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Germany is the engine of the European Union, one of the few efficient machines among the twenty-seven.

She promoted the concept of union with the freed East Germany after the end of The Wall – and paid for the re-structuring of a united Germany – with very little help from anyone else. Now the euro is dropping in value, almost in freefall, and Germany is once again paying the bill. Several important commentators think that as a viable solution, to avoid kicking Greece, and possibly Portugal and Spain as well, over the touchline and into dead ground, Germany herself might abandon the euro and revive the deutsche mark. Is this a pipedream?
   You only need to examine your accounts to see how the euro is falling against the dollar, the yen, even the rouble. Remember the old European joke about the difference between Heaven and Hell: in Heaven the police are British, the chefs are French, and the engineers are German; whereas in Hell the police are German, the cooks are British and everything gets organised by the Italians. Well now, eh, the EU version of this joke is as follows: fiscal policies are run by the Greeks, the Spanish and the Portuguese; interest rates are set by a central bank financed and managed by France and Italy, and everything is organised by socialist Belgians and the Spaniards. If you happen to be German, you are therefore a citizen of Europe’s grandest and most productive economy, and it just possible that you might be planning to get your arsch out of it.
   Or not. The G8 and G 20 summits will reach no conclusions; break up without any firm plan. Beautifully-tailored gentlemen and ladies will make impassioned speeches to those members still awake. It is said that there is a hope in certain European capitals (the ones that count) that the €750 billion rescue plan recently announced will provide enough sellotape to stick faltering economies together for a month or two more. There might even be signs of imminent recovery.
   It is all a bit forlorn, though, isn’t it? The euro continues its racing dive into unknown waters on non-European exchanges. All eyes are on Spain, where the ‘president of the government’ wears blinkers and keeps his ears stuffed with cotton wool, while his lady ‘finance minister’ stumbles from one crass error to the next, just as the lady ‘senior vice-president’ corrects the statements of everyone else, and the ‘minister of development’, whose job it really isn’t, blames the Popular Party, which, rather like all governmental oppositions everywhere, tends to disagree with the government. This, according to José Blanco, is unpatriotic.
    Meanwhile, people in very prominent positions are beginning to say the euro is doomed, at least in its present form. What to do then? Should there be more Europe, or less. Surely twenty-seven states, closely united, can do something? Should we all integrate our economic policies, or just admit that the euro was and is a bridge too far? Degrees in political economy are not required to see which way Europe’s political classes will turn.
   It seems M. Jean-Claude Trichet insists the euro is more or less perfect as it is. He wants a ‘budgetary federation’ to keep it happier. In the ECB HQ in Frankfurt, and in Brussels and Paris, officials are prepared to explain what this would look like – a powerful new agency, run in Brussels, examining and if necessary vetoing the spending plans of all members of the Community within the eurozone (Great Britain excluded of course). This agency would have the clout to order a profligate government (like Spain’s) to haul in the traces and tighten the belt, as it were. In Spain’s case, this will be difficult, because every one of the economic reforms proposed by the PSOE concerns taxing or punishing the man in the street one way or the other. No mention has been made of any reduction in public spending. Public companies are not to be privatised. No ministries will be cut (there are at least sixteen!) There are seventeen autonomous communities where public spending is reckless – subsidized by an equally reckless government. In Andalucía alone there are more than a thousand expensive official cars with a chauffeur provided at full salary.
   A representative of the European Central Bank has said: “depending on the situation, it may be desirable for a European Union body to have the power to be more intrusive in order to get the information needed for effective governance. It may also be desirable for the agency to have the power to enforce better fiscal governance by imposing sanctions to discourage misbehaviour.” Whoops. Does not this sound like a central EU authority, able and willing to interfere directly in each country’s budgetary plans? But maybe it is all a typical Eurocrat’s dream. As it is, without such an agency, the existing eurozone rules are designed to keep everybody’s deficits within a prudent limit. And what is to be done about Greece? Could such an agency make the Greek budget a section of the budget for the entire eurozone? Then Greece could rest its head on a pillow of German taxpayers’ enormous funds. This surely would make a final repudiation of what the euro was supposed to stand for when the idea came true almost twenty years ago.
   What was happening twenty years ago? The Bundesbank, and anyone else who knew anything about economics, were horrified by the idea of monetary union. The deutsche mark and the central bank were worshipped in post-war Germany. Citizens remembered the inflationary traumas of the late Twenties and the million-mark loaf of bread. A strong mark backed and encouraged by a strong central bank was seen as the ideal barrier against the torture of inflation. If the mark were to be replaced, it must be replaced by something equally strong; inflation must be kept under control; there must be independence from political interference.
   Now, twenty years on, Angela Merkel’s government is trying to appease public opposition to the euro itself. The president of the Bundesbank and other financial leaders would prefer to eject the Greeks rather than arrange bailouts. They are equally sceptical about Portugal and Spain. But ejecting Greece and other states is surely un-thinkable? Especially if there is a better option, say German thinkers: why should not Germany herself leave the eurozone? In a flash Germany could free herself from an increasingly intolerable fiscal burden, and leave weaker states with the chance of governing themselves out of trouble. The euro would decline against the strong mark, but this does not need to bankrupt Greece or Greek companies, because their debts are payable in euros.
   Actually, a strong deutsche mark might help weaker economies through a much improved balance-of-payments period. German industry would have to keep its head above water;   exporting would cost more, but Germans have always been able to hold down costs and maintain compe-titiveness. More, German people could be assured that their restored currency will not be debased by all these tremendous economic disparities inside Europe, or a central bank or agency based in Paris or Brussels.
   The distinct possibility arises that other states would want to leave the eurozone with Germany: They are the countries already integrated with the powerful Germany economy – Austria, Belgium, the Netherlands and Luxembourg. And then there is France: it will be difficult for the Gallic mentality to decide to remain with southern and eastern Europeans, or join the Germans, but there is no certain and safe route towards some kind of heavenly growth and prosperity. Voluntary German retirement from the euro might however be the least painful way of avoiding the economic Hell mentioned in more jocular mood at the beginning of this article.



Photo: Citizens remembered the million-mark loaf of bread