Europe’s situation is serious – very serious. Who would have thought that British Prime Minister David Cameron would call on eurozone governments to muster the courage to create a fiscal union (with a common budget and tax policy and jointly guaranteed public debt)? And Cameron also argues that deeper political integration is the only way to stop the breakup of the euro.
A conservative British prime minister! The European house is ablaze, and Downing Street is calling for a rational and resolute response by the fire brigade.
Unfortunately, the fire brigade is being led by Germany, and its chief is Chancellor Angela Merkel. As a result, Europe continues to try to quench the fire with gasoline – German-enforced austerity – with the consequence that, in a mere three years, the eurozone’s financial crisis has become a European existential crisis.
Let’s not delude ourselves: if the euro falls apart, so will the European Union (the world’s largest economy), triggering a global economic crisis on a scale that most people alive today have never experienced. Europe is on the edge of an abyss, and will surely tumble into it unless Germany – and France – alters course.
The recent elections in France and Greece, together with local elections in Italy and continuing unrest in Spain and Ireland, have shown that the public has lost faith in the strict austerity forced upon them by Germany. Merkel’s kill-to-cure remedy has run up against reality – and democracy.
We are once again learning the hard way that this kind of austerity, when applied in the teeth of a major financial crisis, leads only to depression. This insight should have been common knowledge; it was, after all, a major lesson of the austerity policies of President Herbert Hoover in the United States and Chancellor Heinrich Brüning in Weimar Germany in the early 1930’s. Unfortunately, Germany, of all countries, seems to have forgotten it.
As a consequence, chaos looms in Greece, as does the prospect of subsequent bank runs in Spain, Italy, and France – and thus a financial avalanche that would bury Europe. And then? Should we write off what more than two generations of Europeans have created – a massive investment in institution-building that has led to the longest period of peace and prosperity in the history of the continent?
One thing is certain: a breakup of the euro and the EU would entail Europe’s exit from the world stage. Germany’s current policy is all the more absurd in view of the bitter political and economic consequences that it would face.
It is up to Germany and France, Merkel and President François Hollande, to decide the future of our continent. Europe’s salvation now depends on a fundamental change in Germany’s economic-policy stance, and in France’s position on political integration and structural reforms.
France will have to say yes to a political union: a common government with common parliamentary control for the eurozone. The eurozone’s national governments already are acting in unison as a de facto government to address the crisis. What is becoming increasingly true in practice should be carried forward and formalized.
Germany, for its part, will have to opt for a fiscal union. Ultimately, that means guaranteeing the eurozone’s survival with Germany’s economic might and assets: unlimited acquisition of the crisis countries’ government bonds by the European Central Bank, Europeanization of national debts via Eurobonds, and growth programs to avoid a eurozone depression and boost recovery.
One can easily imagine the ranting in Germany about this kind of program: still more debt! Loss of control over our assets! Inflation! It just doesn’t work!
But it does work: Germany’s export-led growth is based on just such programs in the emerging countries and the US. If China and America had not pumped partly debt-financed money into their economies beginning in 2009, the German economy would have taken a serious hit. Germans must now ask themselves whether they, who have profited the most from European integration, are willing to pay the price for it or would prefer to let it fail.
Beyond political and fiscal unification and short-term growth policies, Europeans urgently need structural reforms aimed at restoring Europe’s competitiveness. Each of these pillars is needed if Europe is to overcome its existential crisis.
Do we Germans understand our pan-European responsibility? It certainly does not look that way. Indeed, rarely has Germany been as isolated as it is now. Hardly anyone understands our dogmatic austerity policy, which goes against all experience, and we are considered largely off-course, if not heading into oncoming traffic. It is still not too late to change direction, but now we have only days and weeks, perhaps months, rather than years.
Germany destroyed itself – and the European order – twice in the twentieth century, and then convinced the West that it had drawn the right conclusions. Only in this manner – reflected most vividly in its embrace of the European project – did Germany win consent for its reunification. It would be both tragic and ironic if a restored Germany, by peaceful means and with the best of intentions, brought about the ruin of the European order a third time.
Copyright Project Syndicate, the world’s pre-eminent source of original opinion commentaries. (Follow PS on Facebook and Twitter)
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Well said Joschka Fischer!
Germany has actually done a remarkable job of rebuilding itself out of crisis – twice since 1945 – with a great deal of help the first time from others and now its leaders are preventing other crisis countries from doing the same.
For those of us living outside the EU it is so sad to watch. And so worrying, too, Dave
I hear what the writer is saying and sympathize, but I would like to know why the UE cannot collectively go back to individual currencies in an orderly and efficient manner. The Euro was indeed quite an experiment, but not well designed or implemented. The result to date has been both a financial nightmare for many and a takeover of the UE by non-elected technocrats in Brussels and at the BCE located in Germany. Globalization has put control in the hands of rapacious International Finance.
If I were a European, I would have serious second thoughts about totally giving up hard-fought sovereignty (let’s all count how many citizens died just fighting the Nazis to keep that sovereignty). Why give total control to Brussels etc, when those technocrats even have shown themselves to be rather vacuous and owned by International Finance, unable to think outside the box even to deal with a Greece that entered the EU via Goldman Sach’s cheating ways?
One needs to admit when a mistake has been made and change course. The Euro was a mistake in design and implementation. Most certainly, no further sovereignty should be given up to the technocrats and banks while everyone pretends the currency is a long-time winner for all european citizens, not just a few. Surely if the EU has supposedly intelligent and financially sophisticated members, someone can come up with an efficient and painless plan to rid us all of this currency and start over correctly. All this ‘the sky will fall’ stuff is just saying no one in the EU politburo is smart enough to even reverse course effectively and efficiently.
Or is it perhaps designed to put some countries into permanent poverty and powerlessness kneeling before the banks and the technocrats? Gosh, I dislike offering that idea, but it is already out there.
Poor Joschka! He has worked himself up again into a rhetorical Armageddon of his own creation. His claims that Europe is “on the edge of an abyss” and that “chaos looms” show that has become the mouthpiece of the neoliberal agenda to eliminate the last vestiges of national sovereignty in Europe and force a political union on the peoples of Europe against their will, and that he is using hysteria and irrational exagggeration as weapons whip them towards this goal.
We should remember that the euro was a neoliberal creation forced on the peoples of the eurozone by their politicians, most of whom arrogantly denied their respective citizens any vote on the matter. Could it be that this kind of oligarchical tyranny is largely the cause of the eurozone’s present problems? I won’t hold my breath waiting for any such admission from them. Europe was not falling apart before the euro, before Lisbon and before Maastricht; instead it was delivering many benefits to the economies of all its members without the problems that the euro subsequently brought. (And how those who prophesied such problems were ridiculed!) Unwinding those problems can be done rationally and without hysteria by an orderly and managed uncoupling of one or two counries from the eurozone, provided the politicians have the courage to strand up to the ‘markets’, the American rating agencies and the currency speculators instead of bowing down before them, as Fischer is in effect doing by suggesting that theirs is the only agenda that should be followed. If the euro brought the problems, perhaps eliminating the euro would reduce the problems. Or is that a form of heresy or ‘thoughtcrime’ that the once radical and anti-establishment Fischer is now determined to stamp out in others?
Fischer’s knowledge of history is as bad as his economics, if he seriously thinks that the tragedy of the First World War was about Germany destroying itself. He seems to be completely ignorant of Britain’s and France’s deliberate policy of encircling Germany and of Britain’s fundamental war aim of destroying Germany as a commercial, colonial and naval rival in order to achieve its own global supremacy. After the British government flatly rejected the German peace offer of December 1916, even enlightened people in Britain (such as the poet Siegfried Sassoon) had the courage to say that Britain was now exposed as the aggressor. Perhaps Fischer has never heard of the German peace offer; if so, he should not be lecturing others on what he imagines history shows. It seems that the only version of history that Fischer knows is that written by the winners, just as the only version of economics he knows is that determined by the neoliberal agenda. His lack of critical filters deprive him of any right to lecture others.
The best thing Joschka can do is to dust off his old joggers — the ones he used to wear when he was first elected to the Hessen Landtag — and go for a good run to clear his head of the muddled ideas of economics and history which so cloud his judgment. I wish him a long, happy and very silent retirement.
completely agree with you!
Absolutely first rate piece—the pity of it is that it may be too late.
What a sensasionalist text about such an important and central issue for Europe! I cannot take a text like that seriously! What a shame for Europeans to behave like take. Comparing a current German policy with the Nazi’s war-oriented policy? Worst than the text itself, is the number of people agreeing with such an absurd! What’s the reason for that? In doing that the author can gather more followers? People who cannot hink and just ‘buy’ the easiest information available? Could the author please give well founded socio-economic reasons for his writing instead of trying to spread sensasionalism around? It’s not useful. I read and read the text and could not get any well founded economic point for his argumentation… to me this text means nothing more than empty sensasionalism.