Introduction
The topic of Germany’s leading role in Europe has been not only a subject of academic debate but also a recurring issue in public and political discourse across major European countries, predating German reunification by many years.Footnote 1 Following the post-war period, European reflections on Germany’s role have been closely tied to the gradual blurring of the functional distinction between the political and economic spheres, leading to the increasing ‘economisation’ of international politics.Footnote 2 The increasing significance of economic factors in international relations in the late 1960s and 1970s led West Germany to assume a far more complex and nuanced role than the long-standing depiction of it as an ‘economic giant and political dwarf’.Footnote 3 The collapse of the Bretton Woods monetary system and the oil crisis served as critical turning points. These events prompted a contentious reassessment of the economic and social objectives that had characterised the Thirty Glorious Years of post-war growth.Footnote 4 Additionally, the crisis in transatlantic relations laid the groundwork for Germany’s emerging economic and political centrality. This centrality was evident in Germany’s ability to play a substitutive role in Europe with respect to its American ally and its proactive response to the economic crisis, actively shaping policies and principles that later became pivotal aspects of the neoliberal response to the crisis of embedded liberalism.Footnote 5 These developments initiated a significant reflection on Germany’s role that engaged much of the continent as early as the 1970s. The focus of this reflection was on the possibility that, through its economic supremacy, Germany could become a hegemonic power in Europe.Footnote 6
Subsequent scholarship has sought to establish the nature of the German role in Europe. West Germany has been alternatively seen as an effective hegemonic force, but also as a failed or reluctant hegemon,Footnote 7 while several scholars have challenged the very notion of ascribing the concept of hegemony, or even leadership, to Germany.Footnote 8 One of the reasons why it seems so difficult to clearly define Germany’s role in Europe is the multitude of internal constraints and external pressures that have shaped its scope and nature. Internally, Germany has often faced challenges related to political and economic coherence; externally, it has faced the need to legitimise its leadership through the consent of its European partners.Footnote 9 The dynamic between Germany’s own inclination (or reluctance) to exercise leadership and the varying degree of acceptance (or rejection) by its partners is a key factor in the elusive nature of its position. Placing both elements within their historical context can then significantly deepen our understanding of Germany’s evolving role in Europe. While the position of Germany with regard to its role in Europe has been partly already explored,Footnote 10 the attitude of the European partners seems to have received less attention.Footnote 11 Yet, the question of consensus in the acceptance of the German role in Europe is crucial: for Emmanuele Comte and Fernando Guirao, the largely consensual nature of German hegemony is what allows it to act as a stabilising factor.Footnote 12 However, defining German hegemony as a situation of ‘critical dependence’ for its partners and the impossibility of ‘developing policies that contradict German preferences’ can hardly be considered a genuine ‘consensus’.Footnote 13 Moreover, the degree to which the countries that partner with Germany accept or reject its leadership helps explain the successes and failures of the initiatives and objectives of the Federal Republic of Germany in the process of European integration.Footnote 14
Recent work on Italian–German relations provides precisely the granularity needed to investigate this reception dynamic. By focusing on Italy – one of West Germany’s closest yet structurally asymmetric partners – this article brings the general debate on German hegemony into conversation with the concrete ways in which that role was interpreted, contested or embraced on the ground, thereby testing whether leadership could translate into legitimate authority.
Indeed, the Italian perspective on Germany has often been characterised by ambivalence, encompassing a multifaceted interplay of attraction and repulsion, admiration and rejection.Footnote 15 This has prompted a twofold, but often disconnected, historiographical approach to the Italian–German relationship. One emphasises a parallel between the countries’ historical trajectories, suggesting an equal and positive influence on their political, economic and cultural relations.Footnote 16 The other focuses on the lasting impact of unresolved historical tensions, highlighting persistent negative stereotypes and prejudices.Footnote 17 Recent scholarship, however, has moved beyond this binary. By historicising anti-German sentiment, scholars have shown that such sentiments were often wielded instrumentally and must be read alongside the concrete dynamics of political and economic ties.Footnote 18 Second, recent historical research has also highlighted that the assumption that economic and political relations between Italy and Germany were shaped by a symmetrical dynamic is partially misguided. Especially from the 1970s onward, it is precisely the structural asymmetry between the two national contexts that shapes perceptions and interactions.Footnote 19 Through the complex relationship between the ‘Italian case’ and the history of success (Erfolgsgeschichte) of West Germany – and the shifting hierarchies implied by it – the Italian gaze reveals a far more diversified perception of the German role than might be expected.
Against this revised historiographical backdrop, the present article intervenes to show how the 1970s Italian debate both reflected and refracted those asymmetries. The article seeks to advance the historiographical conversation about a pivotal phase in Italian–German relations and, by using the Italian case of the 1970s as a lens, to historicise and problematise the broader question of how West Germany’s role in Europe was received. To this end, the article analyses the political and public debate surrounding the economic policy decisions of the Federal Government and the Bundesbank, treating them as actors endowed with a multidimensional agency capable of influencing both Community-level strategies and the policies of individual member states. West Germany is therefore approached as the outward projection of a ‘model economy’, reified in its socio-economic structure. Adopting a multi-level perspective, the article considers a wide constellation of Italian actors – the government, the Bank of Italy, majority and opposition parties and the journalistic sphere – whose interactions collectively shaped Italy’s imaginary of Germany and framed domestic interpretations of West German economic policy and its repercussions at the European level.
The evidence drawn from these debates reveals the practical workings of the ambivalence sketched above: a political and public debate in which the concept of rejection of the German hegemonic role is inextricably linked to an expectation of leadership. This ambivalence sheds light on additional aspects of the relationship between Germany’s role and its reception by partner countries. First, the notion of leadership does not always align between the country expected to exercise it and the one that is meant to receive it. In other words, what emerges from the debate is a stark contrast in the conceptualisation of leadership between the Italian and German approaches. The Italian perspective is primarily resource-based, whereas the German approach is more closely aligned with the idea of standard-setting. Internal constraints – in particular the need to preserve an export-led economic model supported by tailored macroeconomic policies – have led to German leadership taking the form of a policy of ‘leading by example’. This approach involves an effort to export key tenets of its socio-economic model at both the European and international level. Italy’s capacity to fully embrace German leadership is then fundamentally undermined by its inability to conform to the German standard, thereby creating a coexistence challenge between the two economic–political systems within the framework of European integration. The fear of German hegemony seems thus to be connected to not only the long-standing factors typically associated with ‘Germanophobia’ but also the situational perception of German inadequacy in fulfilling a constructive role. This made it challenging to situate West Germany’s role within a politically and economically reassuring framework. In the context of the Italian debate of the 1970s, then, Germany was perceived as a model of prosperity, expected to lead Europe out of its economic crisis. Simultaneously, it was viewed as an overly powerful nation that exerted excessive influence over others when it came to economic and monetary integration. This dual perception encapsulates the ambiguity of German reluctance and the contradictory nature of the refusal–expectation dynamic in Italy, thereby facilitating an understanding of Germany’s broader relationship with Europe.
In short, the very ambivalence that has long coloured Italian views of Germany becomes intelligible once leadership and asymmetry are analysed together – a perspective that recent historiography had called for but not yet substantiated empirically.
Building on this framework, this study draws on a broad spectrum of sources, archival as well as journalistic. Because the national press wielded considerable agenda-setting power in the 1970s, newspaper and magazine commentary is treated as a privileged barometer of the ‘psychological’ and political climate in which governmental and party economic choices were interpreted. The survey encompasses both mainstream dailies and periodicals and the party press: although the latter was becoming increasingly open to outside contributors during the decade, it still reflected the official line – or at least the internal dialectic – of the respective parties.Footnote 20
Archival evidence not only helps reconstruct the public debate but also anchors these perceptions in the concrete dynamics of Italian–German relations and in domestic policy-making. Given the fragmentary nature of institutional and ministerial records for the period, the analysis relies primarily on the personal papers of key political figures covering a wide spectrum of political stances. Many of them (Aldo Moro, Mariano Rumor, Ugo La Malfa, Antonio Giolitti) also held portfolios in the economic ministries or at the Foreign Ministry.Footnote 21 These collections illuminate individual viewpoints, party positions and intra-ministerial debates, partially offsetting the scarcity of ministerial documentation. The source base is therefore deliberately weighted toward Italian materials for two reasons: first, these personal archives remain largely under-exploited; and second, because the article’s core question is how Italy perceived West Germany’s role in Europe, Italian sources are intrinsically the most pertinent.
The article unfolds in four sections. The first examines the emergence, in the Italian debate, of an expectation for leadership from West Germany, spurred by concerns over a partial US disengagement following the decision to suspend the dollar’s convertibility. The second section explores how this expectation was linked, according to the Italian point of view, to Germany’s ability and willingness to serve the public interest – particularly by financially supporting convergence policies within the European Community and by adopting expansionary economic policies. The third section examines how the misalignment between Italian expectations and West Germany’s standard-setting approach fostered fears that its economic success could translate into de facto hegemony that neglected the interests of its European partners. The last section explores how Italy’s political and financial vulnerabilities during the 1970s intensified perceptions of German hegemony, leading the debate to concentrate on the challenge of reconciling the coexistence of two distinct economic systems within the European integration process.
Looking for a Leader? Italian Debates on Post–Bretton Woods Economic Leadership
Starting from 1971, Italian elites reassessed leadership within the European Community as the transatlantic monetary order unravelled. The end of the Bretton Woods system underscored the inherent ambiguity of the alliance between the United States and its European partners, revealing a relationship marked by latent conflict. Unilateral actions by the transatlantic ally reinforced existing anti-American sentiments in Italy, which had already found a receptive audience within the country’s ideological landscape.Footnote 22 Within the governmental sphere, doubts began to surface about the reliability of US commitment to the European integration process. A considerable gap was alarmingly observed between the economic objectives of the European Economic Community (EEC) and those of the United States, which were geared towards the creation of a US-driven free trade area.Footnote 23
In the context of an attempt to redefine the Community’s spaces of autonomy,Footnote 24 Italy considered which actor could effectively assume leadership of the European integration process at such a pivotal juncture. It was expected that Italy would look primarily to France and West Germany for guidance. However, two factors contributed to precluding the possibility of France assuming effective leadership: on the one hand, France’s economic position; on the other hand, its conflictual relationship with the United States. Taken together, France’s macroeconomic fragility and its tense relations with Washington removed Paris from the shortlist of credible European leaders.
The perception that was emerging in the Italian debate was that of a ‘changing of the guard’ in the leadership of the continent from France to Germany, taking place on the basis of the primarily economic and monetary supremacy of West Germany.Footnote 25 West Germany was the only country that, in the context of an economic union, would be able to support others’ reserves in the event of speculative waves, which made it the ‘currency pillar of the Community’.Footnote 26 In the aftermath of the end of the Bretton Woods system, France seemed to resist this handover, but the outbreak of the oil crisis, the exit of the franc from the Monetary Snake and the rapprochement between French President Giscard D’Estaing and German Chancellor Helmut Schmidt would reinforce the impression that France was somehow ‘surrendering’ to West Germany’s economicist approach.Footnote 27 The possibility of a Franco-German ‘directorate’ was met with concern by the press.Footnote 28 However, although the prospect of an axis between the two countries had long been a topic in Italy’s foreign policy considerations,Footnote 29 at this stage, the analyses of the Ministry of Foreign Affairs reflected a more sceptical diplomacy toward the Franco-German tandem.Footnote 30 This scepticism was shaped by several ‘objective factors’, including divergences on key Community policies (particularly the CAP and regional policy) and the broader issue of Atlanticism.Footnote 31
Although the economic–monetary factor was thus becoming fundamental in defining the intra-European hierarchies, the main competition was in fact being played out in Europe’s relationship with the United States. France’s unwillingness to go along with American decisions clashed with Italy’s need and desire to keep relations with its overseas ally as relaxed as possible. Despite the climate of mistrust toward their American ally, the transatlantic alliance remained crucial for both Italy and West Germany. A stark opposition seemed only to worsen economic instability, whereas both countries had long benefited from trade liberalisation made possible by exchange rate stability. Furthermore, the historical role of Atlanticism in the political life of both countries continued to serve as a factor of international rehabilitation and internal stabilisation. Equally significant for both nations was the American commitment to defending the European continent.Footnote 32 This was probably the biggest common ground between West Germany and Italy. Any initiative aimed at tightening relations with Washington was judged by the Italian government – and in particular by the Christian Democracy (Democrazia Cristiana; DC) – to be ‘illusory’, whereas Europe’s autonomy could not but be ‘cast in the reality of the world’s economic and political interdependence’.Footnote 33 However, the need to safeguard relations with the United States did not obviate the need to find new ways of interacting with it. In particular, the goal of building a new international monetary system made it crucial to find ways of advancing the interests of European countries without alienating the support of the United States. The political–economic role of West Germany seemed to be evolving in precisely this direction. In August 1974, the Italian Prime Minister Mariano Rumor discussed the matter with the German Chancellor Helmut Schmidt at a meeting in Bellagio, where measures to support Italy were to be discussed. The issue of Franco-German hierarchies was raised again. Rumor argued that France’s economic challenges were preventing it from exercising ‘accomplished leadership’. Secondly, West Germany had a strong economy, a stable government and a positive relationship with the United States, which allowed it to play a pivotal mediating role. ‘The German initiative’, according to Rumor, was to be ‘a point of reference towards which all eyes should have been turned’.Footnote 34
However, the government’s position had to take account of the point of view of the Italian Communist Party (Partito Comunista Italiano; PCI). With Enrico Berlinguer’s arrival at the Secretariat and the idea of the so-called historic compromise, the PCI was seeking to emerge from the long period of isolation to which the conventio ad excludendum had relegated it.Footnote 35 Although the possibility of participation in the government was still remote at the beginning of the 1970s, it was a political force on the rise, with great influence on the cultural landscape of the country. The success of the 1975 local elections would change the outlook on PCI involvement, making it an increasingly likely hypothesis. Even when the preclusion against the Atlantic alliance had been at least partly withdrawn, the PCI’s approach remained much closer to French-style anti-Americanism.Footnote 36 In fact, the PCI used France’s Gaullist stance to harshly criticise Italian ‘servility’ towards the United States.Footnote 37 The end of the Bretton Woods agreements led the Communists to further reflection. Such an event was interpreted by the PCI as the definitive emergence of the contradictions of ‘neo-capitalism’Footnote 38 and represented an external opportunity for a ‘requalification of the Atlantic nexus’.Footnote 39 In part overcoming a mistrust that had long characterised the Italian left’s relationship with Germany, the possibility of a potentially emancipatory European leadership in the framework of transatlantic relations was discussed. Far from being the result of chance, the left saw a consistency of decision-making in German actions that suggested a precise and deliberate design aimed at maximising German interests. For example, the monetary support that Bonn offered the United States was aimed at ‘the conquest of an autonomous and almost equal relationship with the United States, based on the strengthening of the West-German political role in the EEC, to be achieved through the progressive weakening of France’. In the context of the international monetary crisis, this emancipation was interpreted as the consequence of inter-imperialist competition, which had previously precipitated the dissolution of the Bretton Woods agreements and prompted a re-evaluation of the ‘traditional set-up of opposing blocs’. This, in turn, positioned Germany as a potential ‘pole of European political aggregation . . . to the detriment of the already consolidated US hegemony on the old continent’.Footnote 40 Thus, while the DC and the centrist area saw the German leadership as a mediating factor in the transatlantic relationship, the PCI considered it to be an oppositional force. However, the outbreak of the oil crisis and Bonn’s alignment with Washington’s positions would have significantly diminished expectations in this regard, reinforcing the long-standing concern and fear that West Germany’s Atlanticism and Europeanism were fundamentally incompatible.
A Matter of Money: Italian Expectations and West Germany’s Reluctant Leadership
The prospect that West Germany’s emancipation would lead not to the exercise of leadership but to disengagement from the Community was a widespread concern. Italian expectations of German leadership rested on the belief that West Germany could serve as a driving force in the European context. However, for most commentators and politicians such leadership was to be expressed first and foremost as the derivation of its economic supremacy, where the need for political direction was already sublimated in the transatlantic relationship. Consequently, West Germany was to exercise ‘greater responsibility than in the past’ by emancipating itself, when it came to economic leadership, from the role of ‘vassal number one of the United States’.Footnote 41
In other words, although the political nature of the German role was not underestimated – in terms of both European leadership and a rebalancing of the transatlantic relationship – the economic factor remained the central element in the construction of Italian expectations. By virtue of its position of economic strength, West Germany was called upon to use its resources to provide for the public good. Italian officials therefore repeatedly urged Bonn to raise its spending, confident that this would advance integration through convergence policies and allow Germany, as the continent’s economic locomotive, to pull Europe out of the crisis.
Within this context, the subject of structural policies dominated Italian political debate. Regional policy, in particular, was seen as not only a possible instrument for overcoming the economic crisis but also the only instrument capable of safeguarding Italy’s position within the Community. As a result, it also became a key factor in shaping the perception of West Germany and its role in the EEC. The issue was frequently presented, particularly by Christian Democrat and Socialist parties, in conjunction with a solidaristic and non-competitive interpretation of the integration process that undoubtedly reflected the political cultures of the two parties.Footnote 42 It was thus deemed imperative to implement structural policies – and in particular the regional policy – as a prerequisite for economic and monetary convergence, without which ‘Italy would have risked rapidly finding itself in an unsustainable position’Footnote 43 – a point of view usually echoed by the press.Footnote 44 For Italian officials, implementing structural policies meant transferring resources from richer to poorer regions, making West German consent indispensable. The Italian government reiterated its position at official meetings by prioritising progress on regional policy over permanence in the Monetary Snake.Footnote 45
The worsening economic conditions following the oil crisis intensified this dynamic. Italy and West Germany found themselves with nearly opposite stances on the ‘anti-crisis’ measures to be adopted after 1973. West Germany, alongside the United States, was one of the few countries capable of allowing the continued flow of petrodollars generated by exporting countries’ surpluses. It swiftly dismantled the financial controls previously agreed upon with France and other Community members.
Chancellor Schmidt’s decision was informed by the growing volume of Eurodollars, which made any effort to control these flows appear ineffective.Footnote 46 Additionally, he recognised that re-establishing an international monetary system based on fixed exchange rates had become ‘virtually unthinkable’Footnote 47 and pointed to the growing interdependence of the global economy.Footnote 48 These factors significantly influenced West Germany’s relations with both the United States and the EEC. In addition to relying on Washington for European and German security – and for support of a faltering Ostpolitik Footnote 49 – German policymakers sought to draw the United States back into a multilateral effort to manage the economic and monetary crisis.Footnote 50 Concurrently, the German view that the best response to the crisis at the European level was to implement domestic economic policies centred on fiscal rigour and stability gained traction. West Germany increasingly emphasised this stance, particularly after the franc’s exit from the Monetary Snake.Footnote 51
In Italy, the oil crisis disrupted the early signs of recovery under the Rumor IV government. One of the first political consequences was a split among the economic ministries, which had previously worked in relative harmony. This sparked an intense debate over whether Italy should adopt the ‘German recipe’ of restrictive policies to curb inflation. Opinions varied on this matter: the Ministry of the Treasury, led by the Republican Ugo La Malfa, and the Bank of Italy, alarmed that inflation had climbed to 20 per cent in early 1974, urged the adoption of a deflationary policy; the Minister of the Budget, the Socialist Antonio Giolitti, on the other hand, believed that the expansion of public spending was necessary for the recovery of production.Footnote 52 The Christian Democrats sought a compromise by adopting the formula of ‘development within stability’.Footnote 53 Disagreements on economic policy were to lead to La Malfa’s resignation; most observers nonetheless agreed that Germany should not be bound by the same strict austerity. On this front, no one doubted that it was indeed necessary for Germany to take on more of the Community’s internal imbalances, by virtue of the ‘dominant position of its currency and economy’. As one editorial argued, ‘in order to save what remains of the EEC, it [was] necessary that in Bonn . . . thoughts be given, more seriously than hitherto, to the possibility and ways of helping the other partners’.Footnote 54 While acknowledging that the ‘deficit’ countries needed to attempt to limit domestic demand expansion, it was widely believed that these efforts should be balanced by the ‘surplus’ countries – particularly Germany – taking steps to stimulate demand. Given that ‘European economic integration had benefited the economies of the member countries’, West Germany had to accept ‘even a deterioration in the balance of payments’, recognising how ‘European economic integration has benefited the economies of member states, starting with . . . the more prosperous Federal Republic of Germany’.Footnote 55
By the second half of 1974, it became evident that Germany’s commitment to anti-inflationary policies was largely non-negotiable.
Regarding regional policy, the hardening stance of West Germany would make it necessary to reconsider the goal set at the 1972 Paris summit to launch the European Regional Development Fund by the end of 1973. The points of contention – primarily between the countries that would finance the fund the most, with Germany at the forefront, and those that would benefit the most, headed by Italy – concerned not only the fund’s overall size and eligibility criteria but also the types of projects it would finance. While the Italian government hoped to use the fund to complete the infrastructure projects outlined in its 1971–5 economic plan, the Federal Republic strongly opposed financing initiatives that were not directly linked to production and, consequently, job creation.Footnote 56
Moreover, in an August 1974 interview with the New York Times, Chancellor Schmidt emphasised the importance of Europe combatting inflation but cautioned the United States against adopting a similar approach, warning that it could trigger a recession across the Western economies.Footnote 57 This interview sparked a series of discussions in Italy about the suitability of Germany’s economic policy choices and their impact on its European partners. Schmidt’s message to the United States could, in fact, be equally applicable to Germany, albeit on a regional level. Beniamino Andreatta, a prominent Christian Democrat and one of the most vocal critics of Germany’s anti-inflationary stance, argued that these policies were not only ill suited for broader European adoption but also detrimental to the balance of trade between Germany and other European nations, including Italy.Footnote 58 According to Andreatta, the Chancellor had to take note of the fact that, while the United States had international responsibilities, ‘there were European responsibilities for Germany which obliged it to take account of the weak economic and social structures of others that did not allow them to dance to the tune of the German obsession with inflation’. Building on Schmidt’s remarks in the New York Times interview – which suggested that political unification of the European Community would be challenging without an external enemy or ‘dynamic leadership’ – Andreatta urged the Chancellor to view the threats posed by the economic crisis as this ‘external enemy’ and to propose Germany as the protagonist of such ‘dynamic leadership’.Footnote 59
Once again, assuming the leading role within the Community essentially amounted to Germany’s eventual ability – and willingness – to pull Europe out of the economic crisis.Footnote 60 Contrary to expectations, West Germany showed little desire to make this ‘leap’ in its approach to leadership. Italian commentators portrayed it as a nation reluctant to ‘look beyond its borders’, using its economic power to impose conditions that absolved it of broader responsibility. Rather than fostering a sense of shared purpose, these conditions were seen as promoting ‘an individual Victorian ethic of economic relations between nations: each country goes it alone and relies only on its own strength’.Footnote 61 Economists affiliated with the country’s three major political parties agreed that this approach risked plunging the Western economy into recession throughout 1975 and much of 1976.Footnote 62 What would shortly afterward be referred to as the ‘locomotive theory’Footnote 63 demanded a change of direction in economic policies from West Germany, together with the United States and Japan, to enable the entire Western economic bloc to recover.Footnote 64
Italian demands underestimated the radical nature of the Chancellor’s convictions and their concrete affinity with the country’s economic culture.Footnote 65 The transfer of the US presidency from Gerald Ford to Jimmy Carter further highlighted these tensions. Unlike his predecessor, Carter showed little interest in addressing inflation and openly sought to adopt an economic strategy contrary to that of West Germany, aligning more closely with the principles of the ‘locomotive theory’. However, this plan was met with scepticism from West Germany, which ultimately led to the Chancellor’s refusal to follow the US’ lead and a strong insistence on the need to collectively pursue policies focused on financial stability.Footnote 66
The ‘unexpected and harmonious revolt of the German vassal’Footnote 67 had seemingly materialised, but not in the way Italy had anticipated. The limited stimulus measures approved by Chancellor Schmidt in 1975 and 1978Footnote 68 fell short of reassuring both the government and observers.Footnote 69 By the late 1970s, West Germany had consolidated its evolving role as an indispensable reference point in the international and European system: seen as a potential engine of recovery, an exemplar of concerted and corporatist modernisation, a pioneer of détente and economic cooperation with the East and a privileged partner of the United States, it was even dubbed the second ‘superpower’.Footnote 70
Model or Anti-Model? Italian Fears of German Hegemony
Expectations for German leadership were often intertwined with a more pessimistic view of its potential hegemonic role in Europe. Issues such as the challenges in establishing the European Regional Development Fund, disputes over agricultural policiesFootnote 71 and Germany’s reluctance to implement expansive measures to support its partners’ balance of payments contributed to perceptions of Germany as not only a failed leader but also a de facto hegemon. Because it lacked political and economic responsibility toward its partner countries, this form of hegemony became meaningless and at times even detrimental.
A telling example of the debate on the nature of German leadership was the cover of Der Spiegel dated 5 January 1975, which featured the full-page headline ‘Deutschland, Weltmacht wider Willen’ – ‘Germany, reluctant world power’. The cover displayed three symbolic images: the army, industry and German gold ingots. These elements were the focus of an interview with the Chancellor, who, this time, was more willing to acknowledge West Germany’s new role on the international stage. Although on the military front Germany could still be considered a ‘middle power’, the same could not be said on the monetary and economic front, where it was instead actively playing the role of a world power. According to the Chancellor, West Germany’s increased ‘capacity to act’ was a result of three factors: a larger role in NATO, the diminishing danger posed by the division of the two Germanies and the great success of German economic development, which was ‘freely and effortlessly recognisable to the whole world’. The third factor in particular meant that West Germany could place itself on an absolutely equal footing in economic and financial matters with the United States, Japan, France and Great Britain. He then explained Germany’s ‘reluctance’ to project excessive strength: the historical experiences of the two world wars contributed to mistrust and fear among European allies, while Germany feared being relegated to the role of a world banker.Footnote 72
The interview resonated in Italy, where the Germans’ reservations were met with scepticism. The essence of the interview was summarised as follows: ‘Germany, whether it wants to or not, is destined to become the leading country in Europe with the active consent of America, while still behaving in a way that makes France believe “it can play first fiddle”’.Footnote 73 However, it was also acknowledged that the idea of West Germany’s international responsibility ‘seemed slow to make its way into popular sentiment, which was burdened with far more concerns. The ‘world role [was] less demanded from within than imposed from without’, and it was an imposition that, in particular, came from Washington itself, which pressed for ‘the West German giant to cease to be a ‘political dwarf’’ and thus laid the foundations for a change in the image that Germany had hitherto tried to give itself.Footnote 74
This shift in image did not result in benefits for Italy; instead, Italy appeared to be one of the first ‘victims’ of the change. The 1970s were largely perceived as a ‘progressive exit from the American economic orbit and passage under German influence’.Footnote 75
In this context, Italian discourse focused on three interrelated topics that highlighted the experienced and perceived divergences between German and Italian economic and political realities. The first topic concerned the relationship between currencies, which had evolved from a purely technical subject into a realm of political competition, shaping the balance of power between states and their economies.Footnote 76 The second topic addressed economic conditionality, while the third explored the potential coexistence of the two systems within the European integration process – specifically, Italy’s ability to thrive in an EEC influenced by or modelled on the German system.
Monetary issues emerged as a significant concern in political discourse, particularly as the strength of the German mark became evident in the second half of the 1960s. The mark came to symbolise German economic power and the success story of West Germany, which had transformed into one of the world’s leading economies just thirty years after the Second World War.Footnote 77
This issue extended beyond mere symbolism; during the late 1960s and throughout the 1970s, West Germany consistently demonstrated its capacity not only to withstand the frequent speculative pressures of the post–Bretton Woods environment but also to leverage the exchange rate as a tool for both political and economic influence. Consequently, Germany’s approach was frequently criticised as one-sided, resembling the United States’ policy of benign neglect.Footnote 78 In Italy, this attitude was seen as an initial indication of West Germany’s autonomy from the United States – a notion that the former quickly denied – as well as a sign of growing impatience with its EEC partners.Footnote 79
In response to the US decision of August 15, 1971, and its ongoing effects, West Germany consistently sought to take the lead in currency strategy by advocating for forms of joint floating against the dollar.Footnote 80 However, in Italy, these proposals were routinely met with scepticism and concern from both political leaders and commentators. There was significant concern that aligning with the mark would force the lira into a series of revaluations that were incompatible with Italy’s fundamentally different economic situation.Footnote 81 This issue became especially apparent with the abandonment of the Monetary Snake, as there was a strong emphasis on regaining autonomy in monetary policy and freeing the lira from what was increasingly viewed as the ‘mark area’.Footnote 82 The onset of the oil crisis and the franc’s exit from the Monetary Snake in 1974 bolstered the notion of a monetary unification aimed at creating a currency area centred around the mark. This would align the currencies of the six countries whose trade structures were becoming increasingly dependent on the German economy.Footnote 83 In this context, German supremacy was viewed not as a driving force for cohesion but as a de facto hegemony that ultimately weakened the EEC rather than strengthening it. Consequently, the mark-led European currency area was depicted as ‘a monster, . . . a small body with a huge head’.Footnote 84 There was a prevailing notion that the mark was the exception in Europe, its ‘excessive strength’ leading to speculative waves that negatively impacted other member states.Footnote 85 As a result, the core issue was perceived not as the crises facing individual countries but rather as Germany itself, whose prosperity isolated it within its own ‘position of strength’.Footnote 86
The issue of the mark zone resurfaced during negotiations for the European Monetary System (EMS), where prevailing sentiments in Italy ranged from confusion to outright hostility.Footnote 87 Many questioned whether the Monetary System would merely be a more complex iteration of the mark zone. This scepticism extended even to supporters of the agreement – such as Guido Carli, at that time president of Confindustria – who viewed the EMS structure as overly pro-German,Footnote 88 and to the Republican Party (Partito Repubblicano Italiano; PRI), concerned about a ‘German solution’, that is, a ‘pure and simple reconstitution of the Snake’ that would bind Italy ‘not to Europe, but to Germany’.Footnote 89 Italy’s weak negotiating power, characterised by its inability to influence discussions and its focus on resource transfer and structural policy progress,Footnote 90 contrasted sharply with Germany’s determination to prevent the EMS from devolving into an ‘inflation community’, a concern deeply rooted in the Bundesbank’s priorities. This apprehension had guided Germany’s approach to its EEC partners throughout the 1970s. As Schmidt himself had made clear in an interview with Der Spiegel in January 1975,Footnote 91 in order to avoid becoming the ‘paymaster of Europe’ while also preventing a backlash against German leadership, Germany needed to apply discreet pressure on its partners’ economic policies. This strategy formed the foundation of the external dimension of the German Model (Modell Deutschland) that the Social Democratic Party of Germany (Sozialdemokratische Partei Deutschland; SPD) promoted during the 1976 elections. In addition to the need for internal propaganda, German crisis management had to be projected abroad. However, the modalities of this projection were complex. German authorities were aware of the degree of rejection that Germany’s exercise of leadership could provoke among its EEC partners. The concept of the German Model was therefore a means of implementing a ‘policy of good example’, enabling West Germany to exert significant influence over European institutions, integration goals and its partners, all while avoiding the appearance of overt hegemony.Footnote 92
Paradoxically, the impact of Modell Deutschland in Italy was contrary to expectations. Instead of inspiring the emulation of its technical and economic aspects,Footnote 93 Schmidt’s formulation sparked a debate about the renewed national pride it seemed to embody. It was described as ‘a simple statistical edifice . . . devoid of creative suggestions’.Footnote 94 On the contrary, the ‘tricolour and patriotic appeals’ used in large quantities, the ‘waving of red-black-gold flags’ and the insistence on the ‘superiority of Modell Deutschland’ bore witness to ‘a longing for rediscovered national pride’ that represented the ‘natural evolution’ of a people who had now laid the foundations for a ‘revival of the German spirit’.Footnote 95 Among leftist intellectuals, the concept of the model was so transformed that ‘Germanisation’ became linked to the potential spread of a continent-wide socio-economic anti-model, perceived as conformist, illiberal and authoritarian.Footnote 96
Italian Vulnerability and the Problem of Policy Coordination
The perception of German hegemony was further intensified by Italy’s political and financial vulnerability. As early as mid-1974, Italy was widely regarded as the ‘sick man’ of the continent. Italian journalist Ennio Carretto collected the opinions of the foreign press on the Italian situation in Epoca. According to Le Monde, Italy was the sick man of Europe; the Economist saw it as ‘a country with its back to the wall’. Het Parool, a Dutch newspaper, wrote that Italy was ‘drowning in purée’, while according to the New York Times it was ‘on the brink of the Titanic’.Footnote 97 In this economic climate, the Italian government and the Bank of Italy had decided to take measures to restrict credit and limit imports of raw materials and capital goods.Footnote 98 These measures, however, proved insufficient. While they pressed – as shown earlier – for progress on structural policies, international loans were a more immediate solution. Indeed the necessity of seeking external loans laid particularly bare the Italian government’s exposure to the economic conditionalities attached, which were largely determined by West Germany.Footnote 99 Germany was, in the words of the Governor of the Central Bank, the ‘keystone’ for all the lending options explored by Italy.Footnote 100 The subject of West Germany’s influence on Italy’s economic policies had already come to the fore when the Bundesbank granted a loan of two billion dollars to the Bank of Italy, which was secured by a pledge of a portion of Italy’s gold reserves.Footnote 101 However, this perception would be further strengthened over the next two years. The 1975 administrative elections recorded a great success for the PCI and the weakening of the DC, with the consequent possibility of Communist participation in the government. This would lead West Germany to pay more attention to the ‘Italian case’. ‘Simple financial aid’, read a document from the German Foreign Office (Auswärtige Amt) of July 1975, ‘appears difficult, since as experience teaches us, it is practically impossible to carry out any transaction in Italy without one day blowing up and damaging the beneficiaries’. The fear was of the ‘inevitable repercussions’ that the arrival of the Communists in government would have on the rest of western Europe.Footnote 102 The ‘domino effect’ theory applied to not only strictly political events but also the economy, although in this case there was a tendency to speak of ‘contagion’. The weakness of the lira and the currency crisis of January 1976 made the Germans fear the consequences for the pound sterling and the French franc.Footnote 103 The Italian situation thus became one of the items on the agenda at the G7 summit in Puerto Rico.Footnote 104 The basic view was that any financial aid given to Italy at that time could turn into unwilling aid to the PCI. For this reason, West Germany urged that any aid to Italy be made conditional on a precise economic recovery plan based on economic stabilisation and fighting inflation, contrary to the requests put forward by Italian PM Aldo Moro.Footnote 105 The interpretation in Italy of the results of the summit appeared to vary significantly between the Foreign Ministry communications and the public debate. The former tended to be positive and to emphasise the objectives achievedFootnote 106 while the latter mainly stressed the loss of autonomy in economic matters.Footnote 107 The summit seemed to have caused ‘a real shift in international diplomatic language’ by codifying ‘the right to “interfere” in the political and economic life of individual countries’.Footnote 108 Schmidt’s statements – which, to the dismay of the other G7 members, revealed the veto of France, West Germany, the United States and the United Kingdom on the entry of Communists into the government as an economic precondition for any economic aid – further aggravated the debate.Footnote 109 After Schmidt’s partial retraction, the controversy quickly died down. However, there was still an awareness that in the international and European arena Italy was shifting from a subject to an object, politically speaking; Germany, under Schmidt’s leadership, was increasingly taking on the dominant role.Footnote 110 Through financial aid and the exercise of economic and political conditionality, West Germany could in fact ‘consolidate its political hegemony’,Footnote 111 ‘emphasise its preponderance also politically’Footnote 112 and present itself as the ‘political leader of western Europe’,Footnote 113 while Italy appeared weak and on the margins of the Euro-Atlantic system.
The clear divergence between Italy and Germany, along with the tangible influence that Germany exerted over Italy, highlighted a significant coexistence issue. The lira’s exit from the Monetary Snake underscored a recurring theme in the Italian–German relationship: a fundamental rejection of the notion of ‘rattrapage’ toward a German standard, which was perceived as too distant from Italy’s political and economic needs.Footnote 114 It is no coincidence that, during the negotiations to join the EMS,Footnote 115 Italy sought to hold West Germany accountable while ensuring the Monetary System did not become detrimental to its own interests.Footnote 116 However, the negotiations took place at a very difficult time for Italy; in addition to the aforementioned economic weakness, which had lasted for over a decade, there was the political crisis exacerbated by the assassination of the Christian Democrat leader Aldo Moro. All this meant that Italy entered the EMS negotiations in a relatively weak bargaining position. Net of certain compensations obtained, such as wider exchange-rate bands, the choice was therefore stark: either to accept the EMS and thus strong monetary discipline, which would have required economic policy to follow German methods; or to remain outside the system, accepting a peripheral position excluded from the main core of EEC countries.Footnote 117 What was said earlier about the rejection of the reintroduction of a mark area should be understood in light of the strong belief in a fundamental incompatibility between the Italian and German systems. For example, the economist Francesco Forte wrote that, under the given conditions, joining the EMS would have meant ‘sacrificing the south or burdening the north so much that it would become a completely weak area of the Community’, referring to the specific problem of the Italian Mezzogiorno.Footnote 118 In general, there was a broad consensus, from Confindustria to the PCI, that the two economic systems had different political needs. At the end of the EMS negotiations, however, the rejection of many Italian demands was counterbalanced by an awareness of the importance of the diminishing effectiveness of protectionist measures – such as import restrictions and competitive devaluations. This awareness led the government to view the ‘German-style’ EMS as a potential opportunity for stabilisation, which the political climate made difficult to implement from within, under the guise of a ‘European constraint’.Footnote 119 Despite the opposition of the Governor of the Bank of Italy, Paolo Baffi, momentum in this direction came also from the ‘technostructure of experts’ surrounding the issuing institution. By advocating for Italy’s entry into the EMS, they aimed to implement anti-inflationary policies, ensure exchange rate stability and anchor Italy’s future to Europe. Domestically, this would establish a new monetary constitution based on fiscal discipline, wage containment and central bank independence.Footnote 120 However, fully implementing these measures would require additional time. At that moment, the choice between the Europeanisation/Germanisation of Italy and the rejection of what the economist Federico Caffè called ‘the appeal to the foreigner’ would characterise the subsequent debate on the Three-Year Plan.Footnote 121 The decision to join the EMS can thus be interpreted as an implicit acknowledgement of West Germany’s leadership in economic and monetary matters,Footnote 122 driven not so much by theoretical or ideological alignment with German perspectives as by political considerations: the need to keep Italy at the centre of European integrationFootnote 123 and address immediate economic concerns amid a perceived decline in the effectiveness of employment-maintaining policies, which left Italy with limited viable alternatives.Footnote 124
Conclusions
Whether Germany figured as a potential leader or a hegemonic threat, the Italian debate often struggled to acknowledge the complexities of the country’s role in Europe, which might have clarified its own decision-making process. Amid an evolving redefinition of transatlantic relations – now far removed from the model of ‘consensual hegemony’ that characterised the mid-1960s – the pursuit of a more ‘mature’ role for West Germany remained tied to the acknowledgement of the transatlantic link as fundamental to its identity. This relationship was crucial for Germany’s legitimacy and security, as well as for the prospects of reunification.Footnote 125 The second aspect overlooked by Italy was the consistency of West Germany’s external actions with its support for its own economic model. Adherence to stability policies was linked to not only a general interpretation of the crisis or ideological conviction but also the necessity of creating and stabilising the conditions required to sustain its export-oriented model, which was highly vulnerable to external conditions, and thus essential for maintaining internal social peace.Footnote 126 The ‘vassal uprising’, therefore, did not seem as oriented towards implementing vague designs of hegemony as protecting the German economy and with it the citizens of West Germany.Footnote 127 As in the past, the German gaze was much more oriented towards domestic needs than was externally perceived. Schmidt himself consistently expressed worry that interpreting monetary issues through the lens of power politics risked downplaying the severity of the economic crisis.Footnote 128
Not only the project of the EMS but also the decision of the government and the Bundesbank to limit interventions in the foreign exchange markets in support of the dollar should therefore be read not as part of a hegemonic design consciously followed by West Germany but as a reflection of the need for a coherent and effective response to the economic crisis.Footnote 129
The reality of a new rearrangement in the balance of power between the United States and Europe, prompted by the Volcker shock, coincided with a decline in the global potential of German leadership. Although the integration of monetarist doctrine into mainstream economics could be seen as a victory for the German Model, it simultaneously contributed to crisis factors that diminished Italy’s perception of West Germany, especially in light of the rising influence of Anglo-Saxon-style monetarism.Footnote 130 It is noteworthy that in Italy, the fear of German hegemony was swiftly supplanted by concerns over German isolationism, coinciding with a critical weakening of the Community. As a result, the ambiguity in the Italian perception of Germany persisted even with the Christian Democratic Union (Christlich Demokratische Union Deutschlands; CDU) assuming power. From Italy’s point of view, this transition would likely be characterised by a tightening of economic policies and a reduced commitment to European integration, exacerbating Italy’s challenges.Footnote 131 However, it is important to recognise that this ambiguity stemmed from not only a misunderstanding of German intentions but also the inherent duality of Germany’s role in Europe. Germany functioned simultaneously as a stabilising and destabilising force for the continent, acting as both a driving force and a brake on the integration process, serving as a model and a challenge for its European partners. Rather than being addressed, this unresolved issue became intertwined with the process of European integration. It remained connected to two key elements: the persistence of a ‘stereotypical’ view of the Italy–Germany relationship and the perception that European economic and monetary policies were primarily aligned with German interests, which often diverged from Italy’s needs. These factors continued to shape Italian perceptions of Germany during significant events such as German reunification and the ratification of the Maastricht Treaty, as well as in the political and economic discourse that emerged following the 2008/2009 financial crisis.
Acknowledgements
The author thanks Erin Brady for providing editing and proofreading support. The responsibility for the content and any remaining errors remains exclusively with the author.
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