The World

Yesterday, I was in Berlin where the temperature was -9. Today, I’m in Moscow – where its -19. But that’s enough about the weather, and about Russia (for now). It was an interesting time to spend a couple of days in Berlin, coming just after the EU summit, so let me summarise my impressions on where Germany stands on the euro-crisis.

1. They are reasonably pleased with how the fiscal pact came out. Nobody thinks it’s a complete answer. But it’s viewed as a necessary step on the way to getting European finances back in order. The most important feature is that fiscal restraint will be incorporated into national law which – it is reckoned – will be harder to ignore than the European kind.

2. There is considerable impatience with the Davos-led, Lagarde-Cameron-Geithner line that Germany has to throw more money at the problem, by building a bigger firewall and rebalancing its trade. “I simply don’t understand them,” says one senior official. “This is a problem that will not solved by the ECB or bazookas or bigger firewalls. It can only be solved by growth. And the only long-term route to growth is structural reform.” Another official, close to the chancellor, says that bitter experience has taught the Germans that the markets are not easily satisfied. Build a “bigger firewall” now – and they will be back for more soon. The Germans also mistrust the southern European claim that the firewall is just there to shock and awe the markets. “They don’t want this money just to frighten the markets”, says one official. “They want to use it.”

3. Some German diplomats seem to be a bit embarrassed by the plan for Merkel to campaign with Sarkozy. It is portrayed as a Sarkozy plan. And, for all the emphasis on the closeness between the two leaders (Merkozy and all that), the French are regarded as part of the camp (along with Italy and Spain etc) that are at odds with Germany, on the best way to handle the euro crisis. In other words, they want euro-bonds yesterday – while the Dutch and Scandinavians support the German stance.

4. There is a big worry about the return of anti-German rhetoric and the return of the “ugly German”. Diplomats say the plan for a super-commissar for Greece came out of the German finance ministry – who have a tin ear for the resonance of phrases like that in Greece.

5. But the commissar proposal did touch on a real problem. What if the Greeks make further promises to secure the next restructuring and loan package – and then fail to deliver on their promises, once again? Nobody would say that they wanted Greece out of the euro. But a couple of people said, that this was a decision for the Greeks to make – which sounded like it was leaving the door open just a fraction.

6. Finally, the Germans are desperate to make a sharp distinction between Greece and Portugal. I was told that the Portuguese banks are sounder, the debt-profile is not as bad and – above all – “The Portuguese have done their homework”. In other words, they are serious about reform.

Maybe so. But the trouble is – although I’m much more sympathetic to the German view than my colleagues Wolf and Wolfgang – I don’t think the euro-crisis is simply a matter of “doing your homework”.