A leaked memo from Germany’s government called “The Future of the EU” is bound to have Club Med crying wolf. Among other things, the memo calls for greater political integration “with spending and tax plans set in Brussels” and “automatic sanctions” for countries that fail to meet the EU’s fiscal targets. The Daily Telegraph has the story:
The proposals urge that the European Stability Mechanism (ESM), a eurozone bailout fund that will be established by the end of next year, should be transformed into a version of the International Monetary Fund for the EU.The European Monetary Fund (EMF) would be able to take full fiscal control of a failing country, including taking countries into receivership.
Under this plan, the powers granted under German-designed institutions set to enforce German-designed rules over EU member states would be even greater than that of Washington over the fifty states. If Congress or the White House recommended this plan, the National Governors’ Association would be up in arms and crowds holding pitchforks and torches would be marching down Pennsylvania Avenue.Even within Germany, a proudly federalist country, it is unlikely that states like Bavaria would welcome this kind of central control.In the contest between Germany and France to shape the future of the EU, both sides have good cards and both sides have weaknesses. One of Germany’s greatest weaknesses is the sheer unpopularity of the approach it prefers — and the unrealistic nature of the remedies it can offer. You cannot pass a set of laws that would turn Italians and Greeks into Germans; for one thing, the Greek and Italian genius for ignoring and subverting laws they don’t like would mean that they would find ways to evade and work around the regulations you sought to impose. Germany trying to run Europe in this way would be like Elmer Fudd in a house of Bugs Bunnies: cwumsy, fwustwated and outcwassed.On the other hand, Elmer Fudd doesn’t want to give Bugs Bunny his credit cards, and rightly so. The rascally rabbit can’t control himself, can’t live ‘sensibly’ and within his means.Europe needs to be based on facts, and it looks more and more as if one of the facts is that the cultures of northern and southern Europe are too different to operate a common currency. The ‘neuro’ and ‘seuro’ approach — one common currency for the northern countries and one for Club Med, each free to operate in accordance with the interests and the instincts of the countries who whose it — would probably be the best solution for Europe as a whole. While the situation is now so complex that this may not be practical, the reality is that the status quo is beginning to look unsustainable as well.That Germany can’t devise rules for the governance of the eurozone that Club Med can accept, and that Club Med can’t find a formula that the Germans can live with, means that this marriage cannot be happy and quite possibly cannot be saved under any circumstances.Nothing about this situation looks good.