Sunday, May 30, 2010

Merkel, Barroso, Euro – Oh My

José Manuel Barroso's re-election as EC PresidentImage by European Parliament via Flickr
Now it’s personal. Last week, as reported in the Guardian, German suggestions to reform the Euro-zone and re-open the Lisbon Treaty elicited a sharply worded response from José Manuel Barroso, the current head of the EC. Calling the German Chancellor “naïve” for suggesting that the Lisbon Treaty be re-opened was not designed to raise the level of the debate or improve her mood. The German response - that Barroso’s remarks were “absurd” - put the discussion in the basement.
Outside of Germany, I don’t think that many in the Euro-zone or the EU in general would support the German proposals for several reasons. First, re-opening the Treaty, which barely won approval in the first place, for the sole purpose of inserting provisions to penalize member states for not following monetary policy, is far more absurd than Barroso’s opposition to the proposal. As Barroso’s pointedly reminded Merkel, the Euro was the brainchild of France and Germany. Both, incidentally, also breached the monetary policies that were established. For Germany now to push forward some sort of punishment mechanism strikes me as a species of economic and political hegemony that is particularly distasteful to most of the other member states. Furthermore, expelling a member for non-compliance would likely result in a permanent, volutary withdrawal for the targeted country. A similar result would likely occur if voting rights were withdrawn. The European idea would be dead.
Second, and related to the first, is that Merkel is making a blatant attempt to control and mold the EU in Germany's image. In other words, nationalism is driving the German proposals. Again. Merkel is treading on dangerous ground and she has only herself to blame. It is abundantly clear that her anti-Greek rhetoric not only inflamed German public opinion but also significantly delayed EU action to develop a rescue plan for Greece. German political actions were directed at assigning blame first rather than fixing the problem and designed to increase German control of the EU. This is what the original economic union was designed to avoid - the nationalism that brought Europe to its knees. Eastern and Southern Europe will not swallow that particular pill. The UK would have the perfectly justified reason for never considering closer ties with an EU run from Berlin.

Merkel has now lost her ruling coalition in parliament. She has managed to inflame German public opinion not only against Greece, but Greeks, implying an inferiority of all southern tier member states. They have done it to the Turks. Now the Greeks, and by implication, Spain and Portugal. That is a dangerous road for Germans to follow under any circumstance and German perseverance in that regard will drive the southern tier and the Eastern European members to look elsewhere for political and economic support out of their self-inflicted economic trap.
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