A defiant Angela Merkel is doing no more than defending the interests of her own electorate.
Let’s say this again, just in case a single sentient being on the planet has missed it: Germany cannot simply decide to bail Greece (or Spain, or Italy, etc) out of its debts. OK? However much Angela Merkel is nagged, berated, bullied and patronised by Barack Obama, David Cameron, or the BBC/Guardian axis that regard the preservation of the euro project as critical to their own interests, she cannot just revoke, in a unilateral act, the rules of German government or of the Bundesbank.
Her persistent refusal to “take decisive action” of the kind that would suit the purposes of all those clamorous voices at the G8, is not “dithering”, as it is so often described. In fact, it is not (or not entirely) to be explained in any of the mildly contemptuous ways that her tormentors suggest. It does not arise from an unthinking, superstitious terror instilled in her by the Weimar nightmare of hyper-inflation. Nor is it a narrow-minded expression of the German hausfrau’s values of thrift and self-discipline. What Mrs Merkel is doing, quite appropriately, is defending the integrity of her national constitution, the economic principles on which her country’s economic success has been built, and the interests of her own electorate.
As the leader of a democratic state, what else should she be expected to do? Would Mr Cameron, who is busily assuring us that he will always put the needs of this country first, be chivvied into throwing over the interests of his own citizens for the sake of another national population that has come to grief largely as a consequence of its own misjudgments? Last week, he called for the “pooling [of] fiscal sovereignty” among the eurozone countries. Would he be willing to give up his Government’s right to determine its own tax and spending policy?
And would Mr Obama reverse the fundamental principles of the United States Constitution for the sake of a short-term solution to a global economic problem? (Well, actually, maybe he would. Given his egomaniacal tendency to regard the Supreme Court as a turbulent nuisance when it obstructs his plans, he might not be the best exemplar of constitutional probity.)
In truth, if Mrs Merkel’s reluctance to churn out euros on the Bundesbank printing presses is based on anything other than the straightforward illegality of such a step in German terms, it is probably rooted in more recent associations than Weimar. East Germany is the spectre that hovers over this debacle: the Soviet model of a phoney currency that is manufactured to meet political requirements and which – at the point of national collapse – may simply be exchanged, as the Ostmark was, at an arbitrary nonsense rate in order to avoid pauperising an entire people. That is where Mrs Merkel (and the rest of us) might well see the euro heading if the “decisive action” merchants get their way: not just toward dangerously inflationary levels, but to the status of a fictional currency that can be expanded at will to prop up an ideological delusion.
The “full employment” of the Warsaw Pact countries which was created by central committee fiat, along with the currency to pay for it, is now regarded as one of the more obviously risible facts of Eastern bloc life. But how different from that would it be to create euros to pay for the pensions of the Greeks (or of the French, whose retirement age of 60 François Hollande has promised to restore)? In fact, when will we confront the most fundamental dilemma of this European crisis: that in order to offer the comprehensive entitlement programme that is promised by European “social solidarity”, the EU would not only have to churn out endless mountains of progressively more meaningless currency, but would also be forced to institute forms of economic control that Eastern Europe might have recognised?
As I write, Greece is experiencing what is now called a “bank jog” – a fairly slow “run”. By the time you read this, it may have become a sprint. How long before the (unelected) Greek government imposes a freeze on all bank accounts? Or exchange controls to prevent anyone taking or sending more than very small amounts of money out of the country? When will we start to see prosecutions for “economic crimes” in which the survival of the political project takes precedence over the right to access and make free use of your own funds? Not to mention tanks in the streets to control social unrest. The West may have won the Cold War but its own brand of utopian solution – the great economic and political union that would put an end to war and social instability – is toying dangerously with mechanisms that are certainly anti-democratic and come close to being totalitarian.
This is not just a story of bureaucratic grandiosity, or of German insistence on domination. Certainly it is true that there is an irreconcilable cultural clash between the more puritanical North and the, shall we say, more indulgent South. It turns out that Marx was wrong about economic conditions determining political behaviour: a nation’s religion and geography are much more likely to affect its economic attitudes than the other way round. But it is not the dream of European co-operation that was doomed from the start: given the ancient hatreds and unforgivable sins of the past, that was difficult, but it was not impossible. What has made the project unworkable is the insistence that the EU be a vehicle for democratic socialism: the impossible dream was not European unity but universal “social solidarity” stretching across a continent, for which the single market was simply a milch cow to produce the funds.
Unfeasibly enormous social security and entitlement promises were made on the basis that the free market would always provide. Nobody bothered to ask what would happen when the market faltered or fluctuated (as genuinely free markets do) or when the sense of entitlement outgrew the wealth that could be created. The problem is not unique to Europe. They are facing the same question in the US, where benefits programmes – particularly social security (the US federal pensions system) and Medicare – have become as untouchable, and as financially unsustainable, as they are here.
How long will freedom survive in the face of mass rage at the loss of the economic security that has come to be seen as a basic human right? People were told that they could have lifelong protection from want without any restrictions on their liberty or their economic self-determination. So now the cake has been well and truly eaten and had. The EU is going to have to admit sooner or later that this fantasy has run its course.