It took more than two years until Federal Chancellor Angela Merkel outlined the historical reasons that Germany has to commit to solidarity in the European crisis recently at a press conference. Referencing her East German origins and the solidarity measures linked to German unity, she said that the countries in Europe had the chance to mutually help one another. One might think that Germany had thus found a clear role in overcoming the crisis. But on closer examination, this is unfortunately not the case.
The European Central Bank as back-door saviour
The German federal government discovered the word “solidarity” far too late. People in many parts of the EU had already lost a great deal of confidence in Germany. Individual representatives of the German governing coalition and certain media heavily discredited southern members of the euro zone in the German public eye. This now represents a heavy burden for the solidarity measures that Germany will have to shoulder in the years to come, The German federal government is aware of the need to continue its efforts and thus approves of the role of the European Central Bank (ECB) as the back-door saviour. The volume of government bonds purchased from the crisis countries by the ECB is, in the meantime, somewhat larger than that of the ESM. Political responsibility is surrendered to the ECB. While critics of the euro are exaggerating the fear of ʺItalian conditionsʺ among the ranks of the governing coalition, the path being pursued by the ECB is the easiest for the German federal government because it doesn’t have to worry about scraping together a majority in the Bundestag. By contrast, it would be more honest to vigorously push for the concept of a debt redemption fund to be brought into the discussion.
Of course, introducing a European fiscal union would initially be difficult to explain to German tax payers politically speaking. Many EU citizens point out that while they were saving a lot of money and sacrificing wages, "the others" lived on credit. This attitude, however, seems to forget who profited from the economically unviable real estate market and flawed infrastructure projects in southern Europe for many years. As a result of its strong export situation and the low interest rates in the southern member states, Germany benefited the most from these imbalances and the impossibility of devaluation. Instead of mentioning these factors, the German federal government continues to assign sole responsibility to the countries in crisis. Moreover, by one-sidedly characterising the crisis as a sovereign debt crisis, it ignores the fact that this must be seen both in the context of the financial crisis as well as the result of excessive private debt in some countries.
What should happen next?
What should happen next? Steps have to be undertaken to reinforce the foundation of solidarity. Consequently, it was an important step toward achieving sustainable, Europe-wide budget consolidation in the future with the agreement of 25 of 27 EU member states to the fiscal package. There is no doubt that the euro crisis countries have to push through their reforms but they should be accompanied and supported by measures from Germany and Europe. This includes the debt redemption fund proposed by Germany’s council of economic advisors. Repayment would be financed from European-wide capital levies so that debts can be repaid in a socially equitable way.
Austerity policy alone, however, will not improve the deep recession, the high level of unemployment and the social imbalance in the crisis countries. The German national Green party has criticised unrealistic adjustment programmes from the very outset. This is why it was important that, in addition to the tax on finance transactions, agreement was also reached on a package for long-term growth and employment during the negotiations on the fiscal package despite opposition from the federal government. When it comes to implementation, we have to learn from the mistakes of the structure and cohesion policy and finally direct funding to education and qualification as well as to climate protection and innovation rather than continuing to mainly fund construction projects through short-term economic programmes. More economic stimulus must take place by strengthening the domestic market and eliminating macroeconomic imbalances. To this end, the EU Commissioner for Employment, Social Affairs and Inclusion, László Andor, has justifiably called on the federal government to finally introduce a minimum wage in Germany.
The capability for action and strength
Instead of philosophising about where Germany’s limits are, the federal government should now introduce steps to make the European Union more capable of action and stronger. Even if several key questions remain unanswered, the report supplies useful approaches to the group of the future, a group of foreign ministers. They list measures for strengthening decision-making rights at EU level. Above all, the European Union has to be democratised in all political integration steps. The community approach has been weakened by Merkel and Co. The European Parliament and the EU Commission should now be strengthened again. While concrete changes to treaties would have to be organised through a convention involving civil society, the rights of the national parliaments to information and participation must be ensured in monitoring European tools. It was the Green party in the Bundestag that successfully filed suit for these rights in Karlsruhe.
Germany appears to have come in to its leadership role in the crisis involuntarily. The German federal government has contributed to deepening the gap between North and South with its apparent lack of solidarity: That means that our efforts should now be even greater to push European integration forward and develop future opportunities together with the crisis countries.
Viola von Cramon is member of the Bundestag and of the Committee on the Affairs of the European Union, Bündnis 90/Green Party.