x Abu Dhabi, UAEFriday 21 July 2017

The iron curtain: lessons for the modern Germany

Germany's position as the economic strongman of Europe mirrors its own history, when the rich west was compelled to subsidise the impoverished east.

Under the cover of darkness, in the early hours of an August morning 50 years ago tomorrow, an army of men began unravelling a barbed-wire barrier across the city of Berlin. This was the first sign of the wall, which at once cut the city in half and fulfilled in the most literal sense, Winston Churchill's prophecy, delivered 15 years earlier in Fulton, Missouri, of an "iron curtain" dividing the post-war European landscape.

Within days, a "wall of shame" would be built by those same men, reinforcing the wire fence, where it would remain, buttressed by forbidden zones, snipers and lookout towers, until the final weeks of 1989, when it was spontaneously and joyfully torn down. As history records, its removal precipitated the dawn of an era that would eventually reshape Europe into a borderless, single-currency economy.

In one moment, five decades ago, Germany's future seemed assured as a nation divided, destined to be little more than the battleground on which the apocalyptic nightmares of the Cold War era would be played out. Equally in its moment of unification, the country looked vulnerable to the curse of the affluent-haves of western Germany being forced to pull the have-nots of the communist east kicking and screaming into the modern era.

Twenty years later, the unified German economy is the miracle of the eurozone. Indeed, while many of its single currency partners - Ireland, Portugal, Spain, Greece included - are bogged down by close to insurmountable sovereign debt, weak or non-existent recovery, swelling dole queues and, in some instances, rising dissatisfaction that has spilt over into civil disobedience, Germany continues to swim effortlessly against the tide. It is the fourth largest economy in the world, it makes products the world wants and so, unsurprisingly, its bounce back from recession has been powerful and sustained. For all that though, Germany cannot afford to stand alone in Europe as a kind of paragon of economic virtue, surrounded by ever-deepening pools of sovereign debt.

Any solution to the worsening economic conditions elsewhere in Europe relies on Angela Merkel, the German chancellor, working strategically with Nicolas Sarkozy, the French president and current head of the G20 group of nations.

Merkel is regarded as the consensual manager to Sarkozy's hot-headed maverick. The two are said to be diametric opposites or like "fire and water" as a WikiLeaks cable memorably revealed last year. This approach can sometimes leave Merkel lagging. She was felt to have been sluggish when faced with the problem of the no-fly zone in Libya and slow in reacting to the Japanese nuclear situation. She must be quicker to the pace with the current economic crisis.

Both Sarkozy and Merkel believed they had faced down the worst of the eurozone crisis last month and maintain that the centre is strong even as its periphery is crumbling. But that is not true: first the markets weakened dramatically once again and now Italy, a key member of the eurozone, is on the brink.

Oddly, Merkel might be wise to look to the lessons of the Berlin Wall for inspiration. She must be as decisive as the wall builders of 1961 and as expansive as those who tore it down. Simply, she must use Germany's current account surplus to help feed her worst-afflicted neighbours.

Twenty years ago, the citizens of West Germany bore the burdens and paid the price of unification. They may have grumbled along the way, but they knew they were doing the right thing. Now, unified Germany must do so again. This kind of medicine is never pleasant, but it must be administered - and it must be soon.