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Blame it on the Germans

Gavin Hewitt | 09:35 UK time, Wednesday, 24 March 2010

French PM Francois Fillon and German Chancellor Angela Merkel, 10 Mar 10There is now frenetic activity to resolve the Greek debt crisis at the European summit this week.

The French and the Spanish would like a pre-summit summit where the 16 countries which use the euro would try and reach agreement. The IMF hovers in the wings waiting to be called on stage. The Germans see the IMF as the way out of the crisis. There are reports that the French are easing their opposition to help from the fund. Others say that Berlin is prepared to back a general aid mechanism, but only with stiffer sanctions for those who break the rules.

As the arguments have swirled and the frustration has grown so have the undercurrents of accusation.

My eye was drawn to a remark that may not have been said. Its interest lay in the fact that it was given any currency at all. In Le Monde, President Sarkozy was quoted as telling a friend, in reference to the Germans, "they haven't changed". The paper suggested he was referring to their "supposed imperialism".

It all sounds very fourth-hand but, in the past two weeks, as Germany has dug in its heels over bailing-out Greece, something strange has happened.

If you read many of the comments you would suppose that the problem was not Greece but Germany. The leaders of France, Italy and assorted European officials have all been putting the squeeze on Berlin, rather than on Athens.

The Germans and Angela Merkel, in particular, have been insisting that the eurozone live by its rules, which include no bail-outs. She has raised the possibility that in the future - and after a treaty change - that serial offenders are expelled from using the euro. She is quoted in Der Spiegel as saying that "countries which cheat in their public finances should help themselves". In some of the German media Merkel is being compared to Margaret Thatcher - another lady who was not for turning.

Paul Taylor, writing in the International Herald Tribune, says that "the Germans accepted monetary union in the 1990s on condition that the euro would be as strong as the mark, with low inflation, strict budget discipline and no bail-out for the weak". The Germans have been disciplined and have benefited from the euro, but they are not in the mood to help the Greeks.

It is this unwillingness to compromise that gnaws away at other European leaders.

The President of the European Commission, Jose Manuel Barroso, said he was sure Angela Merkel was a "committed European" which, of course, was a way of telling her to prove it. The Belgian MEP Guy Verhofstadt accused the German leader of no longer wanting a European solution. The Italian Foreign Minister Franco Frattini has piled on the pressure: "We have an institutional as well as a moral duty to intervene as far as is possible."

It is curious to know precisely what "moral duty" there is to help out those who bucked the system. What, of course, these statements are referring to is a higher European calling to back "solidarity" over all other considerations. The head of the European Central Bank, Jean-Claude Trichet, said "the euro is not a la carte. We enter the euro area to share a common destiny." It seems there are plenty of people in Germany who are less concerned with destiny and more focused on the health of their currency.

So the accusation is that Germany was once a consensually-minded European country - the good of Europe was always put first. Now critics see an economically-dominant country that will go it alone if necessary.

The Greek Deputy Prime Minister, Theodoros Pangalos, has accused Germany of making money out of Greece's misfortunes. "By speculating on Greek bonds at the expense of your friend and partner... some people are making money."

The Germans, so far, have resisted the big squeeze. Michael Meister, the spokesman for Merkel's parliamentary group, said "if France wants an agreement on aid for Greece at the summit then it should go it alone and supply aid itself and not expect Germany to do the same."

The Franco-German partnership has always been the key relationship in the European Union. I cannot remember - although I may be proved wrong - such a divide as exists at the moment.

Now it may be that some kind of mechanism to help Greece is agreed, but the EU has seen a tougher, more independently-minded Germany. Even if agreement is reached on short-term relief for Greece there is a wider problem with the euro. Many countries resent the fact that Germany is running a tight economy where growth comes from exports. Wages at home are kept down. Weak domestic demand makes it harder for countries to export there.

So the pressure will grow for Germany to loosen its policies and to defy its history. As one German professor put it, "it is part of the collective memory. Germans are for stability and austerity and not for deficit spending".

So a crisis that began in Greece has mutated to be about Germany and its commitment to Europe.


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