A large part of Europe’s modern history has revolved around attempts to prevent Germany from becoming too powerful for its own good. Yet despite the many attempts to contain the nation, Germany continues to grow.
The League of Nations, a precursor to the UN, signed the Treaty of Versailles at the end of the first world war, which put drastic limitations on Germany’s economy and military, along with its requirement that the nation make reparation payments for damages incurred by other nations during conflict.
At the end of the second world war, leaders realised that, instead of treating Germany like a prisoner as punishment, it would be better to incorporate it into greater cohesion with the continent. This way it would be easier to keep an eye on the country while, hopefully, fostering friendly ties and discouraging another war.
Following a number of variations to rules and treaties, the European Union as we know it today was eventually born, tying together the economies of member nations and eventually binding them – bar a few – with a common currency. Love it or hate it, deeper integration does often make nations easier to control, and Germany has always been a proponent of furthering the idea.
In what could make the initial founders of the League of Nations turn in their graves, Germany has once again become the dominant power in Europe. In the recent negotiations over Greece’s rocky future with the EU, German chancellor Angela Merkel took the lead in holding Greek officials to account, and German finance minister Wolfgang Schäuble spearheaded most of the reforms that the struggling nation was required to adopt. This has caused mixed feelings towards Germany across Europe – some admiring their strength and commitment to reforms, others believing that it has gone too far.
Investor sentiment towards Germany also varies dramatically. Some see it as a powerful nation with a firm government and strong work ethic. Others see it as an international bully, lacking sympathy for nations that are not as economically well equipped. Regardless, there are certainly areas of value to be found within the wider German market.
The bigger picture
As Europe’s largest economy, Germany naturally has some clout. This is impressive, considering its shattered history after losing two world wars and existing as a divided nation until the Berlin Wall came down in 1989, followed by official reunification the next year.
