Germany’s fate is on the agenda
Across Europe, stunned citizens are witnessing the drama that is taking place ahead of the final negotiations for the next tranche of aid for Greece. Germany, which brought the International Monetary Fund on board for the Greek bailout, now refuses to accept its advice, and will not heed the advice of its national economists either.
Germany is becoming increasingly isolated within Europe. The future of the eurozone, the survival of European integration and even Germany’s prosperity, are all hostages in the runup to the country’s 2013 general election – even though there is already a clear winner.
What is really needed now is a bold design that tackles the eurozone’s real problems. The pattern of the last two years, of small policy steps and muddling through from one summit to another, is making matters worse.
Instead of muddling through, we need a mechanism within the eurozone which ensures that one partner is not burdened with a huge amount of debt, while another is in a position to spend lavishly because of its strong economy. In return, we must have solid parameters for sustainable and balanced budgets. Adequate proposals are already on the table.
Above all, we need to have an honest debate within Germany about what is happening to the profits it is making from the euro crisis. From the first tranche alone, Germany has earned more than 400 million euros. By way of historically low interest rates on German government bonds, Germany has, according to Kiel Institute for the World Economy economist Jens Boysen-Hogrefe, saved 68 billion in the last three-and-a-half years.
The real victim of continuous debates is Greece and its Prime Minister Antonis Samaras, who has pulled the coals out of the fire for the Europeans. For months, the Europeans have been telling the Greeks to cut budgets and implement reforms in order to get the next tranche. And the Greeks who have made a colossal effort to do just that are now left in the rain waiting.
The Greek state is virtually bankrupt and political pressure on the domestic front is close to boiling over. Long-gone diseases like malaria are returning because people lack the money to go to the doctor. Some are literally starving. Many European politicians here in Brussels are becoming increasingly ashamed that a community which is supposed to stand in solidarity would allow such a thing.
Several Greeks see Germany as the root of their misery. They cannot understand why country that has benefited so much from the euro is refusing to take the necessary steps. This is especially so considering the fact that during the 1953 conference in London, Germany was granted a huge haircut by European and international borrowers. This was in addition to the Marshall Plan, an economic stimulus plan that provided the money with which the German economic miracle was possible in the first place.
Rather than learn the lessons of history, we have forgotten German reflection that was once based on the two principles of German foreign policy after 1945: Never again, never be alone. The ahistorical policy of the current government is what is leading to angry reactions all over Europe.
In Greece, a new debate on war reparations is ongoing. What if the Greek government asks not for reparations, but for a repayment of the imposed loan from 1942? At that time, Berlin forced Athens to make an interest-free forced loan of 476 million marks, which today corresponds to 10 billion euros; with compound interest, the sum would be six times that.
How long can Germany stand the pressure? As the net beneficiary of the euro crisis, it will not be easy to stay its hard line. Germany now has a very narrow window of opportunity to break out of its growing isolation in Europe but also in the bodies of the IMF. The next Eurogroup meeting, for Germany, as for Greece, has a historical dimension. I hope for Germany and Europe that the lessons of history sink in.
* Jorgo Chatzimarkakis is a member of Germany’s Free Democratic party and a member of the European Parliament. He holds German-Greek citizenship.