Welcome to Berlin - Europe’s cool new capital

The struggles of Greece or Spain seem a very long way away

BY GIDEON RACHMAN

BERLIN does not feel like an imperial city. The new government buildings — the chancellor’s office, the Bundestag and the foreign ministry — have all been designed with plenty of glass and natural light, to emphasise transparency and democracy. The finance ministry is, admittedly, housed in the old headquarters of the Luftwaffe. But most of the grandest architecture is a legacy of the Prussian kings. Modern Berlin presents a more welcoming face, and has become a magnet for tourists and teenagers.

Yet while the German capital has deliberately eschewed the trappings of imperial power, Berlin is increasingly the de facto capital of the European Union (EU). Of course the EU’s main institutions — the commission and the council — are still based in Brussels. But the key decisions are increasingly made in Berlin.

Will Greece have to leave the euro? Ultimately, it will be Germany’s call. Will politicians support further bail-outs for southern Europe? The vital debates will take place in the Bundestag in Berlin, not in the European parliament. Who does the International Monetary Fund call about the euro crisis? The most important conversations take place with the German government and the European Central Bank in Frankfurt — not with the European Commission.

This shift in power from Brussels to Berlin has been accelerated by the euro crisis. Naturally, German Chancellor Angela Merkel still has to go to summits in Brussels and strike deals. But the euro crisis means Merkel is now incomparably the most important leader at the table.

For different reasons, the leaders of all the other big EU nations arrive in Brussels in a weak negotiating position. Spain and Italy are struggling with their debt crises — and so they have become supplicants. The British have opted out of the single currency and the new structures that the eurozone is putting together — so they have become marginalised. The Poles are also not in the euro, and have a relatively small economy.

That leaves France. By tradition, a Franco-German partnership is at the heart of any EU deal.

Some argue that the Franco-German partnership has always gone through rough patches — and that the two nations will inevitably get together again. This time, however, it could be different. The power gap between France and Germany has become too obvious and the issues that divide them are too fundamental.

France’s various proposals for eurozone bonds, banking unions, EU-wide infrastructure spending and common social programmes are all greeted with deep suspicion in Berlin. The Germans suspect that the bottom line uniting these ideas is a desire to get German taxpayers to subsidise France. But Germany’s counterproposal — that the national budgets of EU nations be subject to control by a European commissioner — is dismissed as an unacceptable infringement of national sovereignty in Paris.

By tradition, a Franco-German compromise would be hammered out. But the issues involved are so basic that a deal may not be easily found. In that case, the relative economic strength of Germany could prove decisive — particularly if, as many in Berlin suspect, France is heading for a profound economic crisis.

This steady accretion of power to Germany is greeted with ambivalence in Berlin. For obvious historical reasons, postwar Germany has never sought a dominant role within Europe. After reunification, the goal was always said to be "a European Germany, not a German Europe". That instinct to try to submerge German interests within a general European identity remains powerful. But exasperation with rule-breaking and fiscal incontinence elsewhere in Europe is making the Germans less shy about insisting on the need for a more "German" Europe. The price of German financial assistance is, increasingly, going to be the acceptance of rules and laws designed in Berlin.

That kind of power can lead to arrogance. In Berlin last week I heard occasional exasperated references to arrogant Spaniards, haughty Brits, delusional Frenchmen and corrupt Greeks. But the general tone of discussion is serious, patient and responsible. The Germans insist that they are completely committed to the euro and to the EU.

The problem is that life is too sweet in Berlin. Germany is prosperous and Berlin is a pleasant and fashionable city. The struggles of Greece or Spain seem a very long way away. That detachment from the rest of the eurozone — rather than any "will to power" — is why Berlin remains a peculiar capital for Europe.