In late 2016 the crisis in Europe had remained fundamentally unresolved. The underlying condition of the European Economic and Monetary Union (EMU) was poor and its future precarious. In historical terms the EMU has been a failure and there seems to be little that could be done institutionally, or politically to rescue it. Even worse, the crisis and the policies deployed to confront it have undermined the EU itself.
It is indisputable that during this period Germany has emerged as the dominant power in the EMU, thus also shaping the policies and outlook of the EU as a whole. The ascendancy of Germany in not primarily based on the relative size of the German economy, or its putative efficiency. It is shown in the first part of this study that Germany has come to dominate the institutions of the EMU and the EU largely through extraordinary domestic wage restraint since the late 1990s, which has given to German exporters a tremendous competitive advantage. The German triumph within the Eurozone has been achieved largely at the expense of German wage workers and others of low income. For the same reason, the ascendancy of Germany is highly precarious: it is based on the suppression of its domestic demand and the growth of exports, rather than on strong productivity growth and technological progress.
Thanks are due, first and foremost, to Evita Nolka, Georgia Valomenou, Michalis Chiotinis, Margie Basli, Diane Shugart, and Thomas Geroukis, without whose selfless volunteer work this report would have been impossible to produce. Thanks are also due to many others who have read or discussed parts of the research. We wish to thank particularly Ioannis Theodossiou, Ernesto Screpanti and Cédric Durand for reading and commenting on the final draft. Finally, Daniel Munevar and Giorgos Diagourtas provided outstanding research assistantship. Needless to say, responsibility for the final product resides with the authors.