Europe Needs a German Marshall Plan

(…..) The cautious leaders of European Central Bank argue that the euro treaties prohibit the bank from buying debts of member states; likewise, Berlin has resisted issuing any “Eurobonds” that the members of the European Union would have a collective duty to repay. But treaties can be loosened as well as tightened; they fit for a while, then must be revised. If European leaders and finance ministers were able in a weekend to agree on a pact that envisaged a punishing commitment to austerity, surely they can authorize the central bank to buy government bonds directly. Sober minds among German opposition understand this. Ms. Merkel seems to comprehend it, but, constrained in part by her own majority’s reluctance, she has been moving too slowly to halt the unfolding crisis, hoping that lining up harsher fiscal discipline will stanch the ebbing of confidence. Promise the impossible and supposedly the bond markets should rally. But this is wishful thinking. The history of last 5 years has demonstrated that political leaders can’t always rely on the market; banks are fair-weather friends, anxious to lend in good times, in danger of imploding in crises. Ultimately, the issue is not merely one of economic welfare. For over half a century, progress of European Union has provided a civic vision comparable to earlier aspirations for national liberation from dictatorships, whether Nazi or Communist. It managed to move millions of excess farmers off the land into new jobs without their mass defection to xenophobic populist parties. It has led to a huge exchange of young students and workers, reintegrated formerly Communist nations of Eastern Europe and accommodated a united and wealthy Germany without a destructive revival of earlier anxieties. And in the future, the European Union is needed for the Continent to remain a significant international actor in a world organized around powerful regional groupings. Ultimately, the path to “more Europe” will require granting European Parliament a far greater share of control over Europe’s public expenditures, even if many European Union experts might be scornful and the British would balk. European Union’s budget today is limited to less than 2% of total European G.D.P., whereas every major European country’s budget usually accounts for 40 to 50 percent of national output. Europe’s parliament should have the power to decide on the overall amounts to spend on welfare and pensions and support of the unemployed. Then European social preferences can be debated the way they are within every nation, through European-wide parties and parliamentary elections that will take on real significance. If German policies prevail, they will seem less coercive, and the national populist parties that have emerged with disturbing strength will be compelled to debate ordinary politics rather than demonize immigrants. Merkel is right; Europe must press forward, Germany is today the country on whose farsightedness European project hinges. Chancellor Kohl proved an unlikely visionary in 1989-90 when he urged both German unification and an enhanced European Union. Need for decisive policies has come again.



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Consultor Internacional

6 Responses to Europe Needs a German Marshall Plan

  1. (…..) In the euro zone, there is no lender of last resort. Germany, which has the money and the clout to play that role, refuses to. The European Central Bank is constrained by politics and its own narrow sense of mission. Just last week, it declined to lower interest rates — in no small part, said its president, Mario Draghi, because “I don’t think it would be right for monetary policy to fill other institutions’ lack of action.” Throughout the euro crisis, the response of Europe’s political leaders has been tepid, reluctant and unconvincing. They are willing to kick the can — and no more. The decision over the weekend to lend Spain $125 billion to shore up its tottering banking system is typical. For one thing, it’s unlikely to be enough. For another, it will do very little to improve Spain’s underlying problems — including 25 percent unemployment, an economy in steep decline and a growing federal deficit that may require its own bailout.

    You wonder why people are already speculating that Italy will be next? Because there is no investor confidence that the problem has been solved. Why would there be? It hasn’t been.

    One critical difference between America and the euro zone is that we have one government and they have 17. For all our fractious politics, in September 2008, our government’s financial officials spoke with one voice. In Europe, the politicians and finance ministers in each of the 17 countries that make up the euro zone have to deal with their own nations’ political dynamics. The Germans are sick of being asked to save what they see as the ne’er-do-well Greeks. The Greeks are just as sick of the austerity programs that the Germans have imposed on them. On Sunday, Greece will go to the polls and could well elect a government that will renege on the deals it cut to get bailouts and exit the euro zone. France’s new president, Françoise Hollande, said during his campaign that he would reopen the fiscal treaty that European governments agreed to in March because it didn’t do enough to promote growth. And on and on. It is often said that Europe needs tighter political and fiscal integration to save the euro, but there is no political will for that, and likely never will be. Sovereign governments, it turns out, do not willingly cede their own sovereignty. If the euro zone is to be saved, Europe’s voters will have to save it. Everything they’ve done in the past year suggests that they would rather risk financial disaster than be wedded to countries with mores and politics very different from their own. The reason Europe lacks a lender of last resort is that its citizens don’t want one. As for us, all we can do is watch and wait and hope for the best. But don’t be too surprised if President Obama calls Angela Merkel someday soon and asks: “How could you let the euro fail? What on earth were you thinking?”

  2. Professor Uziel Nogueira says: Any social engineering experiment –such as the European integration project — is intrinsically vulnerable to setbacks. European integration is irreversible but the common currency project is not. For political reasons – the fall of the Berlin wall and collapse of the Soviet Union– the euro was rushed in the EU without proper economic, social and political conditions being met in many of the 17 member countries. Greece is a good example. Angela Merkel faces a serious political challenge because Germany cannot single hand save the euro zone. Eventually, some countries will be forced to abandon the common currency, starting with Greece in a few weeks. In an EU post debt crisis (yes, it will end!) many countries will realize that social and economic costs of keeping a strong euro are too high to afford. If weak link economies leave the euro zone, the common currency will be greatly strengthened. Germany’s leadership post debt crisis will be even stronger in Europe. I respectably disagree with Joe Nocera, one of my favorite NYT columnist. There won’t be any payback of Obama asking Merkel the rhetorical questions “how could you let the euro fail? what on earth were you thinking?”

  3. (…..) PREGUNTA. Pongamos que no hay Europa federal; que la unión monetaria se va al garete y la Unión Europea se derrumba. ¿Esa esquina del gran continente euroasiático, que contra todo pronóstico acabó dominando el mundo, en qué se convertirá?

    Niall Ferguson: RESPUESTA. Si imaginamos el peor escenario: el colapso del sistema bancario en España que se extiende a Italia y luego a Francia; la desordenada fractura de la unión monetaria empezando por Grecia; una depresión severa, comparable a la de 1931, las consecuencias económicas serían muy siniestras, mucho más que ahora, y quienes piensan que con la vuelta de las viejas monedas llegará la prosperidad quedarán muy decepcionados. Los países mediterráneos se convertirían en argentinas y Europa empezaría a parecerse a América Latina en la década de 1980; un lugar en el que será muy difícil llevar a cabo políticas democráticas, con monedas devaluadas e inflaciones desbocadas, y el auge de los populismos. Los partidos de centro se desmoronarían y aunque no creo que volvamos a los días de los golpes de Estado militares, las consecuencias económicas no solo supondrán más desempleo y que mucha gente pierda sus ahorros, sino que además se produciría una colosal pérdida de influencia. Desde el punto de vista de China, ahora, Europa tiene interés porque es un mercado incluso más grande que el de Estados Unidos. En la Organización Internacional del Comercio pesa tanto como Estados Unidos y China. Para el resto del mundo, especialmente para Norteamérica, Europa ya es un Estado federal, una entidad en la que ya no se distingue entre los países. No tienen ni la menor idea de la diferencia entre España y Portugal. Y si anunciamos que no hay más Europa y que volvemos a 27 Estados separados, nuestra influencia en el mundo desaparecería.

    Hay 11 Estados en la UE con una población inferior a seis millones de habitantes. En China hay 11 ciudades con más de ocho millones de habitantes.

    En cualquier caso, Europa ya no es la prioridad de la política exterior norteamericana, por delante están China y Oriente Próximo; solo ahora, por nuestros problemas económicos, hemos conseguido volver a formar parte de la agenda, como un adolescente conflictivo que amenaza con suicidarse. Tenemos que ser conscientes de las dificultades y también tener muy claro que tal y como se ven las cosas desde Alemania es completamente diferente de como se ven desde España o cualquier otro lugar. Estamos en un momento muy peligroso en el que las fuerzas centrífugas son muy poderosas. Estuve en Berlín hace dos semanas. No les importa el dolor que causa el desempleo en España, no les importa la economía griega. Les importa un pequeño aumento de la inflación o las elecciones en Renania del Norte. El mayor problema es que el país clave de Europa, Alemania, no quiere aceptar que el precio del euro —que ha sido extraordinariamente bueno para Alemania— consiste en firmar los cheques al menos durante los próximos diez años. Kohl lo entendió; entendió que la unificación alemana solo se legitimaría en el contexto de la integración europea. La última vez que vi a Kohl fue hace un año cuando le dieron el Premio Kissinger en Berlín. No estaba muy bien, iba en una silla de ruedas y tenía problemas para hablar porque había tenido un ictus. Creo que Kohl y Hans Dietrich Genscher tuvieron una visión histórica y Angela Merkel no la tiene. Ese día, en su discurso, Kohl dijo: debemos entender que nosotros los alemanes tenemos que poner Europa siempre por delante. Y ella, que estaba enfrente, puso cara de haber mordido un limón.

  4. Según determina la revista alemana Der Spiegel, Barroso, Van Rompuy, Juncker y Mario Draghi, han comenzado a valorar conceptos e ideas para impulsar o fortalecer el Sistema del Euro y de Europa, a petición de los principales líderes políticos de la Unión. Mientras tanto, Merkel afronta su cita en la Historia con urgencia: ¿¿ Valora Merkel el momento histórico que vivimos y su enorme significado ??; ¿¿ Es consciente que sus decisiones podrían situarla en un lugar prevaleciente de la Historia europea o defenestrarla en el panteón de los malos recuerdos ?? Aparentemente, una de las ideas que barajan en el grupo de los cuatro de Bruselas, Frankfurt y Luxemburgo, es la confirmación de la tan mencionada Europa a dos velocidades. Si volvemos a los comienzos de la crisis, y asumimos que siempre estuvo la dicotomía de intereses entre países acreedores vs. países deudores, parece más que evidente que la Eurozona se reducirá en número conformando un núcleo duro y el resto formarán parte del paisaje europeo. ¿¿ En cuál de los dos grupos se situará España ?? En apariencia, vamos a necesitar mucho más que un mapa, una brújula y un compás. Fiscal, presupuestaria, bancaria o una unidad política, ese nuevo concepto de “Unidad Comunitaria”, posiblemente repercutirá sobre el diseño o arquitectura institucional de la Unión, donde se antoja evidente la fusión de la alta dirección de la Comisión y el Consejo Europeo, en un único liderazgo político. Sin lugar a dudas, también supondrá despejar la incógnita de la legitimidad o el tan acuciante déficit democrático. En este contexto, emerge la figura de Wolfgang Schauble, cómplice necesario de la Sra. Merkel, destacado miembro pro Europa del Gobierno aleman, que aúna pasado, presente y futuro de la proyección alemana en Europa. Cómplice apegado a la trascendencia de la historia larga de Europa y sus reflejos no tan almibarados. En apariencia, vamos a necesitar mucho más que un mapa, una brújula y un compás. Así pues, a los efectos de progresar y evolucionar en esa idea de una nueva Unión Europea (UE), se antoja imprescindible dejar en el baúl del olvido ciertas falencias de origen (Objetivas y Subjetivas) que tan sólo nos han hecho involucionar con acidez o amargura y SER un gigante de pies de barro en el escenario “nacional”, regional e internacional. Ya es hora que Europa reconozca su lugar en el mundo y ocupe con responsabilidad en mayúscula su lugar en la Historia. Es momento de enorme trascendencia, pero de mayor proyección en la Historia de nuestro continente. ¿¿ Estarán las “élites” europeas a la altura de semejante desafío ?? ¿¿ Estarán las “élites” europeas a la altura de su tan hastiada, exigente y cosmopolita ciudadanía ??

  5. Although Europe may seem far away from the economic life of the average American, the fate of the euro zone weighs heavily on the United States economy. Pension funds have invested in bonds issued by southern European states, while banks and insurance companies have underwritten a sizable fraction of the credit-default swaps protecting investors against default. It’s no wonder, then, that President Obama is urging Germany to share in the debt of the euro zone’s southern nations. But in doing so, he and others overlook several critical facts. For one thing, such a bailout is illegal under the Maastricht Treaty, which governs the euro zone. Because the treaty is law in each member state, a bailout would be rejected by Germany’s Constitutional Court. Moreover, a bailout doesn’t make economic sense, and would likely make the situation worse. Such schemes violate the liability principle, one of the constituting principles of a market economy, which holds that it is the creditors’ responsibility to choose their debtors. If debtors cannot repay, creditors should bear the losses. If we give up the liability principle, the European market economy will lose its most important allocative virtue: the careful selection of investment opportunities by creditors. We would then waste part of the capital generated by the arduous savings of earlier generations. I am surprised that the president of the world’s most successful capitalist nation would overlook this. This does not mean there can be no systematic risk-sharing between the states of Europe. But for that to happen, the countries should first form a common nation, with a constitution, a common legal superstructure, a monopoly on power to ensure obedience to the law and a common army for external defense. Otherwise, there is nothing to counter the strong centrifugal forces created by redistribution schemes, which would inevitably lead to political eruptions that would threaten the stability of the Continent. The European Union has enjoyed a long period of stability because it abstained from sizable interregional redistribution.

    This period would end if we redistributed incomes or debt without creating a United States of Europe.

    Unfortunately, not one of these conditions is met in Europe today and won’t be in the foreseeable future, because the euro zone countries, above all France, are unwilling to give up sufficient sovereignty. Even a European nation, however, should not socialize debt, a lesson demonstrated by the United States in the 19th century (…..)

  6. (…..) Until recently, the German position has been relentlessly negative on all such proposals. German officials have repeatedly opposed the direct recapitalization of troubled banks. Chancellor Merkel has consistently ruled out euro bonds. Some German spokesmen have made it sound as if they actually want a Greek exit from the euro zone. Others have been over-eager to impose the same fiscal regime on Spain as has already been imposed on Portugal. We understand German concerns about moral hazard. Putting German taxpayers’ money on the line will be hard to justify if meaningful reforms do not materialize on the periphery. But such reforms are bound to take time. Structural reform of the German labor market was hardly an overnight success. By contrast, the European banking crisis is a financial hazard that could escalate in a matter of days. We have tried to come up with proposals that address German anxieties. But we want to emphasize that action is urgently needed.

    Germans must understand that bank recapitalization, European deposit insurance and debt mutualization are not optional.

    They are essential steps to avoid an irreversible disintegration of Europe’s monetary union. If Germans are still not convinced, they must understand that the costs of a breakup of the euro zone would be astronomically high — for themselves as much as for anyone. After all, Germany’s current prosperity is in large measure a consequence of monetary union. The euro has given German exporters a far more competitive exchange rate than the old deutsche mark would have. And the rest of the euro zone remains the destination for 42 percent of German exports. Plunging half of that market into a new Depression can hardly be good for Germany. Ultimately, as Chancellor Merkel herself acknowledged last week, monetary union always implied further integration into a fiscal and political union. But before Europe gets anywhere near taking this historical step, it must first of all show that it has learned the lessons of the past. The EU was created to avoid repeating the disasters of the 1930s. It is time Europe’s leaders — and especially Germany’s — understood how perilously close they are to doing just that.


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