Now German will be Spoken

BERLIN |

BERLIN (Own report) - Berlin is demanding a predominating voting majority in the principal EU institutions. According to reports in the Spanish business press, the German government will insist at the next EU summit in early December on a redistribution of vote weighting in the European Central Bank (ECB): In the future, the votes should be weighted in accordance with the country's Gross National Product (GNB). Thus, Germany would attain a predominating position in the most important European monetary institution - not only temporarily, but most likely on a long-term basis. The current principle of equality among sovereign countries would be cancelled. The demand, which has not yet been officially formulated by the German government, is a continuation of the reorganization of the Eurozone along the lines of German interests. Berlin’s leading politicians have commented on this reorganization, which has been taking place for quite some time saying Europe is facing "a new era." Volker Kauder, chair of the CDU/CSU parliamentary group and a confidant of the German Chancellor, succinctly summarized this development saying, "now Europe will speak German."

Rights of Intervention

Accompanied by openly chauvinist insults, the CDU party leadership persuaded the party congress delegates to adopt the government’s aggressive policy toward Europe. At the upcoming EU summit in early December, German conservatives are determined to reorganize comprehensively the European Union to satisfy German interests. In her European policy speech at her party's congress early this week, Chancellor Angela Merkel declared, "So far we have not interfered in the situation of other family members." But, it cannot continue like this: "We need the means for taking legal action against states," currently being drawn into the maelstrom of the debt crisis. Once again, the Chancellor demanded that the EU bureaucracy be granted "rights of intervention" in indebted EU member countries. For Germany, there are no alternatives to a consolidation of the European Union, Merkel said, "We have to create a political union step by step."[1]

EU Austerity Commissioner

The CDU concretized its objectives in a keynote motion culminating in the demand to create the post of an "EU Austerity Commissioner." Bypassing parliaments, this commissioner should have the power to intervene directly in the budgetary policy of Euro countries, as soon as they exceed a certain debt limit. "We must establish a fiscal union," said German Finance Minister Wolfgang Schäuble. According to the CDU's keynote motion, this fiscal union should include automatic sanctions on indebted countries. Under current regulatory provisions, this can only be imposed after being passed by EU bodies. In addition, the CDU would like to convert the EU's so-called rescue umbrella, the European Financial Stability Facility (EFSF), into a sort of "European Monetary Fund," which would be entrusted with the enforcement and monitoring of austerity programs in the periphery of the Eurozone. Finally, only those EU countries can join the monetary union in the future, which have inscribed "debt brakes" in their constitutions, along the lines of the German model. Rebuffing calls for European bonds, the chancellor again rejected Germany’s participation in bearing the costs of the crisis, which, after all, escalated because of the German exports industry's excessive account surpluses vis-à-vis the southern Eurozone:[2] "A communitarization of the debts cannot be permitted."[3]

A New Era

At the Party congress, Merkel's confidant, CDU chairman Volker Kauder, insisted that Germany has to lead the rest of Europe into a "new era": "We find ourselves at a sort of crossroads in Europe. (...) We feel that we have to lead Europe into a new era."[4] Kauder did not hesitate to point to the predominance Germany has already achieved within the EU: "Now German is being spoken in Europe"[5] he declared, referring to the drastic austerity measures, Berlin has imposed on the indebted countries. Three German principles, according to Kauder, should also form the basis of a common EU financial policy of the future: "Debt brakes, fiscal discipline, and better controls." He also sharply criticized the UK's potential resistance to the EU’s transformation to satisfy German interests. "Only being after their own benefit and refusing to contribute is not the message we’re letting the British get away with."

Motivation Aid

The German government is demanding that London cease its resistance to the restructuring of the EU and agree to the introduction of a financial transaction tax. In the prelude to the Cameron-Merkel summit, scheduled for next Friday, tensions reached a new peak after the British leader publicly criticized Germany's EU policy.[6] It is "difficult to understand" how come the ECB is not doing more to help the indebted countries, Cameron said. For weeks, he - like many other European heads of state - has been insisting with growing intensity for the massive buying of government bonds, for example, from Greece and Italy, to lower their interest rates and thereby prevent any state bankruptcies within the Eurozone. Because of such an expansionary monetary policy, Great Britain has a low interest burden of just over two percent, even though London's financial situation is hardly better than that of Madrid. On the other hand, the rate of inflation is relatively high, at about 5.2 percent last September. But Berlin is vehemently blocking the way to an expansionary monetary policy, even though the debt crisis, because of the rapidly rising interest burden, is threatening to consume France, Belgium and Austria.[7] November 9, Bundesbank President, Jens Weidmann made again clear that Berlin still adamantly opposes the ECB's purchase of bonds.[8] The heavy interest burden in southern Europe is, he explained, a sort of motivation aid for the now imminent austerity measures. "The risk also exists that the market incentives are choked off (...). The crisis cannot be solved, if the Italian parliament's incentives for taking action are reduced."[9]

Dominant

In addition to its growing success in dictating a repressive Eurozone crisis policy, Germany seeks to achieve even greater direct control over the EU's economically relevant institutions. The German drive for greater influence within EU institutions has been flanked by the call for a "fiscal" - as well as a "political union," whose administrations thereby would formally come under German control. Quoting diplomatic sources, the Spanish business journal, "Cinco Dias" recently reported on the German government coalition's plans to launch an "attack" on the decision-making structures of the ECB.[10] According to these plans, at the upcoming EU summit December 9, the German government will insist on a change in the weighting of ECB votes. Currently, each Eurozone country has only one vote. Now, according to the journal, the German government seeks to impose an apportionment of vote weighting corresponding to the GNP of each Eurozone country. This would insure a predominant position on the Eurozone's crucial monetary policy committee for Germany, the largest economy in the Eurozone.

Europe: German or Dead

Should, by means of an institutional transformation of the monetary union, German predominance over the Eurozone be unattainable, Berlin is considering putting an end to the European integration. At their party congress CDU financial policymakers have been quoted saying: "We will either have more of Europe or the project will die."[11]

[1] CDU will für EU einen neuen Vertrag; diepresse.com 14.11.2011
[2] see also Die deutsche Transferunion
[3] CDU will für EU einen neuen Vertrag; diepresse.com 14.11.2011
[4] Kauder-Rede beim CDU-Parteitag: "Auf einmal wird Deutsch gesprochen"; www.welt.de 14.11.2011
[5] Kauders Euro-Schelte: "Jetzt wird in Europa Deutsch gesprochen"; www.spiegel.de 14.11.2011
[6] Why isn't Germany doing more for the euro, asks David Cameron; www.telegraph.co.uk 15.11.2011
[7] Hohe Zinsen: Spekulanten wetten gegen Spanien, Belgien, Frankreich; www.spiegel.de 16.11.2011
[8] Weidmann Says ECB Can't Print Money to Finance Public Debt; www.businessweek.com 09.11.2011
[9] Bundesbank chief champions purist approach; www.ft.com 10.11.2011
[10] Alemania prepara el asalto al díscolo BCE; www.cincodias.com 12.11.2011
[11] Merkel Risks EU Clash Over Political Union Push to End Europe Debt Crisis; www.bloomberg.com 14.11.2011