Many European intellectuals, including Manfred Schmidt, William Paterson and Douglas Webber have pinpointed “the broad continuities that have persisted in post-unification Germany’s political economy, foreign policy and consensus-oriented policy-making respectively” (Green, 2008). Yet, post unification, Germany has undoubtedly witnessed some key changes. To take a prominent case, there is little doubt that Germany’s collective bargaining power has worn off since 1990, so too the predictable nature of election outcomes, as well as a statistically significant fragmentation of interests at the level of individual federal states. While no one denies such remarkable changes in the Berlin Republic, there have remained some issues of contention, especially the ones pertaining to Germany’s role in the European context (Tewes, 1998).
With the unification came the need to define a new role for itself. The newly formed democracies in Central and Eastern Europe (CEE) applied subtle diplomatic pressure on Germany that were in conflict with the latter’s conventional role in continental Europe. Although, it was unwilling to give up its traditional role, the signing of the Maastricht Treaty was a new step forward for the unified Germany. It could be said that the treaty was a submissive gesture by the nation and a one-of-its-kind measure in the post world war era. Having said so, one cannot deny the new imperatives that were created through the unification at first and later through the challenges imposed by the CEE. These have impacted the process of policy making in Germany and their redefinition of national priorities. In effect, it could be asserted that the three most influential factors that redefined Germany’s role are: 1.Germany’s domestic policy debate, 2.expectations from CEE and 3.expectations from Western Europe (Lansbury & Pain, 1997).
The coming to an end of the Cold War and the historically unique unification of Germany has given rise for the opening of debate on the direction its foreign policy should take as well as conceptions about its role in the broader European context. In one aspect, the newly devised policies with regard to CEE proved to be a matter of heated public debate. In this context, some political analysts have suggested a more dynamic role for Germany that would “take account of, but be uninhibited by, the country’s Western commitments” (Green, 2008). To put things in perspective, this enduring debate has to be seen from a historical viewpoint. For example,
“As long as the Soviet Union existed, Germany saw it as a guarantor of stability and security in CEE, and thus made it the priority of its Eastern policy. After the Moscow coup in August 1991, this changed. CEE came to be seen as a potentially unstable backyard, which, through immigration, organised crime and environmental risks could threaten the security and well-being of German society. Thus, although German business may have seen CEE primarily in terms of export opportunities and cheap labour, German policy makers saw it primarily in terms of its potential for instability”. (Lansbury & Pain, 1997)
The following statistics on the comparative GDPs of EU nations puts the issue of workers in perspective:
Decomposition of EU and US potential GDP growth rates (%)
1981-1985 1986-1990 1991-1995
GERMANY
Potential GDP 2.0 2.7 2.6
Labour -0.1 0.2 0.0
(Employment) (0.9) (1.1) (0.7)
(Hours worked) (-1.0) (-0.9) (-0.7)
Labour productivity (hourly) 2.1 2.4 2.6
(Capital deepening) (0.7) (0.6) (0.8)
(TFP) (1.4) (1.8) (1.7)
FRANCE
Potential GDP 2.6 2.4 1.8
Labour -0.4 -0.4 -0.3
(Employment) (0.5) (0.2) (0.2)
(Hours worked) (-0.9) (-0.5) (-0.5)
Labour productivity (hourly) 3.0 2.7 2.1
(Capital deepening) (1.0) (1.1) (0.9)
(TFP) (1.9) (1.6) (1.2)
ITALY
Potential GDP 2.7 2.3 1.7
Labour 0.4 0.1 -0.1
(Employment) (0.9) (0.3) (0.0)
(Hours worked) (-0.4) (-0.0) (-0.0)
Labour productivity (hourly) 2.3 2.2 1.8
(Capital deepening) (0.9) (1.0) (0.8)
(TFP) (1.4) (1.2) (1.0)
EURO AREA
Potential GDP 2.3 2.5 2.3
Labour -0.3 -0.1 0.2
(Employment) (0.6) (0.6) (0.6)
(Hours worked) (-0.9) (-0.6) (-0.5)
Labour productivity (hourly) 2.6 2.5 2.1
(Capital deepening) (0.9) (0.9) (0.8)
(TFP) (1.6) (1.6) (1.3)
UK
Potential GDP 2.1 2.6 2.1
Labour 0.0 0.6 0.0
(Employment) (0.4) (0.6) (0.3)
(Hours worked) (-0.4) (-0.1) (-0.3)
Labour productivity (hourly) 2.1 2.0 2.1
(Capital deepening) (0.4) (0.5) (0.5)
(TFP) (1.7) (1.5) (1.7)
EU15
Potential GDP 2.2 2.5 2.2
Labour -0.2 0.1 0.1
(Employment) (0.5) (0.6) (0.6)
(Hours worked) (-0.7) (-0.5) (-0.4)
Labour productivity (hourly) 2.4 2.3 2.1
(Capital deepening) (0.9) (0.8) (0.7)
(TFP) (1.6) (1.5) (1.4)
Source: (Jeffery, 2003)