The Grand Strategy of Germany (FRG)

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Konrad Adenauer in 1952

The Grand Strategy of the Federal Republic of Germany was coined by the conservative-dominated coalition governments of Konrad Adenauer (1949-1963) and only slightly modified by later governments.

The two core components of the Grand Strategy were and are

(1) A "social market economy". This is a kind of tamed capitalism with regulations and social insurances that allows both for economic prosperity and social peace. It was an evolution with roots that reached back to the late 19th century and into social theology. This economic model was closely linked to the minister and later chancellor Ludwig Erhard.

(2) An integration in (and reconciliation with) the West. This was somewhat similar to the foreign policy of the Stresemann era (1923-1929), but more ambitious. The purposes were initially the regaining of as much sovereignty as possible and to prevent future wars, but the West's defence against the Moscow-led Eastern Europe and the pursuit of additional prosperity through the European cooperation became later main motivators.

The social-democratic-liberal governments (1969-1982) added improved relations with Eastern neighbours and with Moscow to the mix, albeit on a much smaller scale than the Western integration, which had at that time already proceeded towards the European Unification process.

The German Re-unification of 1990 and the general end of the Cold War around that time allowed for an extension of the cooperative strategy (2) to Eastern Europe.

Meanwhile the economic stress of subsidizing the economically weak Eastern Germany, late effects of immigration, effects of industrial structural change since the mid-70's (loss of skill industry jobs) and demographic change caused increasing problems in the social market economy since the 1990s.

The Schröder government 1998-2005 saw the need to reform Germany for better competitiveness and made the "social net" less comfortable, but this and the European Monetary Union were likely unnecessary and in combination caused extreme trade imbalances in Europe (=the European equivalent of the imbalance between East Asia and the U.S.).

Germany as a whole is economically "competitive" (as the trade balance surplus shows), perhaps even too much.

Germany's balance of trade in BIP (~GDP); see the spike since the introduction of the Euro in 2002 (source: BMF)

The (for Germany) undervalued Euro makes most imports too expensive and most exports too cheap.

The present domestic economic situation and structure isn't satisfactory. Years of marginal real wage growth have boosted the competitiveness of our industry so much that job losses were small even during the ongoing global economic crisis, but the resulting weakness of domestic consumption caused social and European problems (unemployment and erosion of the middle class, very large trade imbalances).

The post-Cold War period also saw the first and then an escalating use of the German military in so-called "out-of-area" missions.

The original purpose of the Bundeswehr was to serve as a component of the Western integration strategy. The Adenauer government promised 12 army divisions for the West's defence in Central Europe (of an allied total of 26) and regained much sovereignty for it.

The foreign and security politicians of the post-Cold War period were apparently bored without a clear defence objective and Germany became engaged in such "out-of-area" missions. This was at least after the first years part of a strategy to gain a permanent UNSC seat for the unified and thus enlarged Germany. This was apparently given up, while the "out-of-area" missions continue for no real strategic purpose. The missions are sometimes supposed to be linked to the Western integration strategy (especially to giving NATO a purpose after the Cold War, thus keeping this stabilizing institution intact), but it's questionable whether they're necessary for the officially defensive NATO and EU. To the contrary; the partially militarized foreign policy could be a risk factor for the old integration-oriented national security strategy.

As of today, the basic Grand Strategy of the 1950's is still in effect. 

We do still strive for close cooperation with European countries instead of thinking of (violent) confrontation as a promising foreign policy approach.

We are also still fans of the social market economy, although it's been obvious for about a generation that we didn't keep it in a good shape. Social, fiscal and trade imbalances seem to become increasingly serious and the advancing demographic change (continuous shift to a smaller working age population share) is adding ever more pressure on it.

It's about time for reforms, albeit not necessarily for a new grand strategy. 

The last social-democratic Chancellor was rather "misled", the later grand coalition was unable of major reforms and the current conservative-liberal government seems to mix a degree of incompetence with a typical conservative inability of reform which can apparently only be overcome when Germany is reduced to rubble.

An additional problem is that the present chancellor was good at making a political career and destroying political enemies, but is poor at leadership and management.

Germany has to wait for the next reform-capable government. Let's hope that the discussions will in the meantime open the eyes for the existing serious challenges and yield many good reform ideas.

S O

Adenauer  photo: (c) Katherine Young, New York

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