Cyprus and the euro group have finally agreed on a rescue package. But after this “rescue” Europe will not be the same. With a bail-in, compulsory levies, an ECB ultimatum and capital controls arbitrariness is drawn into the monetary union. And the German dominance is stronger than ever. Mehr
Zwei Tage nach der Wahl in Italien haben sich die Märkte beruhigt. Umso heftiger tobt die politische Debatte: Ist Italien unregierbar? War der Sparkurs ein Fehler (auch wenn Merkel dies bestreitet)? Oder hat die Wahl auch ihr Gutes? Dies meint J. Hopkin von der London School of Economics: Er hofft auf ein Ende der Austeritätspolitik. Mehr
The EU Commission is pessimistic: The recession will continue in 2013, unemployment will reach new highs, deficit targets are to be missed. Apart from the fact that so far all the predictions proved wrong: the criteria for assessing the situation are questionable, key indicators are missing. Mehr
At the possibly decisive EU budget summit Angela Merkel has called for further cuts. Although she calls for “more Europe”, Merkel wants to spend less. At the same time she is getting even closer to the British prime minister Cameron. This raises the question: Is Germany the new England of European politics?
The chain of evidence is getting longer. Already at the first, failed budget summit in November, Merkel fought side by side with Cameron for cuts in the EU budget. This time, on the second try, Cameron even counts Merkel among his “allies”, as “Euractiv” reports.
No inch fits between the two when it comes to the so-called competitiveness. Britain is not in the euro, it has shut down its industry and is mired in recession. But that does not prevent Merkel to support him on this issue.
And then there’s free trade. The British ever wanted to reduce the EU to a free trade zone, people say. As a matter of fact, that was never true – since London also represents a strong foreign and security policy. It even had its empire.
But now Germany behaves like it was the new England – Merkel even wants a free trade area with the United States. A strong foreign policy, however, is her damn. Germany shies away from the war in Mali, Defence Minister De Maizière recently rejected an EU army.
It is not exaggerated to say that Berlin also has an Empire on its own. At least, the government in Berlin behaves as if it was the master of Europe. The “German Europe” will now be expanded by new reforms designed after the German „Agenda 2010“ …
But Germany is still not an island? But it wants more than free trade, e.g. “More Europe”, even a political union? – Yesterday’s news. At the December summit, the deepening of the EU was canceled abruptly. And for “more Europe” there is no money from Berlin.
Germany is also an island – if you look at its position in the international debate. Whether it comes to austerity, monetary policy, exchange rates or imbalances (ie surpluses) – in almost all questions the “China of the euro zone” is isolated…
On the 50th anniversary of the Elysée Treaty, there is not much to celebrate. True, Chancellor Merkel and President Hollande stopped barking at each other. But it is in vain that we are waiting for joint European initiatives. If I am not mistaken, this anniversary marks essentially one thing: the emergence of a German Europe. But is Berlin actually ready for leadership?
Even the choice of venue is significant: the Elysée Treaty will not be celebrated this time in its original location in Paris, but in Berlin, the secret new EU capital. Ten years ago, at the last anniversary, that was not the case.
Back in 2003, Germans and French met at the Elysée Palace, celebrated the German-French Entente in the Iraq war (Berlin and Paris stood together against London and Washington) and cooperated closely on economic policy.
In the EU, Paris was still on the driver seat. Germany was the “sick man of Europe”, and France served in many ways as a role model. The former Chancellor Schröder copied eagerly on the French elite universities, on industrial policy or on the centralization of power.
And today? Merkel’s Chancellery has become the (un)secret nerve center of Europe. The entire Federal Government travels to China to sell airplanes, just as France used to do. Now, Germany is a role model, and Paris seems so be the loser.
For decades, France expressed its mark on the EU, now we are talking about a “German Europe”. The new German hegemony did not just emerge by delaying decisions in the eurocrisis, as the sociologist U. Beck put it. Nor is it simply a result of „Merkialvelism“.
No, it is a result of strategic decisions. In many areas, Berlin has learned from Paris and beaten the French with their own methods. Now, Merkel is using the Euro crisis to push through its own national agenda.
Sure, Paris is also pursuing national interests. But France needs Germany and Europe. This federal government, however, behaves as if it did not need France and (Southern) Europe any more. That’s the basic difference.
In the long run this will not go well, however. I currently see three main problems with the “German Europe”:
1. The citizens do not like it. Most Germans do not want a “German Europe” because they still feel overwhelmed by the burdens of the reunification and the Agenda 2010 (this is reflected by the famous German “paymaster” debate).
2. The German economy is increasingly decoupling from Europe. The major corporations see the EU merely as a free trade zone, they would prefer to get rid of all its obligations (see, for example, the debate on emissions trade).
3. The actual German government is not willing and not able to cope with the new role of “leadership”. Currently, Merkel does not even manage to explain its EU policy to the citizens – by the way, when did she try for the last time?
In addition, Berlin is using double standards. For Germany, there are always exceptions (see, e.g., the exorbitant export surplus, the special rules for German Sparkassen in banking union, the golden share in VW), while in the EU Berlin preaches a strict governance and a liberal „Ordnungspolitik“. This encounters – legitimate – opposition in Paris.
Now, the big question is whether Germany will turn to France once again. I do not think that this could happen before the German elections. But once reelected, Merkel might well agree with Hollande to loosen the austerity in Europe.
Just as good is possible, however, that Berlin forges a new alliance with London and Warsaw – or tries a policy of “divide and rule”. I’m not even sure whether the 60th Anniversary of the Elysée Treaty will be celebrated …
(This is a translation of my blog post “Deutsches Europa”. The original version is here.)
The euro group is to be led by a Dutchman, the new finance minister J. Dijsselbloem. After Berlin and Brussels, the government in Paris has signaled its approval, the newspaper “Handelsblatt” reports. According to the paper, the nomination is merely a formality. But what qualifies the newcomer Dijsselbloem for this strategically important position? Shockingly little.
Jean-Claude Juncker is in a hurry. Since several months he wanted to leave the top job of the euro group. Besides his health problems, Juncker is apparently fed up with the German dominance and the miserable handling of the Greek crisis.
Finance Minister Schäuble wanted to take over but failed to overcome the opposition of France. His French counterpart Moscovici was vetoed from Berlin. So a replacement candidate was needed. But where to take?
Clear criteria for the search do not exist. A “program country” that is under a bailout is ruled out in Brussels. So Ireland and Portugal were out of the question.
Belgium would be ok, but it is already represented by Council President Van Rompuy. A Finn would go well, too, but there is already Monetary Affairs Commissioner Rehn.
According to Handelsblatt, Berlin insisted that the next euro group chief comes from a triple-A country.
So it fell to Dijsselbloem. He is only for a few months in office, but he is from the Netherlands, which still have the top rating. But for how long? Given the severe economic crisis, the Netherlands will loose the triple-A could soon.
The Dutch Central Bank predicts a decline in economic output by 0.6 percent in 2013. The budget deficit in 2013 and 2014 will be at 3.5 percent of GDP.
This does not seem to bother the “Handelsblatt”, nor the federal government. Much more important seems to be that Dijsselbloem stands “for a strict austerity”. Another asset is that he is a social democrat, which is supposed to calm the French Socialists.
In my view, these are pretty weak arguments. To me, the most important fact about Dijsselbloem is that his country, Finland and Germany have set up a special club within the euro group – with exclusive mini-summits and harsh opposition to the banking union.
This elitist trio does not exist in the Treaty on European Union or in any Euro group log. It legitimates itself solely with the Triple-A provided by the three major U.S. credit rating agencies, i.e., with the favor of the markets.
What if the markets withdraw confidence in the Netherlands? Will Germany, Finland and the Netherlands be allowed to continue fiddling in the euro group when Dijsselblum was appointed group chief? What happens when the Hague misses the deficit target? Will the euro group threaten its own leader with sanctions? Will it make an exception for the boss?
Until these questions are not answered, there are only few reasons for, but many against the candidate …
This is the english translation of my blog post “Gegen Dijsselbloem”. The original post is here.