German think-tanks, Ireland and the European crisis

There is a lively and nuanced policy debate going on in Germany about the Irish situation, and what can be done about it. By Nat O'Connor.



I've been reviewing what the different German foundations have to say about the Irish situation and the euro crisis (with the assistance of Nina Roβmann). What this review shows is that, unlike the rather one-dimensional view that's often reported about what "Germany says", there is a lively and nuanced policy debate going on in Germany. What follows are some highlights of this debate.



In their wider analysis, they ask: Is Ireland a new Greece? But they answer “No”. They explain Ireland's crisis as one of refinancing, whereas the Greek crisis is explained as having more problems of lost competitiveness and structural problems. In one paper, KAS argues against a political union at EU level. They do advocate structural and fiscal reforms in deficit countries and complain that the “no bailot clause” of the EU treaties was undermined (Article 125 of the Treaty of the Functioning of the EU). However, in a more recent paper KAS's chairman makes an argument for economic government at EU level, which is a changed position.


FES argues that before countries like Ireland lower their wages, relatively low wage countries like Germany have to raise theirs. It also criticises the unequal distribution of wealth in Ireland. FES call for better co-ordination of fiscal and social policies across EU member states, including harmonised corporation tax.

On the wider crisis, FES criticises the policies imposed by the EU on deficit countries, and it warns that this will only lead to rising unemployment, cuts in social services and growing euroscepticism within European trade union and labour movements. FES proposes a four-part change: 1. A European New Deal infrastructure investment strategy for employment; 2. some form of economic government at EU level, including stronger democracy at EU level; 3. Co-ordination of wage, fiscal and social policies across Europe; and 4. Eurobonds as a new way of financing government debt. FES argues against a 'growth' strategy for Europe per se, but a strategy for sustainable prosperity based on a real culture of solidarity.


Heinrich Böll Stiftung (HBS) view Ireland's tax policies as negative. They identify the migration of German companies and jobs to Ireland due to lower taxes. They advocate saving German banks who suffered due to “toxic” Irish stocks. However, they argue that there is of course no alternative to saving Ireland, and the lesson learned should be the establishment of common fiscal and economic policy. They note the German Green Party's Gerhart Schick's call for Ireland to raise corporation tax, not VAT. He also stated that the rich in Ireland have profited above average and should now share their wealth, and that spreading out the burden of the crisis is unfair, as the poor are hit hardest. In another publication, HBS criticises the cuts to unemployment benefit and education in Ireland.

On the wider crisis, HBS sees a federal EU as necessary and the natural consequence of monetary union. However, they note the evidence of a lack of support for this. They also note the fear of “Germanisation” of economic policy, and call for more attention to be paid to the banking sector.




The Rosa Luxemburg Stiftung (RLS) identifies a balance to be struck between the fears of many on the left of neoliberal economic policy, and the potential benefits of closer European integration for citizens and society. At one RLS conference, the Jesuit social ethicist Friedhelm Hengsbach SJ argued that the ongoing debate on the EU “transfer union” is absurd, as mechanisms like the European cohesion fund, whose aim it is to balance inequalities among member states, are already in place. He criticised austerity and calls instead for co-ordination of employment, growth, financial, fiscal, wage and social policy. However, he is against common EU economic governance.

RLS argues that the Greek crisis has been oversimplified. The many differences in development in Greece underlie the problems they face, not just wage cost competition. The lack of a social union in the EU permitted redistribution from the bottom to the top, they say, and they call for an EU-wide structural policy to trigger a conversion process to help them develop what they lack in public administration, legal framework, social security, regulation, company strength, banking, procurement, infrastructure, etc.


The existence of the democracy education foundations is a requirement of the post-war constitution, as is their funding by the state. While this originated as an idea imposed by the Allies that the Germans needed to be “taught democracy”, the Stiftungen have evolved into a major resource for the German political system, and they carry out a wide range of policy research. The foundations also invest a lot of their resources in democracy education around the world.


Originally published on Republished with permission. 


 Image top: europeanpeoplesparty.