Germans debate the cost of keeping the euro zone.
Within a few weeks, Europe’s spreading debt crisis will force Germany to decide one of the most crucial questions in the continent’s post-war history: will monetary union be strengthened or weakened?
Germany is the biggest and healthiest country in the economy, so it has to be called for, which has sparked a heated national debate.
The debt burden of the 17 European countries that use the euro as a common currency is very different, and unless the strongest aid is weakest, they cannot survive as a single currency.
However, the cost of such intervention could be close to 1 trillion euros ($1.45 trillion), and it will certainly involve a major shift in governance power from individual states to European power centers in Brussels.
Without Germany’s wealth and credibility, nothing will happen. But for Germany, the euro zone’s rescue mission is useful, and German leaders must compromise on the core principles of thrift and sovereignty, and they have been fiercely defended until now.
Germany still supports the euro.
“Germany’s commitment to the euro is still strong,” Danny, the institute of international and security affairs, Germany mark schwarzer said, “but it has been in to help indebted countries hesitant, because it is admitted that the euro zone is not in conformity with the German expectations.”
When the single currency was introduced in 1999, Germany is one of its most powerful supporter, still adhere to the traditional support for European integration, this tradition can be traced back to the postwar era prime minister konrad adenauer’s government.
But many German leaders believe that any government adopting the euro would be as prudent as its own currency, the deutschmark.
“They want the euro, but they want it to work in a German way,” she told the European integration division at her institute. “[they want] respect for rules and stability.”
The eurozone rules are ignored.
Germany’s commitment to the euro remains strong. But it has been trying to help the indebted countries, because it recognises that the eurozone is not what Germany expected.
Daniela schwartzer of the German institute for international and security affairs.
In fact, there are some rules in the eurozone, but they are not respected. Countries that use the euro should not have a budget deficit of more than 3% of GDP, but many countries ignore it.
European Banks share some of the burden by offering cheap euro loans. Several countries, led by Greece, cannot resist the temptation to borrow. And to borrow. And to borrow. Soon they were in trouble and had to borrow more money to pay off the interest. This is the exact opposite of the German way.
“There is a complete mismatch between the countries that have done their homework and the countries that have not done their homework,” said marcus kerber, a prominent euro critic in Berlin. “The germans have done their job, we are growing steadily, and other countries have just set a public spending policy in the interest of the euro.”
German chancellor Angela merkel has so far been support for European governments to take collective action, in Greece, Portugal, Spain, Italy and Ireland issue and set up a bailout fund to buy government bonds in the secondary market.
But she reluctantly took every step, and often for the first time said she wouldn’t. As costs rise, Germany is opposed to big bail-outs, even in her own Christian Democratic Party.
“To establish the idea of the euro zone, is one of the eurozone economies will come together in terms of productivity and wealth,” the German parliament, Klaus Peter Wells, Christian Democrats from Hesse. “In fact, they don’t, so I think we have to think about redesigning the eurozone.”
The cost of leaving the euro.
Those countries and Banks that lend them billions of euros will be expensive. Leaving the euro would cause at least some of the debt default, leaving Banks unable to pay back the full amount.
German Banks will also be affected. Many have a majority stake in Greek, Spanish and Italian Banks that will go bad.
Another option to shrink the euro zone is to redesign the euro zone by making it stronger and more unified, with tighter rules and more top-down control.
Rich countries such as Germany will shoulder more responsibility for poor countries. The debt burden is partly due to the whole eurozone, whether through eurozone bonds or more direct financing. The move would give the eurozone more political cohesion — reforms Germany has resisted so far, but that may be necessary.
Among them are the German banking association, which represents deutsche bank’s 220 largest financial institutions to small private Banks.
Even if the eurozone part apart may also damage to the European economy, and it will be for many years to encourage European political vision of major setbacks, and redefined the German youth political identity.
“They will be part of the European university study abroad, or their internship in a French company, but working in London, so they understand the workings of a European,” on behalf of the German parliament member of the green Gerhard Schick said. Party. He said that if the pace of European integration were to be withdrawn, it would be a “upheaval” for the younger generation in Germany.
The cost of political union.
On the other hand, if the eurozone is now a political union, Germany will need billions of euros, possibly hundreds of billions of euros to help weaker countries. Germany and others will have to hand over some power to the European parliament and other pan-european organisations.
Markus Kerber, representing a group of German companies involved in the German constitutional court case, would argue that the bailout of eurozone debt countries would violate the German constitution. He summed up his argument in a pamphlet: “arouse the public and oppose the expropriation of the German people in the name of Europe”.
“The bailout mechanism is a way to deprive Germany, the Netherlands, Austria and Finland of their right to tax and defend the country’s [credit] rating,” said kolb. He likens the movement to America’s “tea party” movement.#
“We are defending the prerogatives of fiscal sovereignty,” he said, “against European bureaucrats.”
All this has put ms merkel under some of the toughest pressure German leaders have faced in recent years. She will meet French President nicolas sarkozy in Paris on Tuesday, just one of many leadership tests she will face in the coming months.