The Role of theModell Deutschlandin the Enlarged European Union

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Germany’s influence in Europe since the end of the Second World War has strongly depended on its economic performance. The success of the West German socio-economic model of a social market economy, often characterised as Rhineland capitalism, contributed immensely to Germany’s leading position within the emerging integrated European framework. Under the restrictions enforced by the Allied Powers over ‘‘Germany as a whole’’, West Germany’s strong economic performance helped make up for its limited national sovereignty over its internal and external affairs. 1 The Modell Deutschland enabled Germany to exercise what Simon Bulmer calls ‘‘unintentional power’’ (75). This refers to its ability to exercise profound influence in the European Union (EU) through its economic strength and a rigid policy of monetary stability exercised by the Bundesbank. Until the end of the Kohl era in 1998, Germany was able to take a leading role in shaping the direction of the political and economic integration of Europe by combining the ‘‘soft power’’ approach in the EU with the unintentional, but still tolerated ‘‘hard power’’. The resources of German influence in Europe were consequently based on a combination of the ‘‘soft’’ power of Germany’s paymaster role as the biggest contributor to the EU budget, and the ‘‘hard power’’ Bundesbank stability policy. The latter strongly influenced the direction of economic integration in Europe, especially on European Monetary Union (Bulmer, Jeffery and Paterson 41). The combination of ‘‘budgetary power’’ and ‘‘institutionalised monetarism’’ (Paterson 208–9) allowed Germany to exercise ‘‘economic primacy’’ over the rest of Europe (Cole 92). On the basis of its role as