The European Union is often derided for policy confusion and speaking with a multitude of voices – but sometimes it’s not the EU’s fault, it’s the fault of one of the member-states. Take the idea of setting up a European Monetary Fund. This emerged as a serious possibility for the first time when Wolfgang Schäuble, Germany’s finance minister, offered support for it in an interview last weekend with Welt am Sonntag.
Within a couple of days, however, Germany’s two most important central bankers – Axel Weber, the Bundesbank president, and Jürgen Stark, an executive board member of the European Central Bank – had distanced themselves from the idea. Even more confusingly, Chancellor Angela Merkel chipped in with the remark that it wouldn’t be possible to set up a European Monetary Fund without changes to the EU’s governing treaty. As she well knows, after the agonising experiences first with the EU’s failed constitutional treaty and then with the Lisbon treaty (which finally came into force in December), there is next to no appetite for such changes among the EU’s 27 governments.
The ambiguous signals from Berlin achieved that rare feat in EU politics – making France’s position appear more cautious, coherent and practical than Germany’s. Uncertain whether the German government and its senior central bankers were capable of resolving their internal debates before the next financial crisis bursts upon the world, officials in Paris settled for the entirely sensible line that a European Monetary Fund was an issue for the future rather than the here and now.
What does Germany really want? The old trade-off of the 1990s in which German governments demanded deeper EU integration in return for wider EU enlargement seems no longer to have much appeal in Berlin. When Merkel finally used the term “economic government” last month in relation to EU policymaking, she was careful to frame it in the context of all 27 member-states, not the 16-nation eurozone, thereby robbing it of its potential to serve as a driver of euro area integration.
What Germany wants, I suggest, can be boiled down to three desires. First, Germany wants no longer to be, in the broadest sense of the term, the EU’s paymaster, picking up the tab for European unity just because of its sins in the second world war. Next, Germany wants eurozone economic policymaking to focus on budgetary discipline and debt reduction, so that it is not at risk of having to rescue fiscally dysfunctional countries such as Greece. Lastly, Germany wants to remain the EU’s champion exporter and a model of business competitiveness, piling up vast current surpluses as a result. These three desires reflect the kind of nation Germany has become 20 years after its reunification.
The question is – are these desires compatible with each other and with European stability?
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