Franco-German axis loses its wheels
French President Nicolas Sarkozy has swooped into Berlin to secure a “clear, clean and precise response” from Chancellor Angela Merkel to the dramatic crisis engulfing the eurozone. He is unlikely to get one.
French and German leaders typically meet on the eve of crucial EU summits to reach a pact that can be imposed as a fait accompli on their peers. In doing so, they reinforce the Franco-German axis that has been the driving force of Europe’s Project, and leverage their combined power. But this time the chemistry is particularly sulphurous.
The Chancellor has not disguised her irritation at being bounced into a summit that she never wanted, and which looks to many Germans like an attempt to ensnare the country in an EU fiscal union and limitless bail-outs.
Germany is still transfering €60bn (£53bn) annually to East Germany 20 years after the fall of the Berlin Wall. No German parliament can agree to any EU formula that might implicitly entail the same ruinous obligation towards non-German countries with eight times the population.
Few dispute that Europe faces extreme danger as the bond markets of Italy and Spain start to buckle. “Nobody should be under any illusion: The situation is very serious”, said Commission chief Jose Manuel Barroso. “It requires a response, otherwise the negative consequences will be felt in all corners of Europe and beyond.”
But what response? The Franco-German couple do not even agree on the now secondary matter of haircuts for creditors to Greece. Berlin wants explicit punishment of the banks, even if this triggers a Greek default: Paris has laboured day and night to find a default-free solution, fearing a euro-Lehman crisis if Europe starts down that slippery slope.
They are even further apart on the larger issue that overshadows this summit: whether to take the fateful step towards an EU debt union in order to defend Spain and Italy from fully-fledged contagion.
This could be done by issuing eurobonds, or allowing the eurozone’s €440bn bail-out fund to buy Italian and Spanish bonds preemptively, or – the latest favourite of EU sherpas – use of IMF-style flexible credit lines for stronger countries facing turbulence. In effect, this would create a European Monetary Fund. But who pays?
Whatever Mrs Merkel’s preference, she can stray only so far from constraints imposed by the Bundesbank, the Bundestag, her own coalition partners and public opinion. Her popularity rating has already fallen to 36pc, the lowest in five years, chiefly because of her perceived willingness to bend to EU demands.
Otmar Issing, the European Central Bank’s first chief economist and EMU’s most iconic figure, has made it very hard for the Chancellor to justify any of the key options on the table.
“The issuance of eurobonds amounts to financial power without democratic legitimacy. We must not forget that Western democracy began through parliamentary control over tax and public spending,” he told the Frankfurter Allgemeine, though he might equally have been speaking to the German consitutional court as it prepares to rule on the legality of the EU bail-outs.
Dr Issing said politicians who hope to save EMU by creating eurobonds or other variants “are digging the grave of stable euro”, adding that if Greece were allowed to stay in the euro after defaulting it would destroy monetary union.
With such critics speaking out, it may prove hard or even impossible for Mrs Merkel to secure German political assent for any form of transfer union or debt sharing, whatever she promises at Thursday’s summit.
Both eurobonds and the use of the EFSF for mass bond purchases would require EU treaty changes. These would have to be ratified by 27 parliaments, a very slow process. In Germany’s case it would require a two-thirds majority, inviting a political mutiny .
Any attempt to evade the treaty process by legal legerdemain would run afoul of German courts. In any case, the headline sums are becoming fightening. City banks are talking of a rescue fund of €2 trillion to €3.5 trillion.
Helmut Kohl, former German Chancellor and father of the euro, has told friends that Mrs Merkel is pursuing a “very dangerous” policy. “She is ruining my Europe,” he said.
Yet the assumption that Germany would or could efface itself forever was never tenable. The post-War Rhenish order is withering, and Mr Kohl’s Europe no longer exists. This may be the summit where the 21st Century reality at last becomes obvious.
Nothing ever seems to be exactly as you think it is – or was – and that applies as much to the nostalgia industry as anything else. Thus, those who think it was so much better in days gone past might be intrigued to note this report (below right) taken from the
Daily Mirror on 17 September 1940 – ten days into the London Blitz.
It tells the tale of two men, Charles Groman, thirty-two, a porter, of Cannon-street-road, Stepney, East, a Pole, and David Rothman, nineteen, a street trader, of Bancroft Road, Stepney – both living in the centre of the devastation brought by Hitler's bombers (pictured above - actually photographed on 17 September 1940).
The two men, imprisoned on remand, had appeared before magistrates at Old Street , London, charged with being concerned in the theft of toffee, a piece of chocolate and a dummy chocolate carton, total value 9d (less than 4p) "which had been left exposed or unprotected as a consequence of war operations" – i.e., looting.
The men, however, were relieved to learn that an alternative charge of simple larceny had been preferred, to which the men had pleaded guilty. Each was sentenced to three months' hard labour.
In evidence, it was stated that a confectionery shop had been damaged by a bomb and part of the window stock had fallen to the pavement. A police constable had seen the men pick up some of the confectionery. Groman had been seen to pick up an empty chocolate box and throw it away. Rothman had a previous conviction for theft.
On Rothman's behalf, it was stated that he now realised the gravity of the offence, which "in certain circumstances was punishable by death". Some time ago, the report continued, he fell from a window, and his mother said he was "a bit out of the ordinary".
The reference to the death sentence was in respect of the original charge of "looting" and it is therefore unsurprising that the men "preferred" the alternative charge of larceny, and the sentence of a mere three months' hard labour.
Looking at the "offences" though, one sees two men imprisoned for picking up a trivial amount of confectionery off the pavement, after an air raid. In modern times, most would struggle with the idea that this was even an offence, and the sentence seems barbaric.
But that was England in 1940 – the "good old days" of Churchill, warm beer – when you could get it – and the Blitz spirit. There is a lot wrong with things today – not least the low grade of leadership – but thankfully, we have progressed a little since then.
You might wonder, incidentally, how I happened upon this story – when research
on the book is done and there is no need to be looking at such material any more. And herein lies the rub. My publisher, Continuum, has been
taken over - by Bloomsbury, the highly successful publisher of the Harry Potter series. We are moving into the big time.
However, that means there has been a short delay in the publication schedule, and in the window afforded (which lasts for another four days), I have taken the opportunity to input some corrections and additional material. Not least, I have been able to acquire a rare and difficult to obtain microfilm archive of Sunday newspapers, which I expect through the post today.
Until Monday, therefore, I will be blogging, but will also be a little distracted, focused again on the madness of a bygone age – which actually affords some relief to the madness of today.
COMMENT THREADThe date is
22 November 1984. The men holding hands are François Mitterrand and Helmut Kohl. The place is
Verdun in front of the
Douaumont ossuary, housing the skeletal remains of at least 130,000 unidentified combatants, killed in the murderous battle of 1916 – visible to the public through small windows set at ground-level around the building.
The site is quiet and, even at the height of summer, it feels cold. The birds never sing. That sounds like folklore, but they don't. There is an eerie stillness about the place, and one feels a great weight lifted when you get clear of it, down the hill and back into the town of Verdun itself.
There is a plaque commemorating the meeting, on the very spot where the two men held hands. It was the first time the leaders of the two great nations had met on ground which had once been a nightmarish killing field. It wasn't really a "battle" - it was more slaughter on an industrial scale. And it, more than anything, tells you about the European Project. It explains the driving force – the Franco-German "motor" as it is called.
Now we have Merkel and Sarkozy – and Ambrose says the
wheels are falling off. Yet it was felt that, with enlargement bringing the community to 27, the EU would transcend this core partnership – and come of age. That, really, was what the European Constitution was about.
But in fact, the "motor"remained the driving force. If Ambrose is right – and I think he could well be – and it has stalled, then it is over. The final collapse may not come immediately, but without that very clear and close relationship between France and Germany, the EU is no more.
Verdun tells you that. The EU is nothing without its history. But it remains trapped in the history. Take it away and it is nothing. The question is, what do we do now? It becomes more and more urgent that we find an answer. We have wasted too much time already – and if we don't, others will. And we might not like their answer.
COMMENT THREADThe answer, Mr Hannan, is "no" ... and it was three years ago, when you wrote
the piece. But then you knew that, didn't you? You were just testing us.
COMMENT THREADVeteran forecaster Douglas McWilliams
said: "The signals seem to be building up for some kind of market crash – shares and many bonds are already down significantly from their recent peaks. At the beginning of this year we gave one-in-five odds on a UK double-dip. The chances now are about one-in-three."
And will they recall parliament? Will there be a debate? Would there even be a point in having MPs talk about it? In fact, what is the point of MPs?
COMMENT THREADYou expect the NOTW to be a bottom-feeder – which means that a former editor is bound to be tainted. This is not the sort of man a Conservative leader should hire as his director of communications. And that much of the current affair is
relevant and important. It strikes at the lack judgement of Cameron – which we already knew to be poor. The man is not fit for office.
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