Can Europe survive German nationalism?

Berlin, Germany

Over the past few months Americans have awakened to the right-wing, anti-immigrant nationalism growing across Europe. On April 21, far-right presidential candidate Jean-Marie Le Pen garnered a shocking second place in the first round of French elections. Barely two weeks later Dutch anti-immigrant leader Pim Fortuyn was assassinated; in elections nine days after that, his party joined the Christian Democrats (CDA) in ousting Holland's long-standing Labor government. From Joerg Haider's Freedom Party in Austria to Denmark's People's Party to Belgium's Vlaams Blok, anti-immigrant racism is on the rise in a half-dozen European countries--often fusing with hostility to the European Union's (EU) proposed eastward expansion and, indeed, to the European Union itself. And yet this ugly populism does not fundamentally threaten the half-century-long project of European integration and the liberal politics upon which it is based. And it will not--unless it gains a foothold in Germany.

Germany is Europe's indispensable nation. It is not only the continent's wealthiest and most populous country, but for a half-century it has consistently deployed its strength in the service of a united, peaceful, prosperous Europe. Germany's first postwar chancellor, Konrad Adenauer, joined with France in 1958 to form the European Economic Community, which Adenauer and his successors saw not merely as an engine of economic recovery but as a supranational bulwark against Germany's toxic nationalist past. In 1978 German Chancellor Helmut Schmidt and French President Valery Giscard d'Estaing launched the European Monetary System, the predecessor to the euro. And in 1990, after Germany reunified, Chancellor Helmut Kohl began pushing to enlarge the European Union eastward--a project he believed would entrench democracy in the lands of the former Soviet bloc and prevent a revival of the bloody ethnic hostilities that have plagued the region for centuries.

Underlying this altruistic foreign policy has been Germany's remarkably non-nationalist, even anti-nationalist, domestic political environment. Although Germany has suffered its share of anti-immigrant street violence, its political elites--associating strident nationalism with the country's dark history--have for decades successfully kept it from infecting public debate. But that may be changing. Germany, which in the 1980s was considered on the verge of displacing the United States as the world's most powerful economy, has endured a decade of sluggish growth and high unemployment--with little evidence that the situation will improve anytime soon. "Once the greatest economy in Europe, Germany is no longer a locomotive for Europe and the world," wrote economic consultant Roland Berger in a recent issue of Die Zeit. "It cannot even fulfill the expectations of its own citizens--whether young or old." And that economic failure has begun to eat away at the foundations of Germany's political consensus, stirring up historic anxieties that prosperity had long suppressed. For the first time in decades this year's election campaign has seen Germany's political establishment pander to public resentment of immigrants; one of the major parties has even flirted with anti-Semitism. And mainstream politicians are beginning to acknowledge the public's growing displeasure with European integration. If these trends continue, they could destroy hopes of EU expansion, which would dramatically undermine efforts to build a peaceful, liberal order in Eastern Europe. They could even lead to a politically embittering and economically destabilizing process of deintegration in the West. Says Roland Freudenstein, deputy director of the Konrad Adenauer Stiftung (the think tank of the Christian Democrats, or CDU), "Europe can live with a Haider. But the day a German Le Pen or Haider gets fifteen percent, the EU is in trouble."

Germany's economic decline began in the early '90s in large part because of the exorbitant costs that reunification with the East entailed. To make reunification as attractive as possible to the East, Kohl swapped the worthless East German currency one-for-one with German deutsche marks. His government also poured money into the East's decrepit state industries in a losing effort to keep them afloat and granted East Germany's 16 million citizens the same generous welfare and unemployment benefits as citizens of the West.

But Kohl's assumption that private capital would flood eastward and eventually equalize the two regions did not come to pass. Instead, the East, with its poorly trained and unmotivated workforce, repelled rather than attracted investors. Within four years East Germany had lost 3.7 million jobs, and unemployment in the region had risen to nearly 20 percent. Today much of the East German countryside looks like the American Rust Belt of the early '80s, with boarded-up factories and storefronts and an absence of aspiring young people, many of whom have fled West. In the '90s the German government pumped about a trillion dollars into the East, and it continues to send about $70 billion there annually--4.5 percent of West Germany's GDP--diverting money from the country's troubled educational system and raising costs for employers, who must subsidize the additional welfare and Social Security payments to the East.

To make matters worse, Western Germany has been unable to make a post-cold-war transformation of its own. It remains burdened by labor regulations and work rules that were appropriate to a classic industrial economy but are blocking its transition to a knowledge-based post-industrial one. Like Japan (another nation that cherished the stability of lifetime employment), Germany is having difficulty adapting to what Joseph Schumpeter called "creative destruction" --the chaotic, entrepreneurial culture of "spin-offs" and "start-ups" that has formed the basis of post-industrial booms in the United States, Great Britain, and Ireland.

For starters, German companies find it almost impossible to fire or lay off workers. German work councils can demand that employers provide up to two years of severance pay for laid-off workers, and fired workers can force employers to prove in court that their dismissal was justified. The government also imposes strict rules on part-time and temporary workers, including a requirement that part-time workers enjoy exactly the same benefits as full-time workers. These restrictions, along with draconian limits on how long retail stores can stay open, have inhibited the growth of a labor-intensive service sector. The service sector accounts for only 38 percent of employment in Germany, compared with 81 percent in the United States. And that ratio has contributed significantly to rising unemployment. As Berger notes, the prevalence of capital-intensive manufacturing industries and the absence of labor-intensive services means that in order to create new jobs the German economy has to grow 2.4 percent annually, compared with just .5 percent annually in the United States.

Many Germans, including Social Democratic (SPD) Chancellor Gerhard Schroeder, understand they face a structural economic crisis that, in the absence of extensive legal and political reforms, could last well into the new century. During Schroeder's 1998 campaign he promised economic reform and soon after taking office vowed to follow Tony Blair's "third way" model. Last year a Schroeder-appointed commission blamed Germany's stagnation on restrictive labor regulations that "protect the core workforce but limit how permeable the employment system is, leading to a segmentation of the labor market, that discriminates against the young and against women, and increases the risk of long-term unemployment." But despite his campaign promises, Schroeder has not acted on this diagnosis. Though he has cut punitive taxes on corporate mergers and ousted left-wing Finance Minister Oskar LaFontaine (who wanted corporate tax increases), Schroeder has not merely failed to reduce labor regulations; he actually got the Bundestag to adopt legislation that makes it more difficult for German companies to hire low-wage workers or lay off redundant ones. Tobias Dürr, the editor of Berliner Republik, a magazine that advocates a "third way" for Social Democrats, quips, "We tell people we're Tony Blair, but we're still Neil Kinnock"--Blair's unsuccessful, old-left predecessor as Labour Party leader.

And there is little reason to believe that if Schroeder's SPD is defeated this September by the CDU and its Bavarian-based subsidiary, the Christian Social Union (CSU), his successor will act differently. The CDU/CSU's nominee for chancellor, Edmund Stoiber, is promising to reform labor regulations. But while the CDU and CSU have traditionally been more conservative than the Social Democrats on issues like abortion and immigration, they have been largely indistinguishable when it comes to the economy. The CDU, for instance, is responsible for Germany's 1951 Codetermination law that grants unions seats on corporate boards, and this year it has criticized Schroeder for cutting corporate taxes. As the Munich-based governor of Bavaria, Stoiber was known for subsidizing both new and failing industries and for working closely with labor. Asked recently whether he would alter Schroeder's strategy of working out economic policy through an alliance of business, labor, and government, Stoiber demurred.

Moreover, Stoiber--like Schroeder--is fully committed to Germany's welfare state. The CDU/CSU platform calls for more social spending. And Stoiber will not brook criticism of Germany's generous unemployment-benefits system. This spring, for example, Stefan Effenberg, the former team captain of Munich's soccer team, said in an interview with the German edition of Playboy that "a lot of the unemployed have such good benefits that they don't want to get up in the morning and do a full day's work." After union leaders complained to the team's management, Effenberg's coach suspended him on the eve of two key games--under pressure from union officials and team board member Stoiber. "Mr. Effenberg should stick to talking about what he knows best: football," Stoiber said.

If neither the SPD nor the CDU/CSU is championing economic reforms, it is largely because the political obstacles to doing so are profound. The labor movement, which is dedicated to blocking reform, boasts a membership of more than 40 percent of German workers. Germany's poor and working class vote in high numbers; and they regularly punish politicians who advocate limits on welfare spending or a reduction in labor regulations. In East Germany the CDU and SPD justifiably fear that if they advocate a reduction in government subsidies, the region's alienated voters will back the former Communists of the Party for Democratic Socialism.

In short, Germany, like Japan, is trapped in a paralyzing network of political obstacles and economic arrangements. In Japan the result has been a bipolar spiral of manic hope in would-be reformers, followed by depression and disillusionment when they predictably fail. In Germany the response may be more worrying still: a new nationalism. And that nationalism is beginning to transform public debate over two central issues to German politics--immigration and Europe.

Until recently Germany had a simple strategy for ensuring that immigration did not become a pressing political issue: Unlike France or the United Kingdom, Germany segregated its immigrants economically, socially, and legally. They were discouraged from becoming citizens. They didn't constitute a voting bloc. They took jobs that German citizens didn't want. And they lived by themselves in urban ghettos, like Berlin's Kreuzberg district--dubbed "Little Istanbul"--or on the outskirts of Hamburg. But the decline of the German economy, combined with the post-9/11 specter of foreign terrorism, has raised the visibility of Germany's immigrants and threatened to make immigration--for the first time--a major issue in this fall's campaign.

West Germany's post-World War II immigration laws were similar to the ones passed in Wilhelmine Germany and left in place through the Nazi era. In essence, West German citizenship was automatically granted to anyone of German culture and descent who was living within Germany's boundaries in 1937. This included East Germans, as well those Germans subsequently scattered throughout Eastern Europe. Meanwhile, West Germany passed legislation granting "guest worker" status to Turks, Italians, and other immigrants to work temporarily in Germany's car assembly lines, farms, construction sites, sanitation services, and food-processing and textile plants. They were not encouraged to become citizens but, rather, to return home after several years. Yet, even after the guest-worker program was abolished in 1973, Germany's immigrant population continued to grow--swollen by asylum seekers and refugees from the Middle East, Africa, and the former Yugoslavia and by family members of guest workers who remained in the country. By the end of the '90s Germany boasted about 7.5 million foreign-born residents--more than any other European country and on par proportionately with the United States.

But rather than assimilate and eventually become citizens, immigrants to West Germany were aggressively segregated. Many immigrant children were taught in "national classes" separate from German students. Immigrants had to wait 15 years to apply for naturalization and even then had difficulty qualifying. By the mid-'80s, even though about three million immigrants were eligible for citizenship, only about 14,000 were getting it per year. Even children born in Germany did not automatically qualify as citizens: In 1998 a Munich court deported a 14-year-old Turkish petty criminal--even though he had been born and lived only in Germany and could not speak Turkish.

By the late-'90s Germany was facing an immigration crisis. On the one hand, German business leaders looked enviously at the United States, which attracted skilled computer programmers, engineers, doctors, and nurses from overseas--a kind of immigration that in Germany was forbidden. On the other hand, Germany's existing, largely unskilled immigrant population was suffering inordinately from the country's economic decline--in particular, from restrictions on the growth of a service economy. (Whereas in the United States unskilled immigrants can climb up the occupational ladder by working multiple jobs in small 24-hour stores and shops, in Germany this kind of piecemeal, after-hours work is forbidden.) Immigrants began swelling the welfare rolls, and crime rates in immigrant communities began rising, especially in big cities like Hamburg.

As a result, Germany has found itself buffeted between business demands for a new law encouraging immigration and growing public resentment toward immigrants, who are increasingly blamed for rising welfare expenditures and crime rates. Last September 23, voters in Hamburg registered their unhappiness in an election for the city-state's government. A new "Law and Order Party," led by Judge Ronald Schill--who had threatened to deport Africans who could not produce identity cards--took 20 percent of the vote, ultimately forming a coalition government with the CDU, with Schill himself as Interior Minister (see "Cell Block," by Richard Miniter, TNR, December 24, 2001). Schill, who has continued to rail about "imported unemployment and imported crime," has not decided whether his party will field candidates in the fall election; but in current national polls his party garners an impressive 11 percent.

And there is at least the opportunity for Schill's party--or one like it--to grow beyond that. In a poll published last month by the German daily Handelsblatt, 54 percent of respondents thought most of the nation's immigrants were not interested in assimilating; 43 percent thought foreigners were more disposed to being violent than Germans. Only 12 percent favored increased immigration. Richard Stoess, a professor of political sociology at the Free University of Berlin, calculates from his own polling that there is now a 12 percent to 15 percent latent vote for someone like Le Pen or Haider. It is disproportionately concentrated in the former Communist East. It is primarily male, lower class, and fueled by what Stoess calls "relative discontent" with a person's economic condition and sympathy for "nationalism, authoritarianism, racism, nostalgia about the Nazi regime, and anti-Semitism." To date, these sentiments haven't cohered into a national political movement. One reason, according to Stoess, is that Germany doesn't yet "have an attractive right-wing party. If we had Fortuyn or Le Pen, they would vote for them." Another is that for decades the major parties have effectively stigmatized anyone who expresses racist or right-wing nationalist attitudes. At least until now.

After taking office in 1998 Schroeder's red-green coalition of the SPD and the Greens proposed not only welcoming new skilled immigrants but also--largely at the urging of the Greens--integrating existing immigrants by improving their schooling and making it easier for them to become citizens. Though some Christian Democrats balked, a watered-down reform bill was passed in 1999. With this year's election approaching, however, the CDU/CSU is attacking those reforms for undermining Germany's blood-based view of citizenship. And while the reason appears to be sheer opportunism--"There was very little difference in social policy. That is why we grabbed immigration," explains one prominent CDUer--the voicing of this racial appeal by a mainstream German party could prove a political watershed.

At the party's meeting in May 2001 the CDU declared that Germany "is not a classic country of immigration, and because of its history, geography, and economic conditions, it cannot be one." The party further demanded that all foreigners adhere to "the values of our Christian culture"--a demand, in effect, that Germany's Muslim Turks, Bosnians, and North Africans abandon their own culture and religion. Last September the CDU welcomed Schill and his party into its governing coalition in Hamburg; in January the CDU/CSU chose Stoiber as its candidate for chancellor over the more socially moderate Angela Merkel--ensuring that immigration would be an important issue this fall. Stoiber has a history of opposing the integration of immigrants into German society. Last year he warned of Germany being "swamped" by immigrants. This year he defied his own business backers by opposing Schroeder's plan for encouraging skilled immigration, claiming that it would create "multicultural parallel societies." Arguing that the answer to Germany's lack of skilled workers was not immigration but a higher native birth rate, he proposed paying German families to have more children. As Jurgen Ruttgers, a CDU candidate in North Rhine Westphalia, put it in 1999, "Kinder statt Inder"--"Children not Indians."

But perhaps the most striking evidence that the post-World War II political consensus against courting intolerance and bigotry is eroding comes from a controversy over Israel and anti-Semitism involving the leadership of the Free Democratic Party (FDP). From 1969 until it was replaced by the Greens in 1998, the FDP, a libertarian, pro-business party, served as either the SDP's or the CDU's coalition partner in government. But now, with the Greens suffering from a lack of a credible economic program, the FDP appears poised to reenter government as junior partner once again. This spring the party's deputy chairman, Jurgen Mollemann--a former Kohl Cabinet member--recruited into the FDP a prominent Syrian-born German, Jamal Karsli, who had quit the Greens after they threatened him with expulsion for his anti-Israel views. Installed by Mollemann in the FDP's Parliamentary Group, Karsli attacked the Israelis for their "Nazi methods"--a shocking reference in Germany--and granted an interview to an extreme right-wing publication, Junge Freiheit, in which he criticized Germany's "Zionist lobby."

Mollemann not only refused to dissociate himself from Karsli; he stoked the flames by expressing public sympathy for Palestinian violence. When Germany's Jewish leaders--including TV talk-show host Michel Friedman, the vice president of Germany's Central Council of Jews--criticized him, he responded harshly, accusing his detractors of promoting anti-Semitism by promiscuously leveling the charge at Israel's critics. Haider, who had similarly baited Austria's Jewish leaders, applauded Mollemann's tactics. FDP leaders, who initially stayed silent, finally began to distance themselves from Mollemann late last month after SPD and CDU officials began suggesting that his remarks could render the FDP an unfit coalition partner.

But the cruel irony is that while the controversy swirled, the FDP's national poll ratings rose. According to Freudenstein, CDU internal polls showed the FDP's support rising from 10 percent to 11 percent or 12 percent of the electorate. In a June 6 poll in Der Stern, 30 percent of Germans backed Mollemann's position and only 22 percent backed Friedman's. And according to Freudenstein and other observers, Mollemann's support extends beyond older Easterners to the same young, upwardly mobile, middle-class voters who have supported Haider in Austria and Fortuyn in the Netherlands. As in those countries, there is a considerable reservoir of public resentment against the perceived "political correctness" of political elites--a political correctness that in Germany is felt most strongly on issues concerning Jews and Israel. Together with the economically discontented hard right, these younger voters could constitute a formidable bloc of support for a German Haider, one considerably larger than the 11 percent of the population that currently backs Schill.

If more mainstream politicians follow Schill and Mollemann's example of stoking ethnic resentment and right-wing nationalism for political gain, the implications will be felt not merely in Germany but across Europe. In a sense, after all, it is precisely German "political correctness"--its leaders' inhibitions about the pursuit of narrow and exclusionary national self-interest--that has made Europe what it is today.

France hatched the idea of European integration in the '50s largely as a means of neutralizing German power; and, in a sense, Germany went along--endorsing a supranational structure meant in part to ensure that it couldn't wield its economic and political muscle to the detriment of its neighbors. To this day German leaders still argue that the European Union is necessary to prevent Europe from reverting to its history of war, which is partly a coded way of saying the European Union is necessary to protect Europe from Germany. As Kohl put it in 1996, "European unification is in reality a question of war and peace in the twenty-first century." Current Foreign Minister Joschka Fischer, who has succeeded Kohl as Germany's most articulate pro-Europe spokesman, argues that if the European Union does not expand, the virulent ethnic nationalism that devastated the Balkans could break out once again--not only in Eastern Europe but eventually in the West as well. In a famous speech at Humboldt University in January 2000, Fischer warned that "a divided system of states in Europe without an overarching order would in the long term make Europe a continent of uncertainty, and in the medium term these traditional lines of conflict would shift from Eastern Europe into the EU again."

German bankers and business leaders also consider political integration the best way--perhaps the only way--for the continent to prosper economically. Integration, they argue, not only gives Europe its own reserve currency (the euro), but it makes possible the creation of large pan-European companies with the capital to compete with American multinationals. If Europe fails to truly integrate economically, German leaders have warned, it could find itself in the same situation as Latin America--divided among rival currencies, with the weakest nation's currency jeopardizing the strongest's.

In recent years, as enthusiasm for the European Union has waned among French voters (who barely approved the euro in 1992) and among their leaders (who harshly criticized Fischer's plans for a new Europe), the push for Eastern expansion has depended more and more on German political support. But today there is growing evidence that the political support--powered by a self-consciously post-nationalist German elite insulated from public pressure--is starting to deteriorate.

Until recently German leaders kept questions about the European Union out of public debate--refusing to hold a referendum on adopting the euro as Denmark and France did. And the German public went along. Devastated by the Nazi experience and by defeat in World War II, postwar Germans initially ignored foreign policy; and as the country grew prosperous and gained prestige as a world power, the country's altruism seemed to be paying political dividends. In the '80s, for instance, Germany backed the entrance of Spain, Portugal, and Greece into the European Union, even though it meant subsidizing their economies for decades. The issue wasn't even politically controversial. But the painful experience of reunification and its attendant costs have altered that calculation. Polls taken regularly by the European Union--dubbed the "Eurobarometer"--detected a decline in German support for EU institutions declined during the '90s as the economy began to falter. Germans currently rank at the bottom of the 15 EU countries for "pride in being European." They are twelfth of 15 in whether they think their country benefits from EU membership. They are fourteenth of 15 in their trust in EU institutions, ahead only of the United Kingdom.

And the European Union's potential expansion--which would allow Eastern Europeans and their goods unfettered access to Germany--is bringing together public opposition to immigration and public suspicion of European integration. According to the Eurobarometer, Germans are thirteenth of 15 in their support for EU enlargement (only Austria and France are more opposed). According to polling by Stoess, Germans worry that if the European Union is enlarged eastward, Poles will flood into their country and take their jobs and Polish farms will undermine their German counterparts (even though the opposite is far more likely). "Germans think nationalistically," says Stoess. "They accept the EU, but they are not happy to be in it."

Germany's business leaders, who covet Eastern European markets and labor, are finding it increasingly difficult to prevent Germany's politicians from pandering to the public's anti-Europe mood. Two years ago Stoiber declared his reservations about EU enlargement and called for a public referendum. In response, the pro-business Frankfurter Allgemeine Zeitung attacked him for "playing with the fire of euro-skepticism" and for taking positions that could "have disastrous consequences for Europe and for Germany." Stoiber has since quieted his criticism of EU enlargement, but one close backer believes that after the election he "will block low-wage workers" from coming into Germany.

That could spell trouble for Germany and Europe. Germany needs markets to the East, and its aging population needs replenishment from young immigrants. And if a renewed spirit of German nationalism were to turn the continent's leading advocate of a United States of Europe against the effort, other European countries would almost certainly respond in kind--potentially deintegrating the European Union, spawning despair and alienation in the East, and fueling beggar-thy-neighbor economics and ethnic extremism across the continent.

Moderate CDU members like Freudenstein believe that even if Stoiber wins, it's unlikely German business will allow him to oppose immigration or EU enlargement. (Freudenstein also believes that if the CDU/CSU forms a governing coalition with the FDP, it will not accept Mollemann as a Cabinet member.) But regardless of its outcome, September's election is unlikely to do anything to solve the underlying trends fueling German nationalism and xenophobia--in particular, Germany's ongoing economic decline. If joblessness hovers around 10 percent, Germans will continue to blame immigrants for rising crime and welfare expenditures and continue to fret about Poles taking their jobs.

If unemployment stays that high for several more years, Germany could easily follow the path already taken by Austria, Holland, Denmark, Switzerland, France, Belgium, and Italy--countries where right-wing nationalist movements have substantially eroded political support for a unified Europe. And if that happens, it will make this spring's panic over Le Pen look like a sideshow. Rising extremism in Copenhagen or Vienna or even in Paris is a European problem, not a European crisis. But what happens over the next decade in Berlin may well determine Europe's fate in this new century.

This article originally ran in the June 24, 2002, issue of the magazine.

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