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.