Jacob Heilbrunn

The German Plot to Reinvent Greece and Europe

A conspiratorially minded observer would be hard pressed not to conclude that the European financial crisis is a German plot. Southern Europe, indebted beyond its means and facing impoverishment as the bond-trading vultures detect easy prey, is now looking to Germany as its savior. The financial mess has completed Germany's redemption from pariah to the leader of Europe. Indeed, it may not be too much to assert that Germany has again become a great power peacefully dictating the European future, this time with Euros rather than bullets. It's trying to end state socialism across the continent and replace it with the austerity of market economics, something that Greece would never have assented to a few years ago. The capstone to Germany's reemergence came in the Bundestag vote on Thursday approving a massive increase in the European Stability Fund to 440 billion Euros. A few parliamentarians protested the bailout, but most docilely approved it. Germany is responsible for about half the sum. No, the fund will not dispose of the debt overhang that must be liquidated, most likely by the imposition of a lower standard of living in southern Europe—austerity measures that Germany adopted a decade ago among great controversy but are now creating a booming economy. The fund is supposed to protect Greece from a tumultuous descent into default and to prevent a contagion effect that might take Spain, Italy and Portugal along with it. At the same time, Greece is supposed to implement draconian spending cuts, which it actually has already begun to do. The vote was an enormous victory for Chancellor Angela Merkel, whose position has been looking quite shaky. She could end up becoming the longest-serving chancellor in the history of the Federal Republic if she continues to compile a successful record in office. It would be no small irony if this woman from the East ends up creating the united Europe originally espoused by the ardent Rhinelander Konrad Adenauer, who had his sights set firmly westward. Merkel did not need to rely on the opposition Reds and Greens to win passage. In the end she amassed 535 votes, a comfortable overall majority. Her coalition with the Free Democrats should endure for several more years until the next election. Merkel has the chance to become Germany's Iron Chancelleress. Where Helmut Kohl unified Germany, she now has it within her grasp to unify Europe—along German principles. Merkel has proceeded slowly, cautiously and tenaciously. Her critics argue that she has temporized. But Merkel has consistently argued that Europe cannot follow the path of the United States. She views the Obama program of fiscal stimulus with abhorrence. Germany has followed austerity policies for the past decade. Its latest unemployment figure is 6.6 percent, down from 7 percent. Obama could only dream of such a number. Now Merkel is seizing upon the crisis to insist that southern Europe begin to accept austerity measures. The age of unlimited spending in Europe is coming to a terminus. It is certainly possible that Merkel may have to move to a two-tiered Europe,one in which a core zone pursues more rapid political integration while southern Europe revamps its economies. But for now, the clear winner is Merkel and the newly emboldened Germany she is leading. Yes, Germans will grumble aboout being on the financial hook for their profligate cousins down south, and Slovakia will have to be muscled over as one of the remaining seventeen countries to approve the bailout package. But Berlin will ensure that it happens. With great financial responsibility comes even greater power. Merkel now has the opportunity to recreate Europe in Germany's image.

Image: Bundesarchiv, Bild 146-1990-023-06A / CC-BY-SA