The germans argue about the cost of keeping the eurozone afloat.
Within 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 asked to do so, which has sparked heated national debate.
The debt burden of the 17 European countries that use the euro as a common currency is very different, and they cannot survive as a single currency unless the strongest aid is the weakest.
The cost of such intervention, however, could be close to 1 trillion euros ($1.45 trillion) and would certainly involve a significant shift in governance from Brussels states to European power centres.
Nothing would have happened without Germany’s wealth and credibility. But for Germany, the eurozone rescue mission is useful. German leaders must compromise on the core principles of thrift and sovereignty, and they have been fiercely defended.
Germany still supports the euro.
“Germany’s commitment to the euro remains strong,” says Danny schwarzer of the German institute for international security affairs. ”
When the single currency was introduced in 1999, Germany was one of its strongest supporters, still sticking to a tradition of supporting European integration that dates back to the government of the post-war prime minister, Conrad albal.
But many German leaders believe any government adopting the euro would be as cautious as its own currency, the deutschmark.
“They want the euro, but they want it to work the way Germany does,” she told her department of European integration. “[they want] respect for rules and stability.”
The rules of the eurozone have been ignored.
Germany’s commitment to the euro remains strong. But it has been trying to help indebted countries by recognising that the eurozone is not what Germany wants.
Daniela schwartzer of the German institute for international security affairs.
In fact, the eurozone has some rules, but they are not respected. The budget deficit of countries using the euro should not exceed 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. To borrow money. To borrow money. They soon ran into trouble and had to borrow more money to pay interest. This is the opposite of the German way.
“There’s a complete mismatch between countries that do homework and those that don’t,” said markus kber, a leading European critic in Berlin. “The germans have done their job, we are growing steadily, and other countries have just enacted public spending policies that are in the interest of the euro.”
So far, German chancellor Angela merkel has supported collective action by European governments to issue and set up rescue funds in Greece, Portugal, Spain, Italy and Ireland to buy secondary market government bonds.
But she reluctantly took every step, and often said for the first time that she would not. As costs rise, Germany opposes a big bail-out, even among her own Christian Democrats.
“One of the eurozone’s economies will come together in terms of productivity and wealth in order to build the idea of the eurozone,” said Klaus Peter Wells, a German parliamentarian and Christian democrat from Hesse. “In fact, they don’t, so I think we have to think about redesigning the eurozone.”
Willsch and other eurosceptics are starting to argue that weak countries should consider leaving the euro and at least temporarily returning to the old currency to restructure their finances.
The cost of leaving the euro.
The countries and Banks that lent them billions of euros would be expensive. Leaving the euro would lead to at least some defaults, leaving Banks unable to repay the full amount.
German Banks will also be affected. Many hold majority stakes in Greek, Spanish and Italian Banks, which will go bad.
Rich countries such as Germany will take more responsibility for poor ones. The debt burden is partly due to the eurozone as a whole, whether through eurozone bonds or more direct financing. The move will give the eurozone more political cohesion – reforms that Germany has resisted so far – but may be necessary.
Among them is the German banking association, which represents deutsche bank’s 220 largest financial institutions for small private Banks.
“We have a monetary union without a political union or fiscal union, and I think it’s necessary for fiscal and political union to go further,” said Michael kimmel, the association’s chief executive.
Even a break-up of the eurozone could hurt Europe’s economy, and would over the years encourage a major setback to Europe’s political vision and redefine the political identity of German youth.
“They’re going to be part of a European university, or they’re going to intern at a French company, but they’re working in London, so they understand how europeans work,” said a German member of parliament representing green Gerhard Schick. Party. He said it would be the “turbulence” of Germany’s younger generation if the pace of European integration was to be reversed.
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 the weak. Germany and others will have to hand over some power to the European parliament and other pan-european groups.
Markus Kerber, who represents a group of German companies involved in the German constitutional court case, argues that a bail-out of eurozone debt countries would violate the German constitution. He summed up his argument in a pamphlet: “arouse public opposition to the expropriation of the German people in the name of Europe”.
“The bailout is a way to deprive Germany, the Netherlands, Austria and Finland of their tax revenues and their right to defend their [credit] ratings,” Mr. Kolb said. He compared the movement to the tea party movement in the United States. #
All of which puts ms merkel under the most intense pressure from German leaders in recent years. She will meet French President nicolas sarkozy in Paris on Tuesday, one of the many leadership tests she will face in the coming months.