July 27, 2015 6:21 pm
The rupture the EU needs to avoid is with Germany
European reforms must address Germany’s fears, writes Marcel Fratzscher
Germany’s biggest fear is that the eurozone is becoming a transfer union, with Berlin as the paymaster. Remember that Germany is the main contributor to the latest Greek bailout and has €240bn outstanding in official loans or guarantees to Greece. Demands by France and others for debt mutualisation have deepened those suspicions.
Germany’s second fear is that common European rules are circumvented all too often — as is the case with the stability and growth pact and the fiscal compact, intended to ensure debt sustainability among all members. Although Berlin itself broke the pact last decade, a strong German consensus reigns that compliance should not be a matter of discretion.
Such a post would deliver concrete benefits to EU citizens and strengthen European identity while making it harder for national politicians to blame Europe for their own failures.
The Greek crisis shows that Europe urgently needs deeper integration. Stronger solidarity should be accompanied by more shared sovereignty, as exercised by a eurozone finance minister. This would provide a mechanism to protect against recessions and crises, foster productive investment and support European workers. It would address Berlin’s deepest fears and could be common ground for France and Germany to lead Europe jointly once again.
The writer is president of DIW Berlin, a think-tank