Wednesday, 10 August 2011
Could Germany lead reform to take the right decisions at the right level, in a democratic manner? As Hamilton wrote, ”the means ought to be proportioned to the end”, but powers needed for the eurozone and the European Union should be based on their citizens.
Only the European Central Bank can act right now, but eurobonds would be sensible in the medium term, said Dr Daniela Schwarzer of the German Institute for International and Security Affairs (Stiftung Wissenschaft und Politik SWP): Eurokrise: Der Preis des Zauderns (4 August 2011).
The title evokes the cost of delaying effective action in the eurozone, when the market players keep driving the politicians. The ESM is too small to prevent a market run on one of the bigger euro area members, and it is hard to imagine that a rescue fund large enough would be politically feasible.
Just a few days before the weekend, Schwarzer saw the ECB as the only euro area institution with the ability to act, despite the drawbacks.
Eurobonds would mean a quantum leap in integration, but instituting common borrowing as part of ”crisis management” would further harden resistance by opponents to the euro currency.
In June 2011, Schwarzer had criticised the decision makers of wasting a year, even if some progress had been made: Eurokrise: Das vergeudete Jahr (22 June 2011).
I see willingness to advance beyond the mute national governments, but little in the way of democratic reform.
Interested readers can find more on the through the SWP web pages ”Die Eurozone” as well as the broader SWP-Themendossier ”Finanz- und Schuldenkrise”.
Germany in Europe
With its population and economic clout, Germany is needed for indispensable reform to strengthen the European Union and the eurozone on a democratic basis, but we see little inclination among the current German political leadership. Researchers seem to be more ready for incremental progress in various policy areas, but discussion about remedying the lack of democratic legitimacy remains vague. See:
Annegret Bendiek, Barbara Lippert and Daniela Schwarzer (eds.): Entwicklungsperspektiven der EU - Herausforderungen für die deutsche Europapolitik; SWP-Studien 2011/S 18, July 2011, 147 pages
The German government and its allies need to set a new course towards democratic and substantive reform.