If in the future, Germany were asked to guarantee amounts beyond the current 211 billion Euros for the EFSF, nothing would happen without the Bundestag’s (lower house of German parliament) approval, federal finance minister Wolfgang Schäuble told the Bundestag today. The members of parliament endorsed Germany’s current contribution to the EFSF, with most of the votes both from the governing coalition parties, and the opposition.
Many anglo-saxonian papers, such as the Economist, have told Germany’s government to “lead”, to restore creditors’ and investors’ trust in the Euro. The truth is that Germany can’t simply “lead” Europe. Our country is trusted to a surprising and encouraging degree, given the past century’s history, but the two world wars aren’t forgotten. Many comments, especially from Greek commenters on this thread on a Die Welt blog, may serve as indicators.
But what can the German government do?
Even if the governments of Greece, Italy, and Spain did everything it takes to restore trust in their Euroland share, politicians there could hardly resist to point out that it was “Germany” (as if there were no other European states taking positions similar to Germany’s) which “imposed” the hardships. But without such commitment from the countries in crisis, contributions to the EFSF will not only be meaningless, but will become Finland’s, Germany’s, or the Netherlands’ burden, and wreck their public finances, too. Besides, Greece, Italy, and Spain will not only need to restore their financial status, but they will also need to rebuild their economies, i. e. their competitiveness. That, in fact, is a prerequisite for sound public finances.
It is obvious that not only the “southerners”, but Germans, too, will need to prepare for tougher times. Germany hasn’t yet balanced its own budget (let alone its pension systems). That’s an immediate task, and be it only to put certain amounts of the saved money aside – for a transfer union (because the countries in crisis won’t be able to rebuild their economies all alone), and to put aside further amounts should the countries in crisis – and many of their creditors – go bust.
To believe that there will be a European watchdog that will make sure that the southern states will live up to their commitments (if there should be commitments at all) is an illusion. Germany, along with other contributing countries, should provide funding for a transfer union for a limited period, just as the Taiwanese state provided its fledgling industries with a limited period of protectionism, decades ago. After a given period, the funding should stop – mercilessly – just as Taiwan removed protective barriers around its industries after a given period. Meantime, the southern countries should take the steps they – not a European agency or a contributing European country – believe to be useful.
If they succeed or not: time would be bought, the contributing countries could prepare for a time after a break-up of Euroland (if the Eurozone should prove to be unsustainable), so could the creditors, and noone could seriously accuse the contributing countries (especially Germany, the whipping kid of many southerners’ choice) of accroaching a hegemonic role over other sovereign states.
For many reasons, we should see ourselves in the same boat as Greece, Italy, or Spain. As long as our trade with the three, and many other trade-deficit countries didn’t appear to pose obvious problems, people here in Germany didn’t ask too many questions, either. If we want to be true Europeans, we can be just that, and leave it to our fellow Europeans if they want to be “EU-Europeans”, too, and do their share of the work.
These steps wouldn’t only help to restore trust within the financial markets. They would also provide some peace of mind among those EU member states which aren’t yet members of the Eurozone. They could stay on the sidelines and wait if the day to join will ever come.