For the increasing number of people who have been accusing the Germans of smugness and complacency over the eurozone crisis, the Champions League final defeat of Bayern Munich by the Russian protectorate known as Chelsea FC will have provided a certain amount of ... well, the only word is Schadenfreude.
At the start of the match in Munich's Allianz Arena, a vast banner was unfurled, reading (and I translate) "Our City, Our Stadium, Our Cup". The tribune of the Bavarians, the Süddeutsche Zeitung, had before the game published the forecast of no fewer than 56 "experts" and, to its great satisfaction, all 56 had declared Bayern's victory to be little short of a certainty. Now Munich is in shock. Ah well, it's only a game. Not so the struggle to keep the euro going, in which Germany is being accused of playing against the rest of the currency's members, when it ought to realise that everyone is on the same team.
At the G8 heads of government meeting in Washington, the German Chancellor was, in effect, put on the naughty seat, with all the other leaders, from Obama down, taking turns to tell her to agree to launch so-called eurobonds, effectively using the German taxpayers to guarantee the vast debts of the single-currency zone.
Leave aside that the German government has been told by its own constitutional court that it could never do such a thing, it would in any case be completely unacceptable to the country's own public – as it would be to any sovereign people in a similar position. If anything Angela Merkel has already gone far beyond what her electorate would have wanted in terms of guarantees. As Guido Westerwelle, the country's minister for Foreign Affairs, told an American audience earlier this year: "The German parliament has approved financial guarantees of more than €200bn [through the European Stability Mechanism]. Translated to the size of the US economy this would be the equivalent of far more than one trillion US dollars in guarantees by the US Treasury. Can you imagine members of Congress approving such a sum to help out non-Americans?"
There is a growing fury on the part of the German people, not just as taxpayers, but also as a rapidly ageing country with an inevitably high propensity to save, at the idea that they should put their pensions at risk rather than exert pressure on their more improvident neighbours to "act responsibly". Indeed, to the extent that the Germans always regarded the euro as a less safe store of value than the near-sacred Deutschmark, and would never have given up the latter if they had been consulted in a referendum, it would hardly be a surprise if the domestic pressure grew to leave the euro and return to their national currency.
The political establishment in Berlin would never countenance such a volte-face although it would probably be the healthiest outcome both for Germany and the rest of Europe: the euro-denominated debts of countries such as Spain, Portugal and Italy would be devalued, making outright default less likely. Meanwhile, Germany would still be a formidably successful exporter even with a much stronger currency, as it had been before the euro was imposed – against the dire warnings of the Bundesbank, whose economists always understood that a monetary union without a single federal European government was doomed to break up.
Not the least of the ironies in the current diplomatic haranguing of Berlin is that the only solution other than break-up would be for Germany to take the hegemonic role in Europe that would cause even more anti-German sentiment among her southern neighbours. Perhaps still more to the point, it was because of Germany's painful consciousness of its own historic reputation as the would-be dominator of Europe that it agreed to abandon the mighty Deutschmark. This had been most especially at the urging of France, terrified of the power of a unified Germany, and which saw the euro not just as a way of consolidating a French-run Europe with German fiscal power, but also as a counter to the dollar. Mitterrand's hubris is now Europe's nemesis.
Of course, it is true that German exporters have gained much by trading throughout Europe in a common currency with its economically less advanced neighbours. The conventional economic argument is that the vast surpluses thus built up have had to go somewhere, and that somewhere has been in similarly vast loans to sovereign and private borrowers in the rest of the eurozone. Thus, the argument continues, it is in Germany's interests to do whatever it can to rescue those economies, or it will lose countless billions anyway through non-recovery of its invested funds.
This makes sense in purely accounting terms; but just as it seemed ridiculous to blame Beijing for the way in which US banks recirculated China's vast dollar surpluses in crazily speculative housing schemes in Florida and California, so it seems odd to believe that Berlin is somehow morally responsible for the entire Spanish property binge; and equally fatuous to imagine that if the Germans were to "socialize" the bulk of those losses via its own taxpayers, this would not simply encourage the worst banking practices to continue: it is only now that the Spanish banks are admitting to the rottenness of their loan books, long after the Americans had fessed up to theirs.
One of our own politicians who had thought this country was mad not to join the euro, Nick Clegg, yesterday urged the Germans to sanction eurobonds and thus underwrite the Continent's debts – corrupt Greece and all. He told an interviewer from Der Spiegel that such a course of action was "unavoidable", however much German taxpayers might be "reluctant to entertain those ideas and to ... become the paymaster of the European Union". To which the Deputy Prime Minister's interviewer responded: "Good luck explaining that to a German audience".
Indeed. And in any case, doesn't the paymaster call the tune? Is that what Europe wants? Germany doesn't – and she is quite right.Reuse content