“Wherever there’s a fire in the euro zone, the financial firefighters rush to the scene. That’s us,” jokes Oliver Welke, Germany’s version of Jon Stewart, an American comedian, The Economist reported. Although the IMF and European Union are acting as co-rescuers of Ireland and Greece, Germans see themselves as rescuers-in-chief—and they resent it. “Will we finally have to pay for all of Europe?” asked Bild, a tabloid.
Other Europeans see Germany as an arsonist. Angela Merkel, the chancellor, has twice dithered, arguing about conditions for a rescue even as the flames took hold. Her demand that creditors must share in the losses triggered what is now being called the “Merkel crash”, which threatens to engulf not just Ireland but Portugal, Spain and even Italy. Luxembourg’s Jean-Claude Juncker, leader of the euro group of finance ministers, frets that the Germans “are losing sight of the European common good”. Spain’s problems start in Germany, wrote a Spanish analyst in the Financial Times. Joschka Fischer, a former German foreign minister, accused Mrs Merkel of bowing to “German domestic politics”.
There is more than a grain of truth in this. Germans were loth to give up the D-mark in 1999 and have never warmed to the euro. In 2008, some 56% of Germans wanted the mark back, according to Allensbach, a pollster. Despite the panic about Greece, that share was down to 47% in April, but only a third of Germans had “great faith” in the euro. Mrs Merkel, whose coalition government has so far disappointed voters, wins plaudits when she takes a tough line against errant euro members and scorn when she seems soft. Her Christian Democrats fear that a demagogic D-mark party might emerge to steal votes.
German behaviour is guided by more than petty politics. In adopting the euro the Germans thought they were joining a condominium, in which every member would keep order on their own property, and not a messy commune. Now the crisis threatens that understanding. The Greek bail-out and the €750 billion ($980 billion) war chest created in May to defend the euro look to many Germans like a violation of the “no-bail-out clause” in the Maastricht treaty that created the euro. The government insists it is not, because the aid is voluntary and temporary. The constitutional court is evaluating this claim. The proposed successor, a permanent facility plus procedures to impose losses on creditors of insolvent countries, needs a treaty revision to pass constitutional muster.
Mrs Merkel is struggling to balance demands for European solidarity with German notions of responsible behaviour. Aid to Greece was coupled with fierce budget cuts. Ireland will pay higher interest rates than Greece for its €85 billion. “We still have the feeling that others have done everything wrong, and we have done everything right,” says Peter Bofinger, one of the five wise men who advise the government on economic matters. Germany wants the remedy “to hurt so next time they don’t do it again.” Read more.
