5ROMANIAN JOURNAL OF EUROPEAN AFFAIRS Vol. 16, No. 4, December 2016 [622431]

5ROMANIAN JOURNAL OF EUROPEAN AFFAIRS Vol. 16, No. 4, December 2016
The Lost and Forgotten Lesson of German Reunification
and How It Can Relaunch the European Union Project
Florin Bonciu1
Abstract: The European Union has been confronted, particularly in the past decade,
with a diminishing position in the world economy in nominal terms (as percentage of
world GDP), a decline of its global competitiveness and an increase in the diversity of
the situations that cause troubles to its member states and regions that went far beyond
the possibility of being efficiently managed by a single set of rules. Unfortunately, this
growing diversity of situations, correlated with the increase of the inequality phenomenon
in the developed countries, has been met by the European institutions with a more
and more rigid framework that attempted to apply the principle “one size fits all” to a
reality fundamentally characterized by diversity. This paper draws a parallel between the
European Union’s attempt to assist its member states and regions in reducing development
gaps and the German reunification process after 1990 by suggesting a master plan that
might relaunch the European Union’s project, with a large support of the European
citizens and along with that solving issues like economic growth and unemployment. The
proposal starts from the German reunification lesson that was based on a massive financial
intervention, correlated with a well-defined master plan that has been implemented with
German rigor. At the same time, the proposal takes into account the economic projects
that already exist in the European Union (particularly regarding infrastructure), as well as
the low cost of money that characterizes the current international situation.
Keywords: European Union existential crisis, European Union relaunch, German
reunification lesson
JEL classification: F02, F15, F53, F55
Long and medium term trends manifested within the European Union project
The long term perspective
The European Union has been particularly affected by the economic crisis that began
in 2008 but there is to mention that its contribution to growth (world GDP) has been
declining for the past 30 years (from almost 30% in 1980 to merely 16.5% in 2016 –
Figure 1) even though more countries joined the EU in the meantime. This decline, despite
all the limitations of using GDP as an indicator (Coyle, D., 2014) reflects the fact that
1 Florin Bonciu , PhD, is a University Professor with the Romanian-American University in Bucharest and Senior
Researcher with the Institute for World Economy in Bucharest. His activity materialized in 16 books and over 100
papers on issues related to international economics, European integration, international investments and international
business. E-mail: [anonimizat] .

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Florin Bonciu
European Union could not capitalize its own resources as well as the full potential of
globalization. The enlargements, particularly the ones from 2004 and 2007 that involved
10+2 countries, provided a breath of a fresh air consisting in new markets and low labour
costs but only caused delays in the decline.
Figure 1. The decline of the share of European Union in world GDP, expressed in PPP
terms, in %
Source: Data from IMF World Economic Outlook, April 2016 and IMF data mapper. Figure
drawn by Full fact team sourced at page https://fullfact.org/europe/eu-has-shrunk-percentage-world-
economy/, retrieved at October 5, 2016. Note: Data for 2015 and 2020 represents forecasts and
estimates.
In our opinion this long term decline has been primarily determined by the mechanical
extrapolation of some rules and institutions that had made perfect sense in 1957 for the six
initial member states (in the sense that those countries were to a large extent comparable
and compatible as regards to culture, level of development, traditions and values, etc.),
while they were less and less applicable to the next stages of enlargement (with reference
to countries like Spain, Portugal, Greece and the more so to the countries belonging to the
2004 and 2007 enlargement waves).
Contrary to what happened during the real life enlargement process, from our point
of view, in order to accommodate the diversity of situations and the development gaps, a
pragmatic and functional approach for those enlargements could have referred to:
a) either requesting the new member states to first become OECD member countries (in
this way securing a comparable level of development at least to a certain extent). Such
an approach would have delayed quite considerably several countries in their accession
but would have avoided most of the difficulties that manifested after accession in the
implementation of the acquis communautaire;

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The Lost and Forgotten Lesson of German Reunification and
How It Can Relaunch the European Union Project
b) or changing the rules of the game (i.e. the Treaties) and institutions in order to
accommodate the diversity of situations and development gaps brought by the new
Member States. In this respect, maybe the establishment of a DG for Developing
countries in the European Commission would have been appropriated and beneficial.
Such a Directorate General could have had the objective to support the new less
developed member countries up to the moment they would have reached the average
level of development of the European Union expressed in GDP/habitant.
In our opinion the combination of an ever increasing diversity of member states and
maintenance of the same rules (and even enforcing stricter ones) has been an efficient
recipe for decline and even for the crises that manifest today in the European Union.
The medium term perspective
For the purpose of this paper the medium term perspective refers to the situation that
developed in the European Union after the onset of the crisis of 2008 until mid-2016. The
crisis affected all member states but in different ways and at different intensities.
Given the differences in the levels of development and historical backgrounds that
characterizes the different member states, the crisis has acted as an amplifier in the
sense that the differences just grew bigger and bigger and more acute. It is interesting to
mention here that the euro zone as a whole performed less (measured by GDP year on
year increase) than the European Union average. As a proof of the stricter rules, the results
were less satisfactory. A point to be mentioned here is that of the particularly unsatisfactory
economic performance of the euro zone, which has two components: a) more and more
rigid rules; b) but also the application of such rules to very different situations that may vary
from Germany to Greece and from Italy to Portugal.
At the same time, other indicators, particularly unemployment rate (out of which
youth employment is of clear concern) differentiated a lot the European Union member
countries and had a lot of social and political implications. The same differentiation of
the member states situation, amplified by the crisis, could be found in aspects related to
budget deficit and external debt. In many cases, a logical and much needed decision for
greater efficiency in public spending and functioning of public sectors has been replaced
by austerity measures applied in a mechanical manner that only aggravated the economic
and social conditions, despite of some improvements in the nominal indicators.
Under these circumstances, while the state of affairs in the member countries and their
regions has become more and more diverse, the European Union’s institutions launched
the idea of the United States of Europe, by trying to implement stricter rules (like the
European Semester) or involving rather abstract and vague concepts (like structural deficit
and potential GDP) with very little (if any) immediate use.
In the meantime, after 2008, at a global level, new centres of economic power have
emerged (for instance some members of the G-20 and particularly China, but also India)
and, what is more important, the role of states increased and the realpolitik approach
(based on clearly expressed interests and negotiations) re-emerged.

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Florin Bonciu
In this context the idea of “soft power” has declined markedly (Friedman, G., 2015)
together with the idea of multilateral institutions (like World Trade Organization) which
started being complemented rather than replaced by bilateral and plurilateral approaches.
In our opinion, the high dynamics of bilateral trade agreements in the wake of Doha Round
failure is another representation of diversity and its acceptance in the international arena.
In other words, nowadays the world economy is growing simultaneously more
and more inter-connected, but also more diverse . Real life and real economy manifest
themselves anyway for better or for worse and they reclaim the acceptance of diversity and
flexibility. At the same time realpolitik means that states and other actors with regional or
even global scope of action base their actions and strategies on specific interests and are
willing to use “real/hard power” to achieve them.
European Union – where is it in 2016?
As of mid-2016, European Union is confronted with a number of tensions, contradictions
and existential questions, among which we can mention:
– the prolonged effects of the economic crisis that started in 2008;
– the centrifugal forces that tend to disrupt a number of its member states into regional
and historical components (the list here is rather long and includes Belgium with the
Flemish and Walloon divisions, Spain with Catalonia’s attempts for independence, Italy
with the League of North secessionist ideas and even Venice with the idea to become
again a city-state, Great Britain with the failed Scottish referendum of September 2014
and with the Brexit referendum of June 2016);
– the world geopolitical reality that is based more and more on real force (including
military one as can be noted in Syria) that European Union as an entity is lacking;
Under these circumstances the European Union’s institutions have repeatedly missed
the opportunity to use its diversity as an asset rather than a liability and tried instead in
vain to impose standard rules to all its member states.
It is quite amazing the fact that confronted with conceptual, structural and even existential
issues, European Union officials have always mentioned that there is no other alternative
but to strictly stick to the existing rules while the alternative is quite natural, positive and
obvious: to assess the situation and to draw new rules and institutions that respond to the
current global environment and to the needs of the member states. Therefore, the question
for European Union is not at all “To be or not to be”, but rather a more pragmatic and
forward looking “How to be”. In this respect, we suggested in another paper the idea of
changing the European Union’s motto from “Unity in diversity” to “Diversity in Unity”
(Bonciu, F., 2015).
Dialectics as a reasoning method explains historical movement by a spiral that
makes similar situations, institutions and systems to come back after some time, but on
a different track of the socio-economic framework and with a different intrinsic quality.
Apparently, after 1990 European Union has missed this dialectical movement entirely and
nowadays it’s fighting, not against the Central European governments that have different

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The Lost and Forgotten Lesson of German Reunification and
How It Can Relaunch the European Union Project
opinions or the “Leave” campaign of Great Britain, but rather against dialectics itself. This
dialectical movement has brought back on a different plane and in a different context the
pre-eminence of diversity and flexibility as well as the need to put the prosperity of the
European people at the forefront. In this context, it is difficult, if not entirely impossible, to
predict the evolutions of such a complex socioeconomic process as the one of European
integration and, in this case, one can say that no state or supra-state entity (such as the
European Union) can win a fight over dialectics.
The current situation of the European Union is further tangled by the decision of some
of its leaders (particularly from Germany) to support migration as a possible solution
to a future shortage of labour, with all its presumed positive implications regarding the
alleviation of the consequences of the aging of population (among which, but not limited
to, the funding of social security and pension funds).
Without going into too much detail, it is interesting to note that, at the same time with
the discussion of migrants as a solution to a future labour shortage, apparently in a parallel
world, there is a big discussion on the 4th industrial revolution, artificial intelligence, use of
robots and the internet of things. Such subjects were important enough to become the key
topic of the Davos meeting of 2016 (Schwab, K., 2016). However, it seems that nobody
wanted to connect the dots and see that the 4th industrial revolution as a possible solution
for clearing up the problem of labour shortage and of any associated costs, therefore leaving
aside the need of migrants as a necessary solution. Of course the 4th industrial revolution
is not a panacea, it will create issues of its own (such as the need for a new economic
paradigm where human labour will be replaced at a scale that cannot be compared in
any way with the first industrial revolution), but this is an entirely different subject. It
is interesting to mention in this context that Japan, a developed country confronted in
a rather acute way with the aging problem, adopted the use of robots as a solution to
labour shortage, while Germany, a developed and highly industrialized country, mentions
in a very low key the use of robots and artificial intelligence as a solution to a possible
future shortage of labour, despite of the serious strategies elaborated on this topic, such
as “Industrie 4.0” presented in August 2006 and followed by “High-Tech Strategy 2020”
presented in June 2010 (Lydon, B., 2014).
In a few words, the European Union of today, as of late-2016, is confronted with
an existential crisis, it needs a new paradigm, new values and a new rapport with the
European citizens (by this, meaning the European nations or other consistent socio-cultural
significant groups). Up to now, the responses have been rather administrative, trying to
preserve the status quo rather than opening the floor for new ideas based on flexibility and
diversity. Maybe in this context it would be useful to quote Herbert Spencer’s synthesis
of Charles Darwin’s theory on natural selection as “Survival of the fittest” (Spencer, H.,
1864) as a universal principle applicable not only to living beings but also to institutions
and organization.
The lost and forgotten lesson of German reunification
We want to mention from the very beginning of this part that the purpose of this exercise
is not theoretical or just speculative. The purpose is to clearly formulate a proposal for a

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Florin Bonciu
possible and practical way of relaunching the European Union project in a way that may
align it with the contemporary global and regional trends and balance of power, while at
the same time finding a large popular support in the member countries.
We begin this part of the paper with an explanation of its title. We are going to deal
with the German reunification lesson as a conceptual instrument for the relaunch of the
European Union project later, but first we shall explain why the lesson was both “lost”
and “forgotten”.
The German reunification was a unique historical process that had different stages
between May 1989 and September 1990 and, besides other implications for the two
German states, it also had an implication for the European Union because it represented an
enlargement . After all, the division of Germany, despite its artificial nature as an outcome
of the political agreements between the Allies at the end of the WWII, had as a result the
establishment of two German states which joined the United Nations on September 18th,
1973 as the 133rd and 134th member states (United Nations Association of Germany,
2013).
The German Democratic Republic existed as a state between October 7, 1949 and
October 3, 1990 (New World Encyclopaedia, 2013), it was a member of United Nations
(between 1973 – 1990), had a surface of 108,333 sq.km and a population in 1990 of about
16,111,000 people (New World Encyclopaedia, 2013).
Considering all the practical purposes, the reunification of Germany was also an
enlargement of the European Union even if there was no classical route for that enlargement
involving (as in case of other member states) negotiations by chapters, accession treaties
and timetables for full harmonization with the acquis communautaire. The particularity
here was the fact that we did not have a new member state to join the Union, but a state
(East Germany) that merged with an existing member state of the European Union (Federal
Republic of Germany).
In essence, the mechanism of enlargement (the way it was done) is less important than
the enlargement itself, which no doubt existed. But if someone checks the official pages of
the European Union (belonging to the European Commission or the European Parliament)
dealing with the list of enlargements, this one is obviously missing (www.europa.eu, 2016;
www.europarl.europa.eu, 2016). This is why we call it here “the lost” lesson , because
apparently it has been lost from the historical narrative.
We may speculate here that one of the reasons of this omission is because European
Union likes standard situations and procedures. And by all means the German reunification
has been a non-standard procedure.
The “forgotten” part of the German reunification lesson represents the core part of our
proposal for relaunching the European Union project. In our view, it is a “forgotten” lesson
because the lesson is there (the way it was done and what was achieved), it took place here
in Europe and not in other parts of the world, but it is just not taken into account, therefore
it is a lesson not learnt. And it is our attempt here to bring this lesson to the attention of
decision makers and all those interested in the revival and success of the European Union
project.

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The Lost and Forgotten Lesson of German Reunification and
How It Can Relaunch the European Union Project
The German reunification after almost 27 years has represented a success in reducing
the initial huge differences between the West and the East, even if there is a lot of research
pointing out to the fact that it is not a total success (Connolly, K. 2015). It is true that
differences between West and East Germany still exist, but the reduction of gaps is more
important and, at the same time, in 2016 Germany, the institutions and legislation are,
basically, the same and so are the administrative mechanisms. It is an unfinished business,
a near complete success, but a success nonetheless. And there are without any doubt a lot
of lessons to be learnt from this success.
The main aspects of this lesson of German reunification consist in our opinion in 3
components:
a) the existence of a model or blueprint represented by the Federal Republic of Germany
(as a state and economic model to be implemented in the Eastern part of Germany).
This part gave a clear target and yardstick for measuring the progress;
b) a huge financial package that is was estimated at around 2 – 2.5 billion Euros for a yet
unfinished business (Roth, T., 2014). The exact amount is not relevant; the magnitude
of involvement is.
c) The implementation of a master plan of reunification with clear deadlines and
objectives that have been carried out with German rigueur .
Based on this very simplified model we propose the translation of the German
reunification lesson to the re-launch of the European Union project. In the following we
shall try to draw a parallel of the 3 components mentioned above for the case of German
reunification to the situation of the European Union of 2016.
The relaunch of the European Union project based on German reunification lesson
According to this approach, the relaunch of the European Union project should oversee
3 aspects that may re-establish a dynamic equilibrium across the organization and provide
a large, public support:
a) to create a solid base for economic growth and employment in all the member states
and to secure a position of global competitiveness towards years 2030-2050;
b) to use a process of democratic decision and to provide concrete results in a short period
of time for as many European citizens as possible;
c) to use the current international circumstances that allow for access to “cheap” money
(that is the availability of money and the very low cost of borrowing, especially for
international organizations that benefit of a high credibility).
According to this approach the European Union institutions would play the role of
the Federal Republic of Germany. The goal of the process would be to solve 2 issues
simultaneously:
a) the existence of substantial development gaps between old and new member states as
well as between various regions in all member states;

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Florin Bonciu
b) the inequality issues that left huge parts of European populations outside the benefits of
globalization and growth.
The process will consist in identifying projects that are of significant interest for the
Single European Market and/or for specific member states or regions from the member
states. Special attention can be paid to the projects that are already approved, such as the
Ten-T projects regarding the European infrastructure. Other projects may refer to energy,
agriculture, research, education, health, and aging population. These projects will lay the
foundation for long term sustainable growth.
The lists of already approved projects or projects with a significant impact can be easily
put together by a Task Force established by the European Commission. The selection has
to be carried out in a short period of time and it can be updated periodically. Further on, in
an expedite manner, the Council of the European Union and the Parliament can approve
the list.
While the list may include infrastructure (and other) projects from all member states,
it may be easier to start with projects from the new member states in Central and Eastern
Europe. One obvious reason for this proposal is that there are more development gaps to
be solved in that part of European Union.
After the list of projects is approved, they will be implemented under the direct authority
of the European Commission (or a special implementing body with this purpose only),
with a focus on results, short deadlines and efficiency. The usual delays due to public
procurement practices have to be explicitly eliminated by adopting more straightforward
procedures. Extraordinary circumstances reclaim extraordinary measures. We cannot solve
the existing problems by using obsolete methods.
A particularly sensitive issue is related to transferring the implementation authority for
these projects to the European Commission (or a special implementing body with this
purpose only). In fact, this would mean to transfer more power to a Community organization.
In our opinion the solution is to present the approach to the population directly and not
via the political parties in the respective member states. The way in which such a proposal
will be presented is crucial for its acceptance. In case the question addressed to the
people is formulated as follows: “Would you like to transfer the implementing authority
for infrastructure (and other) projects to the European Commission (or other specialized
institutions)?” it is very possible that it would not be accepted. We can also expect that the
political parties in the respective member states would be reluctant to give up decisions on
funding large scale projects.
But if the question addressed to the people would be: “Would you like to have in a
short period of time (for instance 1 – 3 years) running water, sewage, roads and highways,
schools and hospitals, etc. and create a lot of jobs in the process?”, it is very likely that they
will approve.
There are 2 favourable circumstances for this approach:
a) the funding is possible outside the European Union budget by means of borrowing at
a very low interest rate to be done directly by the European Union. We can say that it

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The Lost and Forgotten Lesson of German Reunification and
How It Can Relaunch the European Union Project
is the best time for borrowing money nowadays when we even have negative interest
rates for deposits;
b) all the technologies involved in building infrastructure of all sorts are very mature, there
is a lot of expertise, technologies are available and, particularly, this type of projects
create jobs not only in the countries where the projects are implemented but also in the
rest of the European Union member countries where suppliers are located.
By launching such a large scale modernization of the infrastructure across European
Union, a virtuous circle can be established. Quickly launched projects would mean jobs
and quick results. Quick results in improving infrastructure will require equipment and
other inputs that will help European economy as a whole. Quick results and jobs would
mean the increase of aggregate demand and better prospects for all European companies.
And better and modern infrastructure would allow for a better competitive position of
European Union in the global economy in the long run.
A positive side effect in our opinion would be the fact that European people will have
a clear, tangible connection between something that improves their life and the European
Union. As result we will have a better defined idea of what European citizenship means
and why it is useful not as an abstraction, but rather in daily life.
In order to maintain an objective approach, we draw the attention to some weak points
or threats of the proposed approach. While all financial and technical aspects can be solved
and the projects are already defined and some of them even approved, the difficulty is to
have an agreement of all parties involved on the proposed mechanism. As this mechanism
cannot be imposed, then the only alternative is to create a true awareness on the critical
situation in European Union and the need for a decisive and bold approach.
An advantage of the proposed approach is that it is scalable, it can start small (but
visible enough to create an impact and public awareness) and then be extended to regions,
countries or whole sectors – like roads or railways.
Conclusions
The European Union is at a certain point in its history when a new approach is required.
The world has changed a lot, the socio-economic and cultural environment in the European
Union member countries has changed, and the balance of power in Europe and the world
has changed.
We may not like the idea of change as it can be unpleasant, difficult and putting us out of
our comfort zones, but the moment requires a new approach and our understanding is that
either we implement a change ourselves or history and geopolitical environment will do so.
We need to accept the fact that European Union is now much more diverse than in 1957
and that globalization is a phenomenon that permeates all fields of economic, political,
social life. At the same time, the consequences of the 2008 crisis are still substantial – we are
confronted with a change of generations and millennials are different while the 4th industrial
revolution is more and more present in our daily lives.

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Florin Bonciu
Under these circumstances, diversity and flexibility should be assets for the European
Union because they are abundant. Diversity and flexibility may lead to resilience and that
is the ultimate test for any system be it simple or complex. The European Union is at the
same time a useful concept and organization, but its usefulness exists as long as it is alive,
flexible, adaptive and dynamic.
References:
• Bonciu, F. – Rethinking the European Union: From Unity in Diversity to Diversity in
Unity, Romanian Journal of European Affairs , vol. 15, nr. 3, September 2015;
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oct/02/german-reunification-25-years-on-how-different-are-east-and-west-really ;
• Coyle, Diane – GDP: A brief and affectionate history , Princeton University Press, 2014;
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