walter russell mead peter berger lilia shevtsova adam garfinkle andrew a. michta
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A Teutonic Shift

After months upon months of fruitless back-and-forth over the Eurozone crisis, as Greece and then Spain brought the continent ever-closer to the brink of catastrophe, the signs of a coherent German policy are beginning to emerge. The Wall Street Journal reports:

Germany is sending strong signals that it would eventually be willing to lift its objections to ideas such as common euro-zone bonds or mutual support for European banks if other European governments were to agree to transfer further powers to Europe.

German officials say everything is on the table, but no single element can be adopted on its own. To see the whole picture of what Europe will look like in the future, all the pieces of the puzzle are necessary. For the Germans, this means that it will never be possible for any German leader to agree to joint European bonds or insuring bank deposits from Ireland to the Iberian coast unless Berlin is assured it has a say in the national fiscal policies in Europe. Germany is offering Europe a kind of quid pro quo and may be setting the stage for a huge step forward in European integration.

Unfortunately, the end result is still anything but foreordained. The French, for their part, have balked at the kind of loss of sovereignty over fiscal matters that the Germans are demanding here. And the fact that this kind of sweeping change would require the rewriting and re-ratification of scores of EU treaties means that no solution is immediately at hand, even if all of Europe’s leaders agree to a solution. It’s not at all clear that markets will give Europe the time its sclerotic political process needs to work through — and it’s even less clear that all the other EU countries will sign up for Germany’s new plan.

But a step forward is a step forward, and given the stakes, any sign of life from Europe’s political leadership is to be welcomed.

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  • Verinder Syal

    Is not the end result of this that the Germans subsidize the Club Med countries indefinitely, and over time become even more hated?

    So, are they not postponing the inevitable? People delivering varying productivity cannot have the same standard of living, and that one currency makes no sense.

    The only issue is how to unravel this while doing the least harm.

  • Jim.

    The French love the idea of lost sovereignty.

    The trouble is, their idea of a “lost and found” department is in Strasbourg.

    Tell you what, Hollande, admit that Louis XIV was an egotistical [donkey] and cede the Alsace-Lorraine back to Germany, and maybe some agreement can be reached.

    But run any agreement by your populations first, eh? Running roughshod over their sentiments is virulently anti-democratic, and needs to be opposed.

  • Andrew Allison

    Great, but innaccurate headline!
    The Germans are simply making explicit what their position has been all along namely, that he who pays the piper calls the tune. The euro-zone crisis developed as a result of indiscriminate spending of other people’s money, and it would be foolish to allow it to continue.

  • Eurydice

    We’ll see. The assumption here is the same as that underlying the Euro – that everybody else will give up sovereignty, except for Germany. If Germany has a say in France’s national fiscal policy then the same will be true going in the opposite direction.

    And even if Germany says they mean it this time, that this time all the rules will be followed and everybody will be fiscally prudent or else Berlin will have something to say about it, we’ve already seen how pressure from the rest of the zone (and the markets and the world) have swept away those kinds of assurances.

  • Neville

    As you have suggested before, if Germany ever gets a deal like this done then France will immediately switch sides to become the leader of a ‘southern coalition’ of EU states, and Germany will find itself on the receiving end of the dictates issued by the infernal machine it has just designed. Germany is highly effective economically, but its leaders don’t seem to be able to think more than one move ahead when it comes to EU politics.

  • Otiose8

    So if I understand the shift. If France (and others) give up significant aspects of their sovereignty and essentially take orders/direction from Germany to conform to what has worked so well there, THEN the Germans will agree to give those orders.

    Sounds like a deal. Why did this take so long?

  • thibaud

    The end result is obvious and has been for some time: fiscal union under German leadership.

    Hollande supports this. Most of the publics in most of the eurozone would support this if it were put to them, as it was to the Irish, who voted iirc 60-40 in favor.

    The challenge is overcoming the opposition of the national pols and bureaucrats who would lose power to centralized European institutions. Events will take care of this, I think.

    It’s become clear that Europe will either become more centralized, more integrated, and more German, or Europe will face a lost decade from which it will never recover. Not really that hard of a choice, when you think about it.

  • thibaud

    Merkel’s already begun to pivot in this direction. No more being shy about the fact that Germany needs to lead now, and Europe needs to follow, and give over much more power to German-dominated central institutions.

    Here’s Reuters from the weekend:
    http://www.reuters.com/article/2012/06/03/eurozone-union-idUSL5E8H34XM20120603

  • http://www.everymanblog.com Everyman

    Welcomed? By whom? By those who hope for their own self-aggrandizement in the EU’s post-convergence period, the one-worlders, who understand that national cultures must be destroyed in order to save them? Is process, then, the measure of progress, and any process better than none? As in Middle East peace talks? And out of it all comes the German dominance that so many fought so hard to resist generations ago?

    Europe’s political leadership? An oxymoron at best. The riders in a circus clown car at worst.

  • thibaud

    The choice isn’t between becoming helots of the Greater Co-Prosperity Sphere and a comfortable future as some kind of virtuous, patriotic yeoman farmers.

    The choice is either to preserve the the current level of national sovereignty at the cost of economic collapse, or to give up some sovereignty and rejoin the ranks of prosperous, economically sustainable democracies.

    No doubt there will be some dead-enders among the population who will join the anarchists or, like some European version of Nathan Bedford Forrest after Appomattox, seek to keep on fighting for a lost dream.

    But most Europeans realize that Europe now means Germany – German banks, German leadership, German fiscal policy. They’re already voting for this with their own savings. Their political votes will follow in due course.

  • Jim.

    So thibaud, would this integrated Europe include giving Germany the right to send German auditors (backed up by German police) into Greece and France to verify that the new laws were being followed?

    Would France and Greece allow their citizens — their politicians! — to be extradited to German prisons, if they were found (in German courts) to be cheating on their fiscal responsibilities?

    Otherwise, this won’t work, and the Germans should decline to participate.

  • Kris

    This proposal for a more integrated Europe would create a much more sensible framework than the current one. (This doesn’t mean I consider it a particularly good idea.) What I don’t understand is the assumption that the governing institutions would necessarily adopt German policies.

  • thibaud

    European, not “German.”

    Think of our own civil war and reconstruction era: the entity is Federal/national/Union, not Massachusetts or Ohio.

    We should be doing everything in our power to help Europe’s Yankee federalists consolidate power over their version of screen dead-enders.

  • Eurydice

    You know, the spin on the story is just dizzying. Germany is in a banking crisis just like all the rest – its banks had loans out to the PIIGS amounting to more than their entire capital. When Greece was bailed out, German banks were able to bring back their money and shift the risk to the ECB – that means transforming a 100% risk into a 28% risk, which is Germany’s share of the ECB. The other 72% gets spread out among the other members. Now Germany’s squawking about that 72%, as if it wasn’t their problem in the first place, as if it didn’t come from inattention and avarice and profligacy – all things that don’t fit into the “higher, finer” narrative.

  • Jules

    It’s become clear that Europe will either become more centralized, more integrated, and more German, or Europe will face a lost decade from which it will never recover. Not really that hard of a choice, when you think about it.

    Only an American with their belief that economics trumps everything could say that.

  • thibaud

    @ Jules – only someone with no idea of what poverty tastes like would think that nationalism trumps economic survival.

    As their credit system collapses, the Greeks are already going back to barter, which is a sure path downward. The Irish are now reverting to the grinding poverty that characterized their miserable island for centuries, which is why they overwhelmingly voted for greater fiscal union recently.

  • Jim.

    @thibaud-

    The Brussels Union is not worth preserving.

    The principle of freedom from involuntary servitude is represented by German anti-Unionists. The principle of living by the unrecompensed toil of others is what the current terms of Union would enshrine in law, even if the Germans get everything they ask for.

    Tear it down, start over.

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