We Germans don't want a German Europe

 

Wolfgang Schäuble The Guardian, Saturday 20 July 2013 04.00 AEST

Germany has no taste for shaping others in its image – but we want a European Union that can compete

'Too often public discourse about the crisis is dominated by mutual recriminations and populist commentary.' Protesters march towards the Greek parliament, following Wolfgang Schäuble's visit. Photograph: George Kampolis/ George Kampolis/Demotix/Corbis

Where do we in Europe stand today? Three years after the start of the first assistance programme for Greece, and about three months after we agreed on a programme for Cyprus, the picture is mixed. On the plus side, there are many encouraging signs from the crisis-hit countries in the euro zone. Labour markets and social security systems are being reformed; public administration, legal structures and tax regimes are being modernised. These efforts are already bearing fruit. There is more competitiveness. Economic imbalances are shrinking. Investor confidence is returning.

Institutional improvements in Europe have increased the likelihood of sound budgets in future years. We have introduced more binding fiscal rules, brakes on national debt and a robust crisis-resolution mechanism that gives us time to pursue the necessary reforms. The next step is the banking union, which will further reduce risk, both for the financial sector itself and for taxpayers. Our efforts to regulate financial markets will ensure that those who make high-risk investment decisions are liable for any ensuing losses. In other words, we are restoring the link between opportunity and risk.

But there is also a negative side. There is widespread uncertainty among people in our countries. Young people in parts of Europe face a dearth of opportunity. People are losing their jobs because their country is undergoing a profound economic transition. And too often public discourse about the crisis is dominated by mutual recriminations and populist commentary. National clichés and prejudices, which we believed to be long overcome, are rearing their ugly heads again.

This debate is full of contradictions, not least where Germany's role in tackling the crisis is concerned. There is little consensus in Europe, either about what Germany is doing or about what it should be doing. Some commentators even claim that the notorious "German question" is back. It has been said that Germany is "too strong" to fit in, but also that it is "too weak" to lead the continent. Germany has been simultaneously accused of wanting to reshape Europe in its own image and of refusing to show any leadership. And even those calling for more German leadership seem to be doing so for contradictory reasons. Some want Germany to drop its resistance to debt-financed stimuli, claiming that this would help us to overcome the crisis. Others want even more fiscal solidity in exchange for Germany's solidarity.

The views on Germany's actual policies are no less contradictory. For example, voices outside the country have called for Germany to relax its "draconian" austerity policies while, in Germany, the government has been accused of not saving nearly enough, or even at all. As is so often the case, the truth is somewhere in between. We are working to achieve a reasonable degree of consolidation, to build confidence and thus to lay the foundations for sustainable growth in Germany and in Europe as a whole.

The idea that Europe should be – or even can be – led by a single country is wide of the mark. Germany's restraint does not just reflect the burden of its history. The truth is that the unique political structure that is Europe does not lend itself to a leader–follower dynamic. Europe signifies the equal coexistence of its member states. At the same time, however, Germany does feel a special responsibility towards the mutually agreed strategy for resolving the crisis in the euro zone. We are taking on this leadership responsibility in a spirit of partnership, especially with our French friends. Like the other countries in the euro zone, both big and small, we know how fundamentally important it is to co-ordinate our efforts closely if we want to overcome the crisis.

From the very beginning of the crisis we Europeans have pursued a joint strategy. This strategy aims to achieve the overdue consolidation of public budgets. But even more, it aims to overcome economic imbalances by improving the competitiveness of all euro zone countries. This is why the adjustment plans for countries that are receiving financial support call for fundamental structural reforms that aim to put them back on track towards long-term growth and thus secure sustainable prosperity for all. Sound public finances create confidence.

But sound public finances are not enough to ensure sustainable growth. In addition, we need to reform and modernise our labour markets, our welfare state, and our legal and tax systems. We have to make sure that all citizens of Europe enjoy working and living conditions that are not based on artificial growth bubbles.

These reforms will not take effect overnight. We Germans know this better than anyone. Ten years ago Germany was the "sick man of Europe". We had to tread a long and painful path to become today's engine of growth and anchor of stability in Europe. We too had extremely high levels of unemployment, even long after we started to adopt urgently necessary reforms. But without these reforms there can be no sustainable growth. Stimulus programmes based on even more government debt will only shift higher burdens on to our children and grandchildren, and will have no lasting benefits.

To create new jobs in Europe, we need businesses that offer innovative and attractive products that people want to buy. European companies can do this only if governments create the right conditions to help companies to achieve success in our increasingly globalised world. That applies not just to German businesses, but to French, British, Polish, Italian, Spanish, Portuguese and Greek companies as well.

The idea that Germans want to play a special role in Europe is a misunderstanding. We do not want a German Europe. We are not asking others to be like us. This accusation makes no more sense than the national stereotypes that lurk behind such statements. The Germans are joyless capitalists infused with the Protestant work ethic? In fact, some economically successful German regions are traditionally Catholic. The Italians are all about dolce far niente (delicious idleness)? The industrial regions in northern Italy would not be the only ones to bristle at that. All of northern Europe is market-driven? The Nordic welfare states, with their emphasis on social solidarity and income redistribution, certainly do not fit this caricature.

Those who nurture such stereotypes should look at recent surveys that show a clear majority of people – not just in northern Europe, but also in the south – in favour of combating the crisis through reforms, public spending cuts and debt reduction.

The Germans themselves are the last people who would want to put up with a German Europe. We want to put Germany at the service of the European community's economic recovery – without weakening Germany itself. That would not be in anybody's interests. We want a Europe that is strong and competitive, a Europe where we plan our budgets sensibly, and where we do not pile up more and more debt.

The key task is to create conditions that are conducive to successful economic activity, in the context of global competition and demographic trends that pose a challenge for the whole of Europe. None of these things are German ideas. They are the tenets of forward-looking policies.

Sound fiscal policies and a good economic environment are the only ways to gain the confidence of investors, businesses and consumers and thus achieve sustainable growth. All international studies confirm this, as do the European Central Bank, the European commission, the OECD and the International Monetary Fund – organisations headed, incidentally, by an Italian, a Portuguese, a Mexican and a Frenchwoman respectively.

And the policies of European governments are geared towards these objectives. Those European countries currently grappling with complex adjustment processes deserve our highest appreciation for the way they are reforming their labour markets and social security systems, modernising their administrative structures, legal systems and tax systems, and consolidating their budgets. We should have the deepest respect for the efforts they are making. Our reward – everyone's reward – will be a strong and competitive Europe.

We Germans don't want a German Europe | Wolfgang Schäuble | Comment is free | The Guardian