GERMANY ECONOMIC ASSERTIVENESS SHAKES EURO ZONE
By STEPHEN CASTLE
Published: February 16, 2011
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**Take note Germany is not stressing control they are only stressing the fact that the rest of the countries need to clean up their act if they want to keep going back and asking for contentious bailouts. Greece was the first followed by Cypress then Italy next Spain. Ms. Merkel is anything but a Nazi or Faciest. She is concerned that if the rest of the nations do not want to take measures to protect their financial interest because all they have to do is run to the Bank, Germany- France, then Germany should put certain qualifications in place just like any respectable bank would when one applies for a loan. I would also like to point out that when Germany united they took all the worthless Russian currency and converted it into Dueche Marks and still built their economy into one of the strongest in the world. It comes down to the banks and politics, there some who want the Euro to fall for profit and trade reasons and then there’s the one’s who want to play but have someone else pay.
BRUSSELS — For decades, Germans wanted to become more European and took care not to be seen bossing around their allies on the Continent. But now that the government in Berlin wants Europe to become more like Germany, the temperature is rising.
At a meeting of European Union leaders this month, tempers flared when Germany, backed by France, called on countries using the euro to agree to a pact enforcing German-style fiscal discipline and wage restraint.
The howls of protests from smaller countries illustrate the anxiety set off by the growing assertiveness of Germany, the most populous and economically successful European Union country, which fears it will have to pay the bill for the carelessness of others.
If Germany decides to call more of the shots on economic policy, that has big implications for European integration, for the relative influence of smaller members in the 17-nation euro zone and for countries outside the zone.
But it also raises a more fundamental question, one with important historical overtones, not just for smaller European countries, but for France as well: Is the rest of Europe ready to accept overt German leadership?
Germany is making its so-called pact for competitiveness the price for agreeing to expand the rescue fund set up for the euro zone. It will be introduced through an idea long championed in Paris — but until now resisted in Berlin — that could become an embryonic economic government for the euro zone as a whole.
According to the leaked German working paper, the country wants to establish German-specified, Europe-wide standards on a variety of issues, including corporate taxes, adjustments in pension systems and legal measures that would commit countries to tough fiscal policies through a “debt alert mechanism.”
Fears of French-German domination are nothing new. But for Germany to emerge from France’s shadow to press its own agenda is a departure, one that derives in large part from domestic political pressures.
Chancellor Angela Merkel faces regional elections this year, and her struggling coalition allies in the liberal Free Democratic Party are flirting with a more Euroskeptic message.
Throughout last year’s protracted debt crisis, Mrs. Merkel was largely on the defensive, unwilling to sanction a euro-zone bailout until the very last moment, when she could argue to Germans that action was vital to save the currency.
Her plan rests on an implicit bargain with the German public: By supporting the euro, even if it means added costs, voters need to be reassured that Germany’s approach to economic policy making will hold greater sway. Instead of Berlin making most of the compromises, most Germans believe, it is time for others to make concessions.
At the same time, the financial crisis has changed the terms of the debate.
“In good times the mood tends to be ‘I’m O.K.; you’re O.K.,’ ” said a European Union diplomat, who was not authorized to speak publicly. “In bad times it’s more like ‘I deliver; can you deliver?’ ”
And, as Germany’s ability to deliver economically grew compared with that of many neighbors, Mrs. Merkel began talking tougher. At a European Union meeting on economic targets in March 2010 she complained that, if the past were anything to go by, other nations would fall short and the Germans would have to work harder to compensate, a European Union diplomat said.
The assertive stance is creating greater anxiety in Brussels and elsewhere because of Mrs. Merkel’s evident loss of faith in the European Commission, which is the union’s executive arm and the traditional motor of European integration.
In a recent speech, Mrs. Merkel talked about the “union” method of integration — among governments — rather than the “community” method, led by the commission and including the European Parliament.
But this German preference for an arena where the big nations dominate sets off alarms in small ones, which see the European institutions in Brussels as a counterbalance to bigger states.
Mrs. Merkel’s competitiveness pact is bound to be watered down as it moves through the tortuous process of European agreement. That begins with a summit meeting on March 11. The goal is to settle on a package of measures by late March, at yet another meeting where members hope to agree on creating a larger bailout fund for the euro’s most vulnerable nations.
But the path to an agreement is littered with obstacles.
On corporate taxes, Ireland worries about losing the support of Britain, which has retained the pound and serves as a counterweight to France and Germany in wider European Council meetings. Without that, Ireland fears that it may be forced to raise its own low rate — which it sees as vital to its economic health — to match bigger countries.
Others, like Belgium, object to Berlin’s call to sever the link between wages and inflation. Countries outside the euro, including Poland, fret about being relegated to second-class status.
And even nations with no such fears worry about being dominated by the biggest of the big member states.
“It has a lot to do with history,” said Frans Timmermans, a former European affairs minister from the Netherlands. “States like the Netherlands are a little confused. On the one hand we always say we want Germany to take its rightful position as a leader of Europe, but once that happens old reactions come out and we say, ‘That’s not what we meant!’ ”
“They are asked to play a leading role,” Mr. Timmermans added. “But God forbid that they do.”
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