The EU had spent much of its energy and political capital in an effort to admit and absorb new member states. It had needed to persuade the existing member states to accept the new members; it needed to organize the new members for the EU structure.
The existing member states were somewhat skeptical of the new members, yet the EU was simultaneously attempting to persuade the existing member states to increase their commitment, involvement, and integration into the EU.
In 2005, member states chose not to ratify a proposed EU constitution. This decision took some momentum away from the EU’s political progress. It also become more clear that some of member states were economically incompetent.
The fiscal weakness, and deceptiveness used in attempts to disguise that weakness, threatened the stability of the EU as a trading bloc, and threatened the stability of the euro as a currency.
Greece became the symbol for the crisis, although several other member states had also been irresponsible. Greece had continued unsustainable programs, like nationwide single-payer universal healthcare, which created a large national debt.
With the EU itself lacking political momentum and diplomatic capital, member states looked to other sources for leadership during the crisis. They looked to Germany, and to Germany’s chancellor, Angela Merkel.
Germany’s foreign minister, Frank-Walter Steinmeier, writes:
During the euro crisis, meanwhile, Germany was forced to confront the danger posed by the excessive debt levels of some Mediterranean EU states. The overwhelming majority of the eurozone’s members and the International Monetary Fund supported plans to demand that countries such as Greece impose budgetary controls and hard but unavoidable economic and social reforms to ensure the eventual convergence of the economies of the eurozone.
Why did Germany emerge, reluctantly and even unwillingly, as a world leader in this situation? Because Germany had proven its ability to manage its own economy.
Many ‘first world’ or ‘industrialized’ nations had lost ground in trade wars. Some east Asian nations gained ground by violating intellectual property rights, by inhumane ‘sweatshop’ labor practices, and by ‘dumping’ and ‘flooding’ markets with low-priced products – selling products below cost in order to drive competitors out of the market.
In these circumstances, Germany had found a way to continue a significant and strong manufacturing sector, and to make money by selling its products, in both domestic markets and in export markets:
Germany has merely held its ground better than most of its peers in the face of rising competition.
The other member states of the EU naturally turned to Germany for leadership, because Germany had shown that it was able to keep a healthy manufacturing sector, both in the face of the trend toward an ‘information economy,’ and in the face of fierce Asian competition.
