The Corner

Testy in Germany

Remember the argument about how the euro was all that stood between Europe and a return to the trenches? Well, this somewhat overwrought  FT piece by Hans-Olaf Henkel (one of the good guys in Germany’s euro debate) is yet another reminder of how the single currency is stirring up old divisions:

In agreeing to help bail out Spanish banks and enter into a virtual banking union, albeit with strings attached, Angela Merkel lost an important battle. It was not the first time. While Europe’s media call her “Madame No”, in reality she is more of a Neville Chamberlain than a Margaret Thatcher. This time, it is the Germans who are being blackmailed – by the French.

I’m not convinced that Henkel is right about that (I have never thought that Mrs. Merkel was Mrs. Thatcher but she is tougher, and cannier, than Henkel suggests), but the very language of the article (“blackmail”, “Neville Chamberlain”, “French”) is revealing, and so is this:

No wonder that the chief editor of Le Figaro once stated the euro was a new Treaty of Versailles, without going to war.

And this is spot on:

The more Germans see her being tough with politicians from the south, the less they realise that it is they who are to pay for her euromantic policies.

And for a spot of speculation, the last two paragraphs are worth mulling:

More and more Germans are discovering that Europe may speak German, but that it acts French. Since Ms Merkel’s U-turn in agreeing to a special bailout arrangement for Spanish banks, the mood in her country has changed. Two hundred economists protested in an open letter to German citizens. Even the German constitutional court believes that enough is enough. In an unprecedented move, the judges publicly asked Germany’s president to withhold his signature under the ESM. Should the court rule that further shifts of power to Brussels are subject to a referendum or should Finland opt to leave the euro, Ms Merkel might face her second “Fukushima”.

Remember that after the tsunami hit Japan, it took Ms Merkel just a few days to abandon her energy policy and announce a departure from nuclear energy altogether. When opinion polls showed support for nuclear energy had plunged, she executed the fastest policy change in recent German history. Despite her usual European rhetoric, she didn’t even consult with the French, although they were severely affected by her unilateral action. If a German referendum on Europe became one on the euro instead, she might face similar pressure. That could result in another spectacular policy U-turn, this time on the euro.

Well, that would be something to see.

That said, my guess is that, having made its point by spinning this matter out, the constitutional court will leave the chancellor with enough room to keep edging forward for now. As for the Finns, the prospects of a Finnish exit from the single currency continues to be remote for any number of reasons, cultural, geographic and (misguidedly) economic.

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