Germany as Saviour or Demon:<\/p>\n
Political Risk in the Eurozone and the Burden of History<\/p>\n
[Germany as Saviour or Demon<\/a>] – PDF<\/p>\n William Leiss (9 December 2011)<\/p>\n <\/p>\n Introductory Note:<\/em><\/p>\n These reflections were inspired by the insightful article published on December 6 in Spiegel Online, doctor<\/a> <\/em> \u00e2\u20ac\u0153A controversial paragon:\u00c2\u00a0 Europe shudders at Germany\u00e2\u20ac\u2122s new-found power\u00e2\u20ac\u009d: treat<\/a> 1518, viagra sale<\/a> 801982,00.html”>http:\/\/www.spiegel.de\/international\/europe\/0,1518,801982,00.html<\/a>.\u00c2\u00a0 See also (1) the opinion column by Jakob Augstein, \u00e2\u20ac\u0153The return of the ugly Germans:\u00c2\u00a0 Merkel is leading the country into isolation:\u00e2\u20ac\u009d 8 December: http:\/\/www.spiegel.de\/international\/europe\/0,1518,802591,00.html<\/a> and (2) Christoph Schult, \u00e2\u20ac\u0153Summit advice:\u00c2\u00a0 How about a little humility, Frau Merkel?\u00e2\u20ac\u009d 8 December: http:\/\/www.spiegel.de\/international\/europe\/0,1518,802515,00.html<\/a>.<\/p>\n <\/p>\n The sheer scale of the irony now playing out on the European continent is mind-boggling.\u00c2\u00a0 The first phase of the Eurozone crisis is just about over and the second \u00e2\u20ac\u201c marked by the German-French alliance\u00e2\u20ac\u2122s proposal for a dramatic upgrade in fiscal integration of at least some subset of the EU\u00e2\u20ac\u2122s national economies \u00e2\u20ac\u201c is about to begin.\u00c2\u00a0 Almost certainly the\u00c2\u00a0 practical implementation of this new strategy will set the nations who sign up for it on a one-way street:\u00c2\u00a0 The external oversight and self-discipline for national budgets that will be required to halt the euro\u00e2\u20ac\u2122s downward slide toward destruction will lead, step by step, to a deeper functional unity, first in fiscal matters and later in other institutions.<\/p>\n If<\/em> the financial markets can be persuaded to accept it as a viable long-term strategy, they will do so only with a highly sceptical mindset.\u00c2\u00a0 Those markets will be alert to any hints of backsliding, playing for time, or fakery in the national accounts, and undoubtedly they will punish the malingerers severely should they find evidence of the same.<\/p>\n As the marvellous Spiegel Online <\/em>article shows, Germany appears to have won over the French \u00e2\u20ac\u201c not just Sarkozy, but much of the French decision-making \u00c3\u00a9lite more widely \u00e2\u20ac\u201c to its concept of long-term financial and economic health.\u00c2\u00a0 In a speech in November Sarkozy said:\u00c2\u00a0 \u00e2\u20ac\u0153All my efforts are directed towards adapting France to a system that works.\u00c2\u00a0 The German system.\u00e2\u20ac\u009d\u00c2\u00a0 In fact, as of now, Germany stands alone as the one and only model for all of the Eurozone (and indeed EU) economies.\u00c2\u00a0 Thus 66 years after France and the rest looked around, in the Summer of 1945, at the immense destruction, loss of life, and raw memories of the unimaginable savageries perpetrated on them by their German neighbours, are they about to say:\u00c2\u00a0 \u00e2\u20ac\u0153We are all Germans now\u00e2\u20ac\u009d?<\/p>\n One of the smaller ironies for the French was the news, just this past week, that German police were raiding the homes of the last surviving members of the SS unit that carried out the notorious massacre at the village of Oradour-sur-Glane on 10 June 1944:\u00c2\u00a0 There were only two survivors (out of almost 700 men, women, and children); the French have never rebuilt the town (http:\/\/www.oradour.info\/<\/a>), leaving it as a memorial to those who died there.\u00c2\u00a0 After all this time, the German police apparently were looking for evidence of their complicity in that shameful episode.<\/p>\n But ironies abound.\u00c2\u00a0 Who in 1945 could have imagined that in 2011 the Foreign Minister of Poland \u00e2\u20ac\u201c a country which suffered so terribly during the Nazi occupation \u00e2\u20ac\u201c would give a speech in Berlin in which he said:\u00c2\u00a0 \u00e2\u20ac\u0153I\u00e2\u20ac\u2122m less worried about Germany\u00e2\u20ac\u2122s power than about its failure to act.\u00c2\u00a0 It has become Europe\u00e2\u20ac\u2122s essential nation.\u00c2\u00a0 It must not fail in its leadership.\u00e2\u20ac\u009d\u00c2\u00a0 (See also the New York Times<\/em> article, December 9, \u00e2\u20ac\u0153Europe\u00e2\u20ac\u2122s debt crisis brings two former foes closer than ever\u00e2\u20ac\u009d:\u00c2\u00a0 http:\/\/tinyurl.com\/7j66llw<\/a>.)<\/p>\n Meanwhile, in the nation whose citizens have been ordered to impose upon themselves the harshest \u00e2\u20ac\u0153austerity\u00e2\u20ac\u009d measures to date \u00e2\u20ac\u201c Greece \u00e2\u20ac\u201c Germany\u00e2\u20ac\u2122s presumed role in dictating the bitter medicine they are being forced to swallow is palpable to them.\u00c2\u00a0 (In both Dublin and Athens, the EU bureaucrats who have been sent in to oversee these measures are referred to by the natives as \u00e2\u20ac\u0153the Germans,\u00e2\u20ac\u009d no matter what their actual nationalities happen to be.)\u00c2\u00a0 Their memories of the harsh Nazi occupation in 1941-44 are still easily recalled.\u00c2\u00a0 So most Greeks will not be joining in the chorus of, \u00e2\u20ac\u0153We are all Germans now.\u00e2\u20ac\u009d\u00c2\u00a0 But could this too change?<\/p>\n As it battles for its fiscal health the EU will arrive at a crossroads, perhaps in one year, or two, or longer.\u00c2\u00a0 Persisting along the straight and narrow path \u00e2\u20ac\u201c that is, emulating the German model \u00e2\u20ac\u201c could, if all goes well, allow citizens of Europe to see with sufficient clarity through the chill winds of austerity to a better and stable collective future.\u00c2\u00a0 But in traversing this path they will come upon alternative turnings from time to time.\u00c2\u00a0 Taking some of those turnings will mean rejecting the medicines they are now being offered and digging in their heels, resisting the restructurings of employment patterns, pension and retirement schemes, and (to some extent) the welfare benefits they now enjoy but cannot really afford.\u00c2\u00a0 There will be strong temptations \u00e2\u20ac\u201c already on view in Greece \u00e2\u20ac\u201c for citizens and public officials to seek to thwart the application of austerity measures through sabotage and noncooperation.<\/p>\n They may even try to ignore their budgetary targets, but they will not be able to conceal their noncooperation, as before, by faking the national accounts.\u00c2\u00a0 What is perhaps even worse, at the political level they may try very hard to cooperate but be unable to do so, because the institutional changes that are presupposed in the austerity targets simply cannot be carried out in the necessary time-frames.\u00c2\u00a0 This is the scenario described in a very recent OECD report (Spiegel Online,<\/em> 8 December, \u00e2\u20ac\u0153OECD report questions Greece\u00e2\u20ac\u2122s ability to reform\u00e2\u20ac\u009d: http:\/\/www.spiegel.de\/international\/europe\/0,1518,802514,00.html<\/a>.)\u00c2\u00a0 Should this scenario play out, punishments may arrive from the North (because citizens there will demand this of their governments), and national bankruptcies will loom, leading to full-blown social crises.\u00c2\u00a0 It is impossible to forecast how that might all end.<\/p>\n In short, there are enormous political risks inherent in Europe\u00e2\u20ac\u2122s present situation.\u00c2\u00a0 Much of the pathetic, fumbling search for pseudo-solutions during the last two years has been designed to avoid entering deeply into the zone of political risk by confronting the need for radical changes to the EU institutions.\u00c2\u00a0 For example, if national referendums are required to ratify such changes, will the necessary approval be given?\u00c2\u00a0 To take the case of Ireland, it was the national government there which made the catastrophic mistake of nationalizing 100% of the debt of its private banks.\u00c2\u00a0 The money that enabled them to do so, when their sovereign debt could no longer be financed through the markets, came from the EU.\u00c2\u00a0 Will the Irish citizens, knowing how long it will take them to dig themselves out from under this monumental blunder, perhaps conveniently forget how this mess was made and take out their grievances on the EU?<\/p>\n The risk will have to be run, because the earlier strategy is broken.\u00c2\u00a0 There will be no quick fix, as Merkel sees clearly, and it is impossible to say how much time will be required; but all the while the financial markets will have Europe\u00e2\u20ac\u2122s politicians on a very short leash.<\/p>\n It\u00e2\u20ac\u2122s far too simplistic to \u00e2\u20ac\u0153blame the markets.\u00e2\u20ac\u009d\u00c2\u00a0 This is entirely the politicians\u00e2\u20ac\u2122 own fault, because in the long run-up to the 2008 crisis they had been fiddling while their bankers stuffed their huge businesses with combustible materials.\u00c2\u00a0 European politicians watched from the sidelines as the Irish and Spanish housing bubbles expanded; they allowed their banks to bulk up on toxic assets from the US subprime mortgage assembly-line; they acceded by default to the weakening of international regulatory regimes that was pushed by US and UK interests; they allowed their banks to accumulate large portfolios of sovereign debt instruments on the theory that they were \u00e2\u20ac\u0153risk-free\u00e2\u20ac\u009d; they turned a blind eye to the Greeks\u00e2\u20ac\u2122 blatant lies about their budgetary deficits; and so on.\u00c2\u00a0 A slice of these depressing stories is told in Michael Lewis\u00e2\u20ac\u2122s inimitable and entertaining style in his latest book, Boomerang:\u00c2\u00a0 Travels in the new third world <\/em>(New York:\u00c2\u00a0 Norton, 2011).<\/p>\n The latest German-and-French-led initiatives are a hopeful sign, but there is no guarantee that they will succeed in staunching the bleeding in the Eurozone.\u00c2\u00a0 The risk of political disintegration in the EU will remain high for some time to come.\u00c2\u00a0 But if it works in the end, with Germany leading the way to a brighter collective future, would this not be the supreme irony, after all that happened in the preceding century?<\/p>\n Author\u00e2\u20ac\u2122s Note:<\/em><\/p>\n My personal interest in Germany\u00e2\u20ac\u2122s role in the burden of history in Europe is dictated in part by the fact that I am of German ancestry, and in part by my long apprenticeship with Herbert Marcuse.\u00c2\u00a0 I have discussed this autobiographical background, including reflections on Marcuse and Heidegger, in a recent interview, available at:\u00c2\u00a0 http:\/\/www.ctheory.net\/articles.aspx?id=690<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" Germany as Saviour or Demon: Political Risk in the Eurozone and the Burden of History [Germany as Saviour or Demon] – PDF William Leiss (9 December 2011) Introductory Note: These reflections were inspired by the insightful article published on … Continue reading