Europact: Berlin – treasurer and policeman
14 March 2011
With the "pact for the euro" concluded on 11 March in Brussels, the 17 Eurozone states have made a commitment to greater coordination of economic policy. Acceptance of the deal was the condition imposed by Germany for its continued support for countries in difficulty, and, according to the German press, it will highlight the predominant role played by Berlin in the survival of the euro.
Berliner Zeitung argues that the "German pact for the euro" will enable Germany’s partners to take advantage of what amounts to "a highly flexible means for reinforcing the single currency," while Tageszeitung insists that the result of the summit was "a disappointment for the German Chancellor, who failed to obtain any compromise in exchange for the extension of the debt rescue mechanism beyond a simple voluntary commitment on the part of other member states.” “The pact,” continues the Berlin daily, "is first and foremost a measure to show the German public that Berlin can impose conditions on weak countries before it agrees to bail them out." On this basis, rival daily Handelsblatt points out that Angela Merkel has now become "not only the treasurer, but also the chief disciplinarian for the monetary union – not an easy political part to play. On the one hand," writes the Düsseldorf daily, "she has to justify her efforts to aid the euro to a very sceptical German public. […] On the other, she must bear in mind that other European nations do not like to be dominated by a greater Germany. It is a role that will exercise a determining influence on Germany, which will have to act as a model for several years to come.“
For Frankfurter Allgemeine Zeitung, the attempt to open up "a new world for the euro," marked by a transposition on the European level of the German federal model of financial compensation between Länder" is bound to fail. “It does not matter if it is dubbed a ‘community of responsibility’ or ‘transfer union’. It will not work in the Eurozone," announces FAZ, which points out "that, regardless of any economic criticism, if the budget of the German state has to provide billions of euros of guarantees for the Eurozone this will amount to political dynamite, and the hitherto unwavering loyalty of the German people to the cause of Europe will be severely tested."
Of course, FAZ remarks, we may wonder if "these onerous guarantees are not simply the price we have to pay for the advantages that Europe has given to Germany," but any discussion of such measures can only be allowed to proceed if decisions on the euro have a sound economic basis. However, concludes the newspaper, "this is not the case: differences in comptetiveness remain, the European Central Bank is sitting on a mountain of disintegrating sovereign bonds, and that is only the start of our worries."