Can Germany Lead Europe Out Of Its Mess? It is too late to save Club Med. Merkel shoud think about saving Northern Europe. Cutting off the South may be the only remedy

By Paolo von Schirach

June 16, 2013

WASHINGTON – In a recent piece The Economist piously invited German Chancellor Angela Merkel to be a forceful and farsighted leader of Europe. Do not be so cautious. Do not think only as far as the next German elections. Do not measure your steps vis-a-vis Europe only within the narrow framework of German voters’s lukewarm sentiments. Look at the “Big Picture”. Indeed, only Germany can save Europe from progressive decline and eventual demise.

Nothing to be gained by leading on European issues

All true. True that only Germany has the dimensions and hopefully the credibility and staying power to “save Europe”. However, it is also true that Chancellor Merkel is the leader of Germany and not of “Europe”. And therefore politically, in the short and medium term (and this is the time horizon for most politicians), there is absolutely nothing to be gained in Germany by intervening more forcefully, (that means spending more German money), to “save Europe”. 

There is no European state

Let me step back. The root of the problem here is that Europe does not really exist politically. It exists only as a patch work of regulatory and administrative inter-governmental arrangements. All this is important and in many areas irreversible. But Europe is not a “State”. And therefore there are no actual or aspiring leaders of “Europe”.

Manuel Barroso, head of the EU Commission, used to be the Prime Minister of Portugal, a small and almost insignificant EU member. Now he is a an unelected functionary; the head of a large bureaucracy. Interesting position. But he is no leader.

Angela Merkel gets votes in Germany, but not in Greece or Italy. The Economist is right in stating that, unless Germany leads, the Eurozone will eventually unravel, because the weak south cannot cope under the current, “mostly austerity” regime.

Too late to save the South

However, while it would be good for Germany to lead, I am far more pessimistic than The Economist. Even if Merkel, risking her own job at home, would lead by accepting Eurobonds and other costly measures aimed at reviving the Southern Periphery of Europe, I am afraid that it is really too late.

Southern Europe is in really bad shape. Even the most energetic stimulus package would do little to revive it. Look, I agree that austerity (that is more severe spending contraction) is hardly the best remedy for countries that run out of money  long ago. But if this is true, it is also true that the opposite –that is more loans, more stimulus as a way out– is also untrue.

Given Southern Europe’s entrenched culture of procrastination and given its mostly parasitical and certainly unimaginative ruling elites, you can rest assured that additional funds coming from Brussels or Berlin would be wasted, stolen or misused. (Did I forget to mention corruption and organized crime?) These countries are simply exhausted.

In the end, it is true that Germany’s lack of leadership may condemn the Eurozone to eventual failure. But it is also true that it is way too late to fix Cyprus, Greece, Italy, Spain and Portugal. I would not be so sure of France’s chances either.

 Save Northern Europe

Germany’s leadership should be used to save what is salvageable, namely Germany itself, Austria the Netherlands and the Scandinavian countries. These countries are reasonably modern and capable. Could Germany lead a process of healthy separation of the viable North from the decrepit South? Yes, it could. But this project, while far more promising than trying to keep the South alive through artificial means, would also require strong leadership. And Germany is not keen to take any chances.


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