Germany in chains
A few weeks ago, there were serious concerns that the good relationship between Greece and Germany would be the greatest victim of both the Greek economic crisis and the extreme reaction on the part of German citizens and news media to any talk of their country contributing to the support of the Greeks. As the crisis drags on, however, and questions linger about how the Europeans will show their support for Greece in practice, an even greater danger to Europe (than that of Greek profligacy) is becoming evident: Germany appears to be at a loss about how to handle its role as one of Europe’s leading powers. The Greek crisis – which, we repeat, is solely of Greece’s own doing – has posed a difficult challenge to Europe regarding its future but it has also put a spotlight on the cracks in the European construct. It quickly became evident, though, that the economic and political union is not only cracked – its very foundations are rotten. This has not been caused solely by the obvious problem that an economic union was created ahead of a political one but by an even more basic fault: Neither the structures of economic cooperation nor the mechanisms for resolving crises had been determined in advance. And so, when Greece came along like a mild earthquake, it shook the euro castle to its core, revealing that the single currency had been built solely on good intentions and high hopes, without any concern for the storms of the real economy. The Maastricht Treaty’s rules were based only on penalizing countries that did not adhere to the monetary restrictions, proposing nothing about to how to deal with crises that demand solidarity between member-states and inspired leadership. The result so far has been the worst possible: The ambiguity with which EU institutions and the leaders of various countries (especially Germany’s) chose to respond to the Greek crisis has resulted in the markets believing that Greece’s partners will not let it go bankrupt, even though they aren’t spelling out what form this support will take. Greece, therefore, remains exposed, with the cost of its debt depending on the latest statement by a Greek or other EU official and the way the markets choose to react. That’s why the cost of Greek borrowing is so high: Everyone knows that Greece is obliged to borrow and that in the end creditors will get their money; they demand and get a high premium because of a risk that they do not, in fact, face. This is the tragedy of today’s situation and the blame lies with all those who contribute to the confusion: the Greeks who want money from their partners but don’t dare admit it, and their partners who know this but are waiting for Greece to stretch out its hand. Besides Greece’s problem, though, Germany’s is greater. The country with Europe’s strongest economy, fearing that the global crisis could lead to a line of beggars at its door, hastened to pass constitutional reforms that make it impossible for it to lend to countries in distress. This, in conjunction with Berlin’s persistent demands for harsh austerity measures – which it has adopted and which Greece certainly needs – has frightened other countries into believing that Germany is only looking after its own interests and ignoring the dangers of an extended recession in other eurozone members. Even France, which has such good relations with Germany, has expressed exasperation at this, noting that the export-oriented German economy has been gaining at the expense of its partners. It is understandable that Chancellor Angela Merkel and her coalition partners should abide by the constitution’s restrictions and heed popular outrage at any effort to help another country. But this does not excuse the fact that Germany has dithered interminably, swinging from a European solution for Greece to proposing International Monetary Fund intervention, and that it demanded tough measures from Greece as a condition for helping out and then sidestepped the issue. In short, confined by its own fears and limitations, and serving its own interests, Germany has done all it could to abdicate its role as a leading power in Europe. Just as much as Greece needs to reform its economy and its public administration, Germany needs to shoulder its full political responsibility for the sake of a united Europe.