Paris, July 3, 2012 –
The latest, and twentieth, European “summit” meeting, held last week in
Brussels, was symbolically a defeat for Germany’s Angela Merkel, who
agreed that Europe’s permanent bailout fund could directly recapitalize
certain troubled Eurozone banks after weeks of obstinate resistance to
such concessions to what in Germany are regarded as the irresponsible
and profligate “southerners” -- Greeks, Italians, Spaniards, Portuguese
– held responsible for the European debt crisis (with a little help
from Goldman Sachs). She also, in the Greek case, agreed to a growth
fund.
(
One should add that the common journalistic term
“bailout,” usually used as meaning “giving” money, actually means
loaning money for eventual reimbursement.)
Thanks to the
relentless campaign for Keynesian reform waged throughout the crisis by
the columnist and Princeton Nobel Prize economist Paul Krugman,
Americans are more likely to think of the current debate in terms of
Monetarism versus Keynesian economics.
However, in the United States,
the Republican Tea Party crowd, and the old-fashioned small-government
economic conservatives who oppose the Obama administration and form the
bitterest enemy phalanxes of President Obama, are not monetarists (and
would probably be hard put to describe what monetarism is).
The
ordinary Republican conservatives (leaving aside the bloated and
power-primed one percenter corporate elites) are frightened by the
national debt, by their own medical or credit-card debts and their
children’s academic loan debts, which are associated in their minds with
liberal government welfare programs plus what they erroneously have
been convinced is a ruinously huge potential Social Security and
Medicare debt.
In Europe the debate has been different.
There is a North-South confrontation concerning budget management,
prudent national expenditure, and the interests of the international
markets which hold European debt. The near-overnight meeting last
Thursday-Friday finished in an agreement to support fragile Spanish and
Italian indebtedness, allowing some Eurozone rescue funds directly to
recapitalize some Spanish banks and to buy Italian sovereign bonds .
A
new system of banking supervision via the European Central Bank was
introduced, which was taken as a step towards eventual Eurozone banking
union. There may also be a tax on financial transactions, no matter
what Britain thinks about that measure, which attacks the soft
underbelly of the City of London (and potentially Wall Street). But
there is no sympathy whatever today for bankers, in view of their greedy
and larcenous practices.
These short-term measures greatly
pleased the (insatiable) international markets, but the German
parliament, the Bundestag, was infuriated by what seemed an opened door
for German taxpayers’ money to flow towards the coffers of their
fiscally irresponsible neighbors. In Germany the affair has from the
start been treated in tabloid newspaper style, with frugal Germany, and a
few hardy North European Protestant allies – Finns, Scandinavians --
being lain open to exploitation by wastrel nations.
The
reciprocal sentiment, held with comparable vehemence, has been that
having already ruined Europe twice for brutally self-interested reasons,
trying and failing to conquer it in 1914-18 and 1940-44, a third such
effort is now visible. The Greeks in particular have reminded all who
would listen that Greece was never paid adequate war reparations by
Germany, and the looted Greek national gold reserve was never returned.
It has been an edifying year in the Eurozone.
Mrs. Merkel’s
ferocious defense of Germany’s own treasury has been motivated by
domestic politics as well as by her family inheritance as daughter of a
prudent pastor. Her conservative coalition with the Free Democrats is
in damaged condition, and her own Christian Democrats have a clouded
outlook for the national elections next year.
Her overall
position on the international debt problem, however, has been unexpected
from the start of the crisis, and I should think politically
unpromising, It is to demand “more Europe” politically, before
conceding any “more Europe” economically. As Barbara Spinelli, of La
Repubblica in Rome, has recently written, what the markets want is a
schedule for adopting a European tax authority, a common European
budget, a “powerful European parliament,” a strong central bank, and
unified foreign policy. Chancellor Merkel wants a “European political
union.” This is fantasy.
Close economic and budget cooperation
is one thing, but that Europe’s great historical and imperial
sovereignties, France, Spain, and England, would hand over sovereign
power to a European executive and “powerful” European parliament, is
inconceivable. Germany itself might – after all that happened during
the past century –but I doubt even that. And we have already seen what
a common European foreign policy is worth: pious good intentions, or
uneasy ratification of what individual governments have done on their
own initiative.
Europe is, and should remain, an increasingly
close alliance of great powers. That these powers will renounce their
individual sovereignties seems to me impossible.
© Copyright 2012 by Tribune Media Services International. All Rights Reserved.
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