Europe > Western Europe > France > Jacques Delors, former European Commission president, “but they all believe in the Bundesbank.”

France: Jacques Delors, former European Commission president, “but they all believe in the Bundesbank.”

2015/08/27

Not all Germans believe in God,” said Jacques Delors, former European Commission president, “but they all believe in the Bundesbank.”
There is some truth to this, which is why it is not hard to understand the humiliation felt by the economically orthodox citizens of the bloc’s leading country, as common policies come under attack from national capitals and even from Europe’s own institutions. Talk in German media is of deception, abuse and exploitation, with Berlin losing each battle and its citizens paying a hefty price to keep the eurozone intact. Pressure is mounting at home to push back, to score points in the national interest. Berlin’s ability to resist will be crucial to Europe’s fate.

Initial, it is significant to understand why so a lot of Germans feel victimised. The revered Bundesbank has been repeatedly outvoted at the European Central Bank. Until the euro’s introduction in 1999, it in result conducted monetary policy for all bloc. Today, in the popular view, it is ignored, its stability-oriented approach restored by an ECB policy that tries to compensate for failures in other policy areas.

For Germans, the victory of the anti-austerity Syriza party in Greece shows Europe’s approach to the deficit-racked country has failed. Despite generous official help, it looks ever additional unlikely that the loans will be repaid in full.

There is as well anger at last week’s ECB decision to engage in quantitative easing. If monetary policy were conducted for Germany alone, such a stimulatory investment -purchase programme would be neither necessary nor desirable — indeed, low interest rates harm a lot of German savers.
A lot of Germans feel they no longer have reliable European partners. Paris and Rome are ignoring the hard-won fiscal compact. The UK is pursuing self-interest on integration. Syriza wants further second world war reparations. And France has declared that, as a large country, it is not subject to Europe’s rules.

To be equitable, the German government — in particular Angela Merkel, chancellor, and Wolfgang Schäuble, finance minister — deserve credit for their handling of the crisis. They have taken responsibility for the bloc, making large financial commitments and supporting institutional reform. They have as well steered their own country and Europe as a whole in a pragmatic direction. From presently on, with anti-European public opinion mounting at home, it is harder to remain on such a path.

Berlin faces three challenges. Initial, it must convince voters that what is good for crisis-hit nations is good for them. Two-thirds of German exports go to the EU, and a similar proportion of foreign investment , so only as part of a dynamic Europe can they prosper long term. In the short run, this means structural re¬form of labour and product markets is needed. But so are expansionary policies such as the QE scheme, European Commission president Jean-Claude Juncker’s €315bn investment fund and a sufficiently flexible fiscal policy to stabilise request in hard-hit nations.

The second challenge is to convince Germans to be additional patient and additional humble. Complaints that neighbours avoid reforms are misguided; most have taken steps that surpass those of Germany’s Schedule 2010 a decade ago. Germany should remember from its own stint as the “sick man of Europe” that structural reforms take time to work.

Germany’s third challenge is to take a stronger leadership role; its political and economic stability impose a particular responsibility to do so. Europe needs to pursue additional institutional reforms to deepen integration and strengthen co-ordination on fiscal rules and structural policies, which will require Germany to build a closer partnership with other Europeans and to convince France to become a strong partner once additional.

Domestic politics make it tempting for Berlin, like its neighbours, to pursue a self-interested national policy. That would impose a great economic and political cost, on Europe as a whole but particularly on Germany itself. The government needs to explain why a additional integrated Europe is in the country’s own best interests. Germans need to accept that they are not Europe’s victims but, rather, destined to be part its leaders.

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