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Germany's Inner Struggle Stifles EU Debt Crisis Action

Politics / Credit Crisis 2011 Sep 27, 2011 - 01:55 AM GMT

By: John_Browne

Politics

The leaders of Europe have been criticized for their inability to deal expeditiously with the Eurozone debt crisis. Many view the paralysis through the prism of self interest: taxpayers of the EU's creditor nations are simply unwilling to finance spending of the bloc's debtors. But the hesitancy can also be ascribed to the growing voter dissatisfaction with the entire structure of the Eurozone, and in particular a chasm between German voters and German leaders.


Following the devastation of two world wars, the European Union was conceived as a super state that would prevent traditional nationalistic tensions from destabilizing the Continent. German and French cooperation was at the heart of negotiations and was the primary factor that led to the establishment of the Union. But the two countries had somewhat different goals.

Germany, knowing that its future lay with its proven economic prowess wanted to ensure captive markets. France, overtaken twice by a belligerent Germany in the previous century, sought permanent peace. Knowing that voter aversion ran deep, French and German leaders determined to build and expand the EU by stealth if necessary.

Indeed, Frenchman Jean Monnet, one of the architects of the EU reportedly said "Europe's nations should be guided towards the super state without their people understanding what is happening. This can be accomplished by successive steps, each disguised as having an economic purpose, but which will inevitably and irreversibly lead to political union."

Initially, the loss of sovereignty was acceptable to the southern democracies struggling with uncertain economies, Portugal, Italy, Greece and Spain (later to become known as the PIGS), which benefited from massive EU funding. In the main contributing nations, notably Germany and Great Britain, voters showed greater hesitancy. In France, Denmark and Ireland, which initially voted against political union in referenda, means were found to ignore voters' wishes. To overcome northern objections, the union was touted as a free trade area that would benefit productive economies.

Over decades, periods of economic stress always provided proponents of greater centralization with a means to advance their agenda. Greater union was the cure all for economic ills. The establishment of the common currency in the late 1990's was seen as the lynchpin in making the Union permanent.

But the euro itself was fatally flawed from the start. Despite the lack of fiscal unity needed to underpin a single currency, European leaders took the plunge and trusted that all would work out in the end. Their gamble is now proving costly.

Today, with pro-union hierarchies in firm control of the political class in France and Germany, and with career politicians susceptible to party coercion, national parliaments are becoming less and less representative of popular will. In any event these national bodies have already ceded some sovereignty to the EU, with some 70 percent of legislation estimated to come from non-elected officials in Brussels. But the European Parliament itself is virtually powerless in setting policy. The net result is unaccountable government. The Federal Constitutional Court of Germany cited this "democratic deficiency" two years ago.

The hardships of the current recession and debt crisis have fanned voter apprehension. There can be no doubt that street level discomfort with the super state is growing in Berlin, London, Paris, and Rotterdam. Conscious of these issues, northern tier Euro zone politicians are now loathe to antagonize voters already frustrated with the political status quo.

However, Germany's political elite may be seeing the crisis as a singular opportunity to gain greater control of the countries that are on the receiving end of its bailout funds. Currently, Germany's formal executive power throughout the EU is far lower than its bailout contributions would suggest. Berlin is actively looking to change this. If they are successful we may look back on the establishment of the euro as the means by which Germany finally acquired the empire sought by Bismarck. German voters, not sharing these dreams, may be less willing to pay the price with their hard earned savings. As a result, German leadership is currently rudderless. Bereft of direction from its most important member, the EU itself drifts.

But let there be no uncertainty on one point: Either Germany gains control of the crisis and creates a German led super state, or the experiment with European integration very well may have run its course.

Subscribe to Euro Pacific's Weekly Digest: Receive all commentaries by Peter Schiff, Michael Pento, and John Browne delivered to your inbox every Monday.

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By John Browne
Euro Pacific Capital
http://www.europac.net/

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John Browne is the Senior Market Strategist for Euro Pacific Capital, Inc.  Mr. Brown is a distinguished former member of Britain's Parliament who served on the Treasury Select Committee, as Chairman of the Conservative Small Business Committee, and as a close associate of then-Prime Minister Margaret Thatcher. Among his many notable assignments, John served as a principal advisor to Mrs. Thatcher's government on issues related to the Soviet Union, and was the first to convince Thatcher of the growing stature of then Agriculture Minister Mikhail Gorbachev. As a partial result of Brown's advocacy, Thatcher famously pronounced that Gorbachev was a man the West "could do business with."  A graduate of the Royal Military Academy Sandhurst, Britain's version of West Point and retired British army major, John served as a pilot, parachutist, and communications specialist in the elite Grenadiers of the Royal Guard.

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Comments

Onc' Scrooge
27 Sep 11, 14:08
Germany will not save the Euro!

Hi John,

like most of the britisch press you also think that Germany want's to build an empire out of the Euro crisis?

As a German I don't think so - I think most of our politicians are heavily embarrased about the Euro crisis and nothing else.

They are pressed from every side:

- by their own promises of 2001 that the Euro will be good as the DM

- by the voters who didn't want the Euro in 2001

- by the voters now again who want to leave the Euro for having a new DM by nearly 70% of the voters

- by the voters who don't want further Euro bailouts by nearly 80% of the voters

- by the voters who even want to leave the EU in majority of more then 50% of the voters

- by constitional judges saying "No more Europe without the voters!" (means a referendum)

- by the german predident who critizied the gouverment even for existing Euro bailouts

- by EU and debtors states who want to get paid

- by banks playing horror films

- ....

It is just a question of time when there will rise some more or less nationalist parties or one of the existing will break up to do so.

How do you think any gouvernment could build an empire under these conditions against their own people?

There has to be a MACHTERGREIFUNG and a GLEICHSCHALTUNG means a new dictatorship to follow empirial dreams against the own people. I don't see any german politicain able to do that and also even HITLER has done it with a big part of the people behind him.

On the other hand if we would have serious attempts of implementing a leverage with the ESFS without a new parliamentarian vote you will see what will happen.

If the Telegraph writes about the german choice between a 2 trillion leverage of EFSF or a Götterdämmerung - you will see what german people will vote for - the Götterdämmerung by leaving the Euro behind.

Greetings

Onc' Scrooge


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