Recovery fund: Where Schäuble is right

Everyone praises the recovery fund. Everyone? No! For former finance minister W. Schäuble, the proposal from Berlin and Brussels does not go far enough. He demands an economic union that complements the monetary union.

It takes “the courage we did not have during the crisis of 2010 to finally achieve more integration in the Eurozone,” writes the former German finance minister in an op-ed for the “FAZ”. “We must not miss the chance again.”

The CDU politician suggested that it was time “to now expand the monetary union into an economic union via the European Recovery Fund”. He criticized that the current debate was “decidedly too short”.

Schäuble is right. Everything revolves only around the 750 billion euros earmarked for reconstruction – which are likely to be spent after two to three years. Nobody talks about the time after that, although the debt service could last until 2058 (!).

It is also true that an economic union is missing. The Recovery Fund would be a good opportunity to create a European Treasury and then develop it into a Ministry of Economy and Finance.

France’s President Macron proposed all this three years ago – but the highly praised Chancellor Merkel has swept it aside. She does not want to talk about it now either; the recovery fund is to remain an experiment for a limited period.

That is questionable. Because without economic union, even monetary union cannot function in the long term, as the founding fathers of the euro knew. Schäuble is right to point this out; Merkel seems to be ignoring it.

But Schäuble is silent about his own failure. He himself has missed many opportunities to establish an economic union and to build up a monetary fund, which he is now talking about again.

At the time of the euro crisis he presented himself as the German disciplinarian, not as the European master builder. He almost ruined the euro and possibly the EU as well – by kicking out Greece.

His “legacy” still has a negative effect today. For example, Greece has only just resisted attempts to link EU aid with conditions imposed by Brussels. The memory of the troika is still too deep.

Yet this is the core of the Merkel-Schäuble doctrine: money only against German conditions and under German control. It runs like a red thread from the financial crisis to the euro crisis and the Corona crisis.

A European economic union cannot be founded on this. This is why I read Schäuble’s criticism primarily from the domestic political point of view: as a side blow by an old know-it-all on Merkel and von der Leyen…

Translated with (free version) The original post (in German) is here