The Folk Memory that Makes Germany Reluctant to Act over the Euro

THE DAILY TELEGRAPH: A fear that inflation leads to nationalist extremism lingers in Berlin – but European unity will not die if the Germans allow the euro to fail, argues Daniel Johnson.

A spectre is haunting Europe – the spectre of German domination. As the Heath Robinson structures of the European Union buckle under the weight of their own contradictions, the question on everybody’s lips concerns the Germans. What will they do about the eurozone crisis? Will they try to save the dream of a federal Europe – or let it go up in a puff of smoke?

In the old days, what gave European statesmen nightmares was known as “the German Question”: once it was united by Bismarck, Germany was too big and powerful to be balanced by the other Continental powers. After starting two world wars, the division of Germany was seen as the price of peace in Europe. At the time, the French writer François Mauriac observed with heavy-handed irony: “I love Germany so much that I am glad there are two of them.”

Today the German Question has returned in a new form. Silvio Berlusconi, like other fallen European leaders from Bertie Ahern to George Papandreou, could be forgiven for blaming the Germans for his defenestration. These days it is the call from the Berlin Chancellery, rather than the White House or the Kremlin, that Europe’s weaker brethren dread.

I recall vividly an occasion in 1991, soon after the putsch against Margaret Thatcher, when she presided over a small dinner of sympathetic young intellectuals. I congratulated the former prime minister on her resolute stand in the Cold War, alongside Ronald Reagan, which had done so much to bring down the Berlin Wall. The Iron Lady’s face darkened. In her most imperious tone, she expostulated: “Are you saying that I am responsible for that?”

German reunification was – and is – her deepest regret. She welcomed the liberation of Eastern Europe from communism, but she feared European monetary union, or what her lieutenant Nicholas Ridley called “a German racket designed to take over the whole of Europe”.

Ironically, the Germans themselves have played to the gallery by suggesting that the alternative to the single currency may be war. “If the euro fails, Europe fails,” Chancellor Merkel told the Bundestag last week. “We have an historical obligation to protect by all means Europe’s unification process, begun by our forefathers after centuries of hatred and bloodshed.”

Angela Merkel is by no means alone in resorting to such hyperbole. Astonishingly, the doctrine that only European unification can prevent an atavistic return to the horrors of “nationalism” (for which read Nazism) has long been and remains the received wisdom in German political circles. » | Daniel Johnson | Thursday, November 10, 2011

It's not the Germans that worry me, it's the British with their xenophobic, anti-European, anti-EU, anti-euro rhetoric! From the articles and the comments on this newspaper, anyone would be forgiven for thinking that the Germans were our enemies! – © Mark

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Eurozone Crisis: Sarkozy Says Greece Was Not Ready to Join Euro

THE GUARDIAN: French president's remarks highlight the challege European leaders have in trying to hold the currency together

Nicolas Sarkozy threatened to take the shine off a day of jubilation in financial markets at a deal to rescue the eurozone, when he said it had been an "error" to allow Greece to join the euro a decade ago.

Amid more protest on the streets in Athens, the French president tried to convince the public to back reforms intended to maintain Greece's membership of the single currency. "It was an error because Greece entered with false [economic] figures … it was not ready," he said.

Sarkozy told French TV: "We had to face up to all this. If the euro had exploded on Wednesday night, all of Europe would have exploded. If Greece had defaulted, there would have been a domino effect carrying everyone away ... we took important decisions that avoided catastrophe."

His remarks underline the continuing frailities of the eurozone, and illustrates the task Europe's leaders have in trying to hold the currency together. » | Larry Elliott, Jill Treanor and Helena Smith | Thursday, October 27, 2011

David Cameron: Closer European Integration Could Marginalise Britain
THE DAILY TELEGRAPH: Closer integration between Euro members could “undermine” the European Union's free market rules, David Cameron has warned.


The Prime Minister will this week attend a special EU summit to discuss the eurozone crisis, and warn the 17 countries who use the single currency not to cut the other ten EU members out of major decisions.

Moves among euro countries towards closer co-ordination of economic policies and fiscal systems have fuelled fears of a two-speed Europe, where the EU is divided between a core of euro nations and a marginalised fringe of countries left outside the single currency.

Wednesday’s summit had originally been scheduled only for the 17 euro governments. But at a bad-tempered meeting on Sunday, Mr Cameron won an agreement for a meeting on Wednesday of all 27 EU members too.

Number 10 fears that the eurozone countries will integrate their policies ever more closely and start to operate as a “caucus” within the EU, making decisions without consulting non-euro members like Britain.

Those decisions could include protectionist measures like higher taxes on imports and tighter market regulations, which would hurt the single market, British officials fear. » | James Kirkup, Deputy Political Editor, and Andrew Hough | Monday, October 24, 2011

Nicolas Sarkozy Tells David Cameron: Shut Up over the Euro

THE GUARDIAN: • Anglo-French row holds up EU summit • PM braced for biggest Commons revolt

David Cameron has begun a week of intense political infighting over Europe by becoming embroiled in a furious row with Nicolas Sarkozyover Britain's role in talks to solve the crisis enveloping the euro.

The bust-up between Cameron and Sarkozy held up the conclusion of the EU-27 summit for almost two hours, with the French president expressing rage at the constant criticism and lectures from UK ministers.

Sarkozy bluntly told Cameron: "You have lost a good opportunity to shut up." He added: "We are sick of you criticising us and telling us what to do. You say you hate the euro and now you want to interfere in our meetings."

The prime minister has torn up his travel plans this week – a move urged on him by Labour leader Ed Miliband in a Guardian interview on Saturday – to attend an emergency heads of state meeting on Wednesday, and has demanded that all 27 EU countries be given the final say over measures to prevent the eurozone's sovereign debt crisis spreading and Europe sliding into deep recession.

On Monday the prime minister is facing both the largest Commons revolt of his premiership and the largest rebellion of eurosceptics suffered by a Conservative prime minister when parliament votes on whether the UK should have a referendum on Europe. » | Allegra Stratton and David Gow in Brussels | Sunday, October 23, 2011

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Dutch PM and Wilders Clash on Greece
RADIO NETHERLANDS WORLDWIDE: Dutch Prime Minister Mark Rutte and populist Freedom Party (PVV) leader Geert Wilders clashed in parliament today over more financial aid for Greece. Mr Wilders is against a further bailout, saying that Greece should quit the euro.

The minority coalition of the conservative VVD and Christian Democrats (CDA) relies on support from the PVV on a majority of issues. However, the Greek euro crisis has caused a major divide between the PVV and the coalition parties.

The PVV and the opposition Socialist Party are against more financial aid for Greece. However, the government’s position of not ruling out more aid has the support of Labour, the D66 democrats and Green Left - all opposition parties. » | mw/hs | Thursday, May 19, 2011

Signals Spain May Seek Bailout Spelling Disaster for Eurozone
The shadows of people taking part in a demonstration organised by the group dubbed 'Youth Without a Future' in Madrid, to protest against professional and social conditions of the youth in Spain, May 15, 2011

'Enormous Damage': Weber's Exit Highlights Merkel's Euro Problem
Photograph: Spiegel Online International
SPIEGEL ONLINE INTERNATIONAL: Bundesbank head Axel Weber's resignation has made one thing clear: The debate about the future of the euro has become intense -- and bitter. Indeed, Chancellor Angela Merkel's efforts at mandating strict monetary discipline for the euro zone may ultimately fail. And German euro skeptics may be gaining ground.

The breakfast for conservative ministers prior to Chancellor Angela Merkel's weekly cabinet meeting is considered the most secretive and concentrated gathering in the day-to-day business of political Berlin. There are no leaks, no mobile phones ringing and no one leaves the room.

Last Wednesday, however, the morning discussion was abruptly interrupted. The ministers belonging to Merkel's center-right Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social Union (CSU), were just perusing the first items on the agenda when a Chancellery employee told Merkel that she had an urgent call. Jens Weidmann, Merkel's economic advisor, was on the line to tell her that Axel Weber, president of the German Central Bank, the Bundesbank, intended to announce his resignation that day.

When Merkel returned, the cabinet members could tell by the expression on her face that something very unpleasant had happened -- so unpleasant, in fact, that close associates would later call it a "catastrophe." Merkel conferred briefly with Finance Minister Wolfgang Schäuble before calling Weber. It quickly became clear that there was nothing that could be done.

He had given careful thought to his decision, the banker told Merkel. He said that he felt isolated as a result of his strict, anti-inflation policies, and that he was practically alone in his views within the European Central Bank (ECB). Under these circumstances, Weber explained, he could not continue in office, and certainly could not become ECB president. >>> Christian Reiermann and Michael Sauga | Moonday, February 14, 2011

Davos WEF 2011: Sarkozy Says France and Germany Will 'Never Let the Euro Fail'
THE DAILY TELEGRAPH: France and Germany will never turn their backs on the euro, French President Nicolas Sarkozy has said in his most robust defence of the troubled single currency to date.

Addressing the World Economic Forum in Davos, he told speculators to be prepared for big losses if they bet against the euro. “[Germany’s] Chancellor Merkel and myself will never – do you hear me, never – let the euro fall,” he said.

“The euro is Europe. And Europe spells 60 years of peace. Therefore we will never let the euro go or be destroyed… To those who bet against the euro, watch out for your money because we are fully determined to defend the euro.”

President Sarkozy’s intervention comes with the single currency under greater strain than at any time in its short history. Davos has been abuzz with talk of a two-speed Europe, with billionaire investor George Soros warning that the “euro could possibly fall apart” under the strain.

Greece and Ireland are implementing painful pay cuts and other deflationary measures because they can not devalue, while Germany powers ahead. Ken Rogoff, the Harvard economist, has suggested Greece should be allowed to fail in an orderly fashion because its debts are insurmountable.

However, President Sarkozy said: “To imagine that we might pull out shows a complete misunderstanding of the European psychology. It has to do with our identities as Europeans.” >>> Philip Aldrick, Economics Editor, in Davos | Thursday, January 27, 2011

Merkel Rules Out Return to Deutsche Mark
Chancellor Angela Merkel says there's no going back to the beloved deutsche mark. Photo: Spiegel Online International
SPIEGEL ONLINE INTERNATIONAL: German Chancellor Angela Merkel has snuffed out speculation about reintroducing the deutsche mark in Germany as a response to the current euro crisis. In a magazine interview, she renewed her support for the common currency and rejected the idea of splitting the euro zone in two.

Chancellor Angela Merkel has categorically stated that Germany will not abandon the euro and reintroduce the deutsche mark. Her comments are intended to quell speculation that Germany's love of the common currency is flagging in the wake of expensive bailouts of troubled euro-zone members Greece and Ireland.

In an interview to be published in Germany's weekly Stern magazine on Thursday, Merkel also rejected the idea of splitting the euro zone into north and south zones, reaffirming Germany's commitment to an economically united Europe.

"There can be no return to the deutsche mark," she said, adding that Germany would "continue to do everything necessary to guarantee a stable euro." She told the magazine that, while she took citizens' concerns very seriously, she was convinced that "we in Germany can handle everything." >>> jap - with wires | Wednesday, January 19, 2011

'It'd Be Better If the UK Joined The Euro'

SKY NEWS: 'It'd Be Better If the UK Joined The Euro': The Spanish Ambassador to the UK, Carles Casajuana says that it would be "much better for everybody" if the UK were to join the single currency. >>> Katie Snape, Sky News Online | Thursday, January 13, 2011

Les confidences anglaises de François Fillon
François Fillon. Photo: Le Figaro
LE FIGARO: «Il est plus facile de travailler avec Sarkozy qu'avec Mitterrand ou Giscard d'Estaing», raconte le premier ministre dans The Times. Il évoque aussi la cuisine anglaise, la mixité sociale des pubs, et mêmes les tenues de son épouse.

Et si la Grande-Bretagne, son crachin et son «fog», mettaient le premier ministre en confiance ? François Fillon le pudique, le flegmatique, s'y sentirait-il plus à l'aise pour fendre l'armure et parler de lui ? Avare de confidences avec la presse française, qu'il évite dès qu'il peut, le chef du gouvernement, qui fait la Une du Times [£] jeudi matin, s'est longuement confié à deux journalistes du quotidien britannique. Marié à une femme, «moitié anglaise, moitié galloise», «l'anglophile» Fillon, qui a reconnu jeudi devant les financiers de la City qu'il parlait anglais «comme un Pakistanais», a vanté les charmes du Royaume-Uni.

Et même la cuisine anglaise, «bien meilleure que ce que les gens disent». Il raconte avoir tenté à plusieurs reprises d'en convaincre Nicolas Sarkozy. «Nous avons eu des disputes animées à ce propos», plaisante-t-il. Le premier ministre explique aussi qu'il aimerait «importer» en France les pubs anglais dont il aime la mixité sociale et… la bière. «La première fois que j'ai été à un match de rugby, je ne pouvais pas comprendre pourquoi nous devions partir à 9 heures le matin pour un match qui commençait en début d'après-midi, raconte t il. Après avoir passé quatre heures à boire de la bière, suivre le match était devenu difficile…» >>> Par Solenn de Royer | Jeudi 13 Janvier 2011

THE TIMES: Britain must help us save the euro, warns French PM >>> Charles Bremner, Paris, Sam Fleming | Wednesday, January 12, 2011 (£)

EU Rescue Costs Start to Threaten Germany Itself
THE DAILY TELEGRAPH: The escalating debt crisis on the eurozone periphery is starting to contaminate the creditworthiness of Germany and the core states of monetary union.

Credit default swaps (CDS) measuring risk on German, French and Dutch bonds have surged over recent days, rising significantly above the levels of non-EMU states in Scandinavia.

"Germany cannot keep paying for bail-outs without going bankrupt itself," said Professor Wilhelm Hankel, of Frankfurt University. "This is frightening people. You cannot find a bank safe deposit box in Germany because every single one has already been taken and stuffed with gold and silver. It is like an underground Switzerland within our borders. People have terrible memories of 1948 and 1923 when they lost their savings."

The refrain was picked up this week by German finance minister Wolfgang Schäuble. "We're not swimming in money, we're drowning in debts," he told the Bundestag.

While Germany's public and private debt is not extreme, it is very high for a country on the cusp of an acute ageing crisis. Adjusted for demographics, Germany is already one of the most indebted nations in the world. Read on and comment >>> Ambrose Evans-Pritchard | Friday, November 26, 2010

Euro Crisis: Britain Needs to Prepare for an Economic Dark Age Next Door
THE DAILY TELEGRAPH: The crisis in the eurozone shows why this country must widen its horizons, writes Simon Heffer.

The Euro might not survive in its present form. Photo: The Daily Telegraph
On a shimmering day last June, I was talking to one of our most intelligent diplomats about the future of the euro. He told me, matter-of-factly, that there would be a serious crisis again before Christmas, and he suggested that it might not even survive in its present form. He has been proved right about the first point. Whether he is right about the second is anyone's guess, but if the markets have their way, he will be.

Privately, those who understand the workings of the European Union, but who can manufacture the right amount of detachment about them, admit that the iron façade of common purpose in the European project is starting to creak and rust. For years, a series of pretences has been entered into by dreamers of the European dream about the union's ability to advance as one entity. It has become worse since the inception of the single currency, of which this country is not, thank heaven, a member.

The club pretends (or sought to pretend: it is now wearing a bit thin) that the great disparities between, say, an economy like Germany's and one like Ireland's or Portugal's could be accommodated within the same common policy; and could be so while individual countries were allowed a measure of economic sovereignty, such as setting their own tax rates. Technically, deficits were to be regulated, but in practice, and in the interests of not upsetting any applecarts, they were not: otherwise, France and Italy would have been booted out long ago. The result is that some countries are now threatening to break the system. And poor old Ireland, with a number of its state-owned banks facing oblivion, cannot even turn its economy around, despite heroic amounts of self-flagellation. But then, if you were trying to have an export-led recovery when your goods were denominated in a currency that is among the most expensive in the world, you would be suffering, too. Read on and comment >>> Simon Heffer | Tuesday, November 16, 2010

Greek Rescue Frays As Irish Crisis Drags On
THE DAILY TELEGRAPH: The eurozone bail-out for Greece has begun to unravel after Austria suspended aid contributions over failure to comply with the rescue terms, and Germany warned Athens that its patience was running out.

Thousands of Communist Party supporters wave flags during the protest rally in central Athens on November 15 against the IMF-EU troika visit in Athens and the expected new austrity package. Photo: The Daily Telegraph
The clash caught markets off-guard and heightened fears that Europe's debt crisis may be escalating, with deep confusion over the Irish crisis as Dublin continues to resist EU pressure to request its own rescue.

Olli Rehn, the EU economics commissioner, said escalating rhetoric in Europe was turning dangerous. "I want to call on every responsible European to resist the centrifugal tendencies and existential alarmism."

Swirling rumours hit eurozone bond markets, while bourses tumbled across the world. The FTSE 100 fell 2.4pc to 5681.9, and the Dow dropped over 200 points in early trading. The euro slid two cents to $1.3460 against the dollar as the US currency regained its safe-haven status. Read on and comment >>> Ambrose Evans-Pritchard | Tuesday, November 16, 2010

TELEGRAPH BLOGS – JEREMY WARNER: Austria Tells Greece to Get Stuffed: Europe’s hastily assembled bailout fund already seems to be coming apart at the seams, and that’s before Ireland has even tapped into it. Austria is refusing to contribute to the next tranche of bailout money for Greece, citing the country’s failure to meet conditions. Yesterday it emerged there is serious slippage in Greece’s deficit reduction programme. >>> Jeremy Warner | Tuesday, November 16, 2010

The Horrible Truth Starts to Dawn on Europe's Leaders
TELEGRAPH BLOGS – AMBROSE EVANS-PRITCHARD: The entire European Project is now at risk of disintegration, with strategic and economic consequences that are very hard to predict.

In a speech this morning, EU President Herman Van Rompuy (poet, and writer of Japanese and Latin verse) warned that if Europe’s leaders mishandle the current crisis and allow the eurozone to break up, they will destroy [the] European Union itself.

“We’re in a survival crisis. We all have to work together in order to survive with the euro zone, because if we don’t survive with the euro zone we will not survive with the European Union,” he said.

Well, well. This theme is all too familiar to readers of The Daily Telegraph, but it comes as something of a shock to hear such a confession after all these years from Europe’s president.

He is admitting that the gamble of launching a premature and dysfunctional currency without a central treasury, or debt union, or economic government, to back it up – and before the economies, legal systems, wage bargaining practices, productivity growth, and interest rate sensitivity, of North and South Europe had come anywhere near sustainable convergence – may now backfire horribly.

Jacques Delors and fellow fathers of EMU were told by Commission economists in the early 1990s that this reckless adventure could not work as constructed, and would lead to a traumatic crisis. They shrugged off the warnings. Read on and comment >>> Ambrose Evans-Pritchard | Tuesday, November 16, 2010

Europe Fears That Debt Crisis Is Ready to Spread
A newspaper vendor in Dublin on Monday. Photograph: The New York Times
THE NEW YORK TIMES: LONDON — European officials, increasingly concerned that the Continent’s debt crisis will spread, are warning that any new rescue plans may need to cover Portugal as well as Ireland to contain the problem they tried to resolve six months ago.

Any such plan would have to be preceded by a formal request for assistance from each country before it would be put in place. And for months now, Ireland has insisted that it has enough funds to keep it going until spring. Portugal says it, too, needs no help and emphasizes that it is in a stronger position than Ireland.

While some important details are different, the current situation feels eerily similar to what happened months ago in Greece, where the cost of borrowing rose precipitously.

European authorities stepped in with a rescue package, expecting an economic recovery and the creation of new European rescue funds to fend off future panics by bond investors whose money is needed by countries to refinance their debt.

But with economic conditions weakening, markets are once again in turmoil. Rescuing Ireland may no longer be enough.

Stronger countries and weaker countries using the common currency of the euro are being pulled in different directions.

Some economists wonder if unity will hold or if some new system that allows countries to move on one of two parallel financial tracks is needed. Read on and comment >>> Landon Thomas Jnr and James Kanter | Monday, November 15, 2010

WELT ONLINE: Deutschland wird zum Zahlmeister der Eurozone: Ein Ausstieg aus dem Euro kommt für die Kanzlerin nicht infrage. Jetzt wetten die Finanzmärkte auf eine Transferunion. Das wird teuer. >>> Autor: D. Eckert und H. Zschäpitz | Dienstag, 16. November 2010

Euro Under Siege After Portugal Hits Panic Button
Euro Under Siege After Portugal Hits Panic Button
THE DAILY TELEGRAPH: The euro is facing an unprecedented crisis after another country indicated that it was at a “high risk” of requiring an international bail-out.

Portugal became the latest European nation to suggest it was on the brink of seeking help from Brussels after Ireland confirmed it had begun preliminary talks over its debt problems.

Greece also disclosed yesterday that its economic problems are even worse than previously thought. Last night, the German Chancellor Angela Merkel raised the spectre of the euro collapsing as she warned: “If the euro fails, then Europe fails.” >>> Bruno Waterfield in Brussels and Robert Winnett | Monday, November 15, 2010

Majority of Germans Want Deutschmark Back
THE TELEGRAPH: A majority of Germans want to scrap the EU's single currency and bring back their beloved Deutschmark amid popular anger that Germany has bailed the euro zone out to the tune over £100 billion.

More than 51 per cent of Germans want to axe the euro after widespread fury that Germany's taxpayers have been forced to come to the rescue of Greece and other high spending southern European countries.

Only three in 10 people in Europe's largest economy now support the single currency, a flagship of EU integration and Germany's European policy. >>> Bruno Waterfield | Tuesday, June 29, 2010