Australia / Israel Review

Douglas Davis

Europe is peering into the abyss.

And the crisis is far from over. Indeed, it is likely to intensify in 2012 as financial contagion spreads from Ireland, Greece, Portugal, Spain and Italy to France, which holds large quantities of Italian debt, and then to Britain, which is exposed to substantial French debt. Italy, whose debt approaches A$3 trillion, has pushed realistic hopes of rescue beyond reach.

Just as dangerous, the financial crisis is accompanied by social and political upheaval. Already, two European governments – Papandreou’s Greece and Berlusconi’s Italy – have been swept away on tides of unsustainable debt. Their places have been taken by unelected technocrats. More heads may roll. More unelected governments may be on the way.

Democracy is in retreat. And its loss does not appear to be a matter of concern to the masses, who vent their anger at the parlous state of their nations and the austerity measures that are being proposed to provide the remedy. Confidence in the political classes – remote, opaque and often corrupt – is seeping away. Now, most of Europe is looking to Germany to bail them out.

Ah Germany – the largest, most populous, most wealthy state in Europe, home of the “economic miracle”. But Germany is no ordinary state. Its collective soul is an eviscerated place and its collective memory is of terrible deeds. The European project offered Germany an escape: an opportunity to start again, to redefine its identity and to escape its brutish history.

For Germany, a united Europe has held out the promise of a melange of states so tightly knit and so interdependent that any thought of another European war would be impossible. And, indeed, the European Union has kept the peace in Europe for more than 60 years.

But the reality of the current crisis has changed the calculus; even if Germany is able to refloat the debt-ridden continent the consequence will be Weimar levels of inflation, which German politicians consider unacceptable. And if they cannot (or will not) engineer a rescue, the consequence will likely be the collapse of the Eurozone – the 17 states which adopted the euro – and, possibly, of the 27-member European Union itself.

Either way, the fear among the cognoscenti is that all this economic and political tumult will open the door to populist leaders who are able to tap into the social dislocation and offer apparently quick, easy solutions to the ever-rising toll of unemployment and the ever-falling standards of living, as banks shut down lines of credit, businesses close and economies grind to a halt.

The current high-voltage uncertainty presages bad times for Jews individually and, in their collective form, Israel. There is no sign of a return to Kristallnacht in Germany, but a conjunction of events in the past month, both entirely out of character, are worth recording.

The first was a decision, taken secretly in June by Germany’s Security Council, with the approval of Chancellor Angela Merkel, to break with decades of foreign policy and sell 270 of Germany’s most modern tank, the Leopard 2A7+, to Saudi Arabia. Way back in 1983, former Chancellor Helmut Kohl vetoed the sale of Leopard tanks to the Saudis, “not least due to the interests of our close partner Israel”.

In these more straitened times, such inhibitions have been abandoned. While Merkel has declined to comment, the well-informed German weekly Spiegel noted that, “despite some misgivings, she determined it to be acceptable to deliver weapons wherever doing so best serves Germany’s geopolitical and economic interests”.

The second event, which came to light almost simultaneously, was a threat by the German Government to halt delivery of a Dolphin-class submarine to Israel in protest at the Israeli Government’s decision to build 1,100 homes in the well-established Jewish neighbourhood of Gilo, in south-western Jerusalem. The Israeli Navy already has three of the submarines, which are capable of carrying nuclear weapons and are considered central to Israel’s military strategy.

Former German Foreign Minister Hans-Dietrich Genscher promised to deliver the submarines to Israel during the first Gulf War in 1991 after it was revealed that German companies had been among the most generous arms suppliers to Saddam Hussein’s Iraq (as they have been to Iran more recently). Approval for the delivery of additional submarines to Israel was given by former Chancellor Gerhard Schröder during his last days in office in November 2005.

What makes these events so extraordinary is that relations between Germany and Israel are unlike those of any other states. History has bound the two nations in an indissoluble embrace. Merkel herself once acknowledged this when she declared that Germany would never be neutral in the Arab-Israeli conflict; it was unambiguously on Israel’s side. And, she added, it was not enough simply to make such declarations. Germany, she said, must constantly demonstrate its support in real and tangible ways.

But times are changing. The French and Germans, hard core of Europe, have habitually stitched up deals in advance of major debates with their European partners. No more. Germany is strong, France is weak, and these days they agree on almost nothing. Wags used to suggest that the two countries cling to each other because French do not trust the Germans and the Germans do not trust themselves. That joke is now wearing thin.