Germany’s New Axis

Just before the EU summit on the last weekend in August, German chancellor Merkel provided input on important decisions. She worked to establish Spanish minister of the economy De Guindos as the new head of the euro group. Paris has no say – honi soit qui mal y pense.

You have to savor it: at the same time the french government collapsed because one of its members dared criticising Merkel’s policy, the chancellor kicked Paris in the back. There’s no other way to consider what Merkel has come up with: former finance minister – and former Lehman Banker – De Guindos shall be the first full time head of the euro group.

Paris pushed for full time euro group leadership for years, and Berlin has always held back. Finally it agrees, but establishes a conservative Spaniard in the role.

De Guindos presided over debt explosion

The skyrocketing of national debt – due to Madrid having to cover banks – and the catastrophic unemployment levels do not count. The driving factor is Madrid reliably following Berlin’s guidance on austerity. Paris, which was reluctant to commit, is being cast aside, to the
benefit of a new Berlin-Madrid axis.

It was about time – the last trio Germany used to suppress Paris has run its course. The Netherlands and Finland, for a long time Berlin’s trusty allies, are weakening more and more.

Criticism of Berlin is considered lèse majesté – in Paris

Both Finland and the Netherlands are economically in dire straits, despite AAA labels and high spots in OECD’s competitiveness ratings. Also, they are a bit small to hold up against heavy weights France and Italy.

For a short time there was an expectation that Paris and Rome, supported by Germany’s social democrats, could push back Merkel’s austerity. There even was a much publicised meeting between german socialist Sigmar Gabriel and his french colleague Montebourg.

Hoewever after Montebourg’s sacking this perspective is gone. Criticism of Angela Merkel has been punished as lèse majesté in France, to help remind Europe who is in charge.