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This article outlines how Germany has sought to project a strategic narrative of the Eurozone crisis. Germany has been placed center stage in the Eurozone crisis, and as a consequence, the German government's crisis narrative matters for the future of the common currency. We highlight how the German government has sought to narrate a story of the cause of the Eurozone crisis and present policy solutions to influence policy decisions within the EU and maintain domestic political support. This focus on the public communication of the crisis is central to understanding the development of Germany's policy as it was negotiated with EU partners, the U.S. and international financial institutions. We draw on speeches and interviews by Chancellor Angela Merkel and two of her senior cabinet ministers delivered at key moments of the Eurozone crisis between May 2010 and June 2012. The article argues that while Merkel and her governments have been able to shore up domestic support for her Eurozone policies, she has struggled to find a coherent strategic narrative that is both consistent with German domestic preferences and historical memory, and with those of other Eurozone members.

This article looks critically at the widely held view that Germany has not done enough to help overcome the Eurozone crisis. According to this line of argument, Germany has refused to comprehensively bail out crisis countries, offer mutual support in order to counter speculative attacks or endorse demand-side growth policies. This is allegedly because of a more narrowly defined national self-interest, increased EU-skepticism, and hegemonic ambitions. This article takes the perspective that such criticisms are primarily rooted in a Keynesian reading of the Eurozone troubles, whereas German policies are informed by another rationale: the ideas of so-called ordoliberalism. Generally, this traditional German school emphasizes the importance of principles, rule-based behavior, and long-term goals—and it believes in the (microeconomic) functioning of markets. Consequently, ordoliberals perceive the crisis as resulting from unsustainable debt levels and a lack of competitiveness in southern Europe, concomitant with a failure of Eurozone institutions. Based on this diagnosis, policy proposals are primarily targeted at debt reduction, as well as structural and EU institutional reforms. While Germany's crisis policy thus appears rational from an ordoliberal perspective, it is considered to be at variance with, and inadequate from the viewpoint of a Keynesian approach.

The European Union has been in its biggest ever crisis since the onset of the Greek sovereign debt crisis in 2010. Beyond the political and economic dimensions, the crisis has also sparked discussions about Germany's European identity. Some scholars have argued that Germany's behavior in the crisis signals a continuation of the process of “normalization” of its European identity toward a stronger articulation of national identity and interests, that it has “fallen out of love” with Europe. This article will seek to reassess these claims, drawing on detailed analysis of political and media discourse in Germany—from political speeches through to both broadsheet and tabloid newspapers. It will argue that the crisis is understood broadly as a European crisis in Germany, where the original values of European integration are at stake. Furthermore, the crisis is debated through the lens of European solidarity, albeit with a particular German flavor of solidarity that draws on the economic tradition of ordoliberalism. Rather than strengthening expressions of national identity, this has resulted in the emergence of a new northern European identity in contrast to Greece or “southern Europe.”

Around 2010, a shift in the EU-understanding of austerity took place – from a future-orientated vision based on concepts of solidarity, cohesion and subsidiarity, to a crisis-driven present shaped around the imperatives of immediate fiscal discipline and debt repayment. This has had contradictory effects, producing widespread divisions, disunity and rising nationalism across Europe on one hand, and new forms of social solidarity and resistance on the other.

France and Germany played a highly visible leadership role during the management of the Euro crisis and the efforts to design a reform governance framework for the Euro area. This article provides a conceptualization of this bilateral leadership, which is then applied to trace the process of Franco-German leadership during the ongoing crisis of the Euro area. Franco-German leadership grew ever more important as the crisis deepened. After the French presidential election of 2012, however, the divergences between the two core states of the Euro area deepened and made the exercise of joint leadership more difficult to achieve. I consider this leadership role to be based on a compromise by proxy logic in which France and Germany, starting from divergent positions, strike bilateral compromises acceptable to other member states that feel their own interests are represented by either France or Germany. Their common capacity to find suitable remedies to cope with crisis, however, is not beyond doubt. The Franco-German approach followed an additive logic, combining the temporary and permanent financial support schemes-a French preference-with a concomitant strengthening of fiscal rules advocated by Germany. In the end, the two governments did not develop a common comprehensive strategy based on a shared conceptual framework.

This article offers a corrective to the notion that German ordoliberal ideology is the key to understanding German policy behavior during the Eurocrisis and, by extension, to the contours of the electoral debate in fall 2013. First, it shows that ordoliberal thought underdetermines policy choices. That is, different actors clearly influenced by ordoliberal thinking and often stressing different aspects of the broader ordoliberal cannon are arguing for more or less diametrically opposed policy solutions. Second, the article provides evidence that this deep divide inside the ordoliberal policy community has contributed additional incentives to the tentative and inconclusive policy choices of the government throughout much of the Eurocrisis. Third, the article extends the analysis of this very cautious policymaking into the campaign phase and the subsequent coalition agreement. It explains why the two major German parties—including an SPD with a much thinner attachment than the CDU to ordoliberalism—sought to play down the Eurocrisis in their campaigns and in their subsequent coalition agreement. One implication is the low probability of German policy change despite ideological differences.