http://www.wsws.org/articles/2012/jun2012/germ-j09.shtml#
By Stefan Steinberg
9 June 2012
German Chancellor Angela Merkel delivered a clear rebuff to US and
British demands for immediate action to deal with the rapidly worsening
European financial crisis in discussions Thursday in Berlin with British
Prime Minister David Cameron. After consulting with US President Barack
Obama, the UK leader had traveled to Berlin to put pressure on the
German government to agree to a plan to bail out European banks.
Merkel
responded by declaring “there is no magic bullet” to solve the crisis.
She also hinted that Germany was prepared to consider the break-up of
Europe into competing economic groups.
The US and British
governments are urging Germany to support a fresh injection of funds
into the European banking system by either the European Central Bank
(ECB) or the European Stability Mechanism (ESM), the European Union’s
bailout fund. In the longer term, London and Washington are calling for
the introduction of a pan-European finance mechanism, so-called euro
bonds, to underpin the continent’s banking system.
All of these
measures would require a huge transfer of funds from Germany to the
continent’s weaker economies and banks—a step that is opposed by the
government, the central bank and broad layers of the business community.
Rather than concede to the demands of the US and Britain, which are
supported by beleaguered European economies such as Italy and Spain,
Merkel made clear that Germany is prepared to forge ahead with a smaller
core of countries in a “two-speed” Europe.
Thursday morning,
prior to Cameron’s arrival, Merkel gave an interview on German
television in which she declared that in response to the crisis, nations
“in a currency union have to move closer together.” She continued, “We
cannot just stop (the process) because one or the other doesn’t want to
join in yet.”
While she did not name Britain, the target of her
remarks was clear. Britain has not joined the euro zone and, at the
start of this year, refused to agree to the strict fiscal rules drawn up
by Berlin to be implemented across Europe. Merkel has repeatedly
insisted that any acceptance of euro bonds by Germany is conditional on
full acceptance of its fiscal pact. Her remarks were aimed at warning
Britain that Germany did not depend on its cooperation in determining
future European policy.
The German government also has
differences with Britain and the US over the implementation of a nominal
European tax on the banks that would create a modest pool of funds over
the next few years. On Wednesday, the coalition headed by Merkel’s
Christian Democratic Union (CDU) struck a deal with the opposition
Social Democrats, who have made support for the government’s EU fiscal
pact dependent on moving towards such a financial tax. For their part,
the UK and the US reject any measures that might impinge on the leading
role of the City of London and Wall Street in international financial
markets.
The extent of the differences between Germany and the
axis of London and Washington was revealed in an exchange between the
chief economic columnist of the
Financial Times, Martin Wolf, and Ludger Schuknecht, a leading official in the German Finance Ministry.
In
a reply to a recent article in which Wolf criticized Berlin for
over-emphasizing austerity and failing to take measures to prevent the
collapse of the euro, Schuknecht rejected any “short-term measures.” He
went on to rule out the creation of euro bonds, saying they would only
make the situation worse.
Wolf, in turn, published a scathing
rejoinder, warning: “It is often forgotten, not least in Germany, that
the rise of Adolf Hitler to power was preceded not by the great
inflation, which occurred a decade before, but by the great depression
and the austerity of Heinrich Brüning, in response.” Wolf concluded by
accusing Schuknecht of ignoring the dangers of the type of economic
malaise that is enveloping Europe.
Merkel’s rebuff to Cameron and
her airing of a two-track Europe reflect growing sentiments within the
German financial and corporate elite. The Friday edition of
Handelsblatt devotes
six pages to an article complaining of the costs of European
integration for Germany. The newspaper’s editor, Gabor Steingart,
defends the German chancellor’s “cautious approach” to the crisis and
urges her to take heart from the fact that she is not as isolated as it
appears.
Steingart goes on to reject a Europe that lives at the
expense of Germany and declares that proposals to use Germany’s tax
reserves and the savings of its citizens (nearly 2 trillion euros) to
bail out other countries constitute “a notion that can only harm
Europe.”
In its page one lead article, the newspaper writes that
the current crisis throws up “issues of historical importance,” and
continues: “Should we rescue ourselves to death? Are the costs of
rescuing the euro fair in relation to the costs involved in a possible
reduction of the currency union to a healthy core?”
Merkel’s
comments raising the possibility of a two-track Europe are similar to
proposals put forward by Jörg Asmussen, the German board member of the
European Central Bank. In a speech two weeks ago, he called for an
accelerated process for integrating euro zone countries in a “banking
union, fiscal union and political union.” In order to focus on this
project, Asmussen proposed that the EU put on hold its expansion plans
in the Balkans and Turkey.
While much attention is currently
focused on the immediate problems of Spanish banks, they are just the
tip of a much bigger iceberg. An editorial in the
Guardian on
Wednesday pointed out that the real issue is not merely insolvent banks
in Spain or Ireland, but all of the financial markets of peripheral
Europe, plus the major banks (of Germany, France and Austria) that lent
to them. The editorial declared: “Forget austerity, fiscal unions, and
inflation regimes at the ECB… the euro meltdown is primarily about how
governments handle the wreckage in their financial sectors.”
Against
the background of a financial meltdown requiring hundreds of billions
in new bailout funds, influential business and financial circles in
Germany are warning that the time has come to pull the ripcord. Berlin,
they argue, must cease to be the paymaster of Europe and prepare for the
breakup of Europe into a small core of northern nations dominated by
Germany, with the rest left to their fate.
The fact that such a
proposition is now being publicly discussed in Germany is an expression
of the profound political crisis in Europe. Such a breakup, which could
commence with the exit of Greece from the euro zone, would revive
longstanding and unresolved historical issues. Where, for example, would
France position itself in a divided Europe?
The proposals being
aired by Berlin would, if carried out, immensely exacerbate tensions
between Europe’s national elites, raising the danger of a Balkanisation
of the continent and new military conflicts.
The working class of
Europe must be mobilized on the basis of its own independent,
international perspective to overthrow the reactionary institutions of
the EU and the various national governments and replace them with the
United Socialist States of Europe.
