Tuesday 13 August 2013

Germany's impossible choice



Germany is the enigma of Europe. A great, central power, economically dominant in the continent. Striding forward with its ‘modern’ economic plans, with a hint of I-told-you-so sneer at the catastrophic borrowing policies enacted by the Southern European countries, Germany could be seen to have never been so great since the time of you-know-who. And yet, humbled by its turbulent past role in Europe’s affairs, Germany also seems reluctant to flaunt its wealth, instead choosing a path of peace and prosperity with the EU. In contrast, Britain, the so-called ‘defender of Europe’, has been plagued by anti-Europe referenda and the rise of the UKIP party amid nationalistic fervor in recent years. Sounds hypocritical to me.
           However, Germany’s adoption of a friendly Europe, in which it is nonetheless the dominant power, has left it in a pickle. The German transition in Europe’s hierarchy of power and economic wealth in recent years is known only too well by the ennui-burdened politicians of the continent. And it is this transition, from the ‘sick man of Europe’, which forces Germany now to act responsibly in accordance with the EU it so rigorously upholds. Germany’s current position under Angela Merkel: force the debt-ridden governments to enact brutal austerity measures, in exchange for the writing off of debt. But this is not a tenable solution. Undemocratic governments, loathed by the peoples of Greece and Spain, will collapse. Further debts will default. The people certainly have the right to be angry – after all, they did not manage their economies in such a way which left them facing disaster – but nevertheless, the looming pension crisis will create further critical debt which threatens to ‘undevelop’ the entire region. The current generation will not – cannot – compromise; and the next will bear the brunt.                          
           Whether or not there is irony in these fatal economic processes occurring against the backdrop of a successful, mega-rich international economic organization (the EU) is not the point that Germany must consider. For the real quagmire in which the country is trapped is far more severe. Ending European hegemony over each nation, with countries returning to their original currencies, is out of the question. Not to mention the extreme devastation this would likely cause to reliant PIIGS economies, as well as the huge damage to trade if the Euro were to collapse, it is simply an impossible position for Germany to occupy, as it is the glue sticking the Eurozone together.         But neither can Germany sit tight and hope for the best. Austerity until debt is no longer a feature of life, is simply not possible. If just one country rejects this state-of-affairs, the whole economic region will be brought down. And so, what is Germany to do?
            The fact is, there isn’t an easy option. That is why, certainly from a British or Cameron perspective, Germany and Merkel are so frustratingly idle. Of course Cameron wants a rebate on Britain’s position on the EU! He sees it as an organization in terminal decline. And perhaps he will be right. Unless Germany adopts a third way; a light for the rest of Europe to follow. A complete reform of the European; the global financial system to allow stable economies. What this reform will entail, and how it will be achieved, remains unclear. But certainly it seems a better prospect than Germany’s current options – sitting on its current, doomed austerity trajectory, or the unthinkable – breaking up the single currency.

Thucydides - out.

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