Monday, 23 September 2013

Time for Germany to show solidarity over austerity plan

  This was published in the FT - 21st September 2013

Politicians must think positively. When facing a weekend election politicians must be doubly positive. So while there is truth in Wolfgang Schäuble’s assertion “Ignore the doom-mongers – Europe is being fixed” (Comment, September 17) the truth does not go far enough.

What matters is not whether Europe is being fixed. Time will fix anything if you can afford it. The question is whether the speed at which Europe is being fixed is something that countries in distress can bear for long enough to stay the course till redemption, or whether democratic systems under stress in deficit countries will abort the process before completion. Under extreme pain of austerity without growth, electorates may turn to extreme populists that offer easy solutions. This almost happened in Italy just last February.

The comparison that the German minister makes between Europe and his own country’s experience since 2003 is comparing apples with pears.

Germany was endowed with the strong legacy of an export-oriented industrial base, which could produce exports as the country regained competitiveness through socially-fair burden-sharing adjustment. It had the benefit of strong demand from the current crisis-stricken EU countries as it turned a self-serving blind eye to their breaking of the single currency monetary rules. On the contrary, the crisis-stricken EU countries are today facing a global recession in which even countries that, like Germany, can afford to loosen up to stimulate consumption, insist on the false virtues of balanced budgets.

Next week, Mr Schäuble may have to work harder to match his pre-election positive outbursts. With the next elections far over the horizon he may finally accept that surplus countries have to do their part to restore internal equilibrium within the EU and in a timely manner that protects the solidarity that Europe stands for.


Alfred Mifsud,

Balzan, Malta

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