Why Germany might let Europe fall
August 18th, 2011
09:00 AM ET

Why Germany might let Europe fall

By Fareed Zakaria, CNN

This is the moment of truth for Europe.

For the last year or so, the Europeans have repeatedly produced workable compromises that kicked the can forward. They hoped these compromises would quiet the markets.

This strategy was often quite successful. Europeans kept promising, “Yes, we are going to bail out the weaker countries with the greatest debt load, but we want some structural reforms in return. And as we get more structural reforms, we’ll bail them out more. And if the crisis seems more intense, we’ll bail them out again.”

The Europeans repeatedly produced packages that were enough to satisfy the markets.  Their hope was that at some point concerns would dampen down and then in the quiet of the night they could allow a country like Greece to soft default - a restructuring that doesn't spook everyone and doesn’t become a Lehman Brothers-like event.  They sought a quiet reshuffling of debt.

I think this soft landing has now become impossible.

Today what people are basically asking is: “Is Europe’s debt going to be centralized or not?” In other words, is Europe going to be willing to say, “All our debt is pooled together and theoretically, as a single entity, we’ll pay it back.”

The key to this commitment is Germany. Germany is the only country that can pay.

But Germany is increasingly reluctant to do so.  What we're watching is the rise of a new, ‘normal’ Germany, which in turn will lead to the unraveling of the old, highly unnatural structure of Europe.

The old structure of Europe rested on an extraordinary degree of German abnegation of its own interests.  The Germans believed their national interest lay in subordinating itself in every way to Europe’s broader interest.  That was what Europe was built on.

That’s why when you go to Brussels to the European Union you find a French-run affair with Germany’s money - a German-financed, French-run organization.

That has changed.  The Germans, 60-years after World War II, are understandably becoming a more normal country. They are deeply, purely European but they are not going to pursue Europe’s interests at the expense of their own.

Despite what people say, Angela Merkel has been extraordinarily willing to bail out weaker states in Europe.  Obviously, she's tried to get a good deal in terms of forcing some structural reforms in Greece and places like that.  But the real story is that she did this despite German public opinion, which is now 75% opposed to any kind of bailout. This German opposition to bailouts will surely remain going forward.

And if that is the trend going forward, the Europeans are going to have a very, very big problem. There really is no way you can make the numbers work without a much more substantial German commitment of resources than there is now.  If that doesn’t come through, it’s very difficult to see how the euro in its current form survives.

The key to Europe’s future is how Germany conceives of its interests.  If it does so in a way that would be perfectly normal (it is important to emphasize there is nothing scary about Germany simply saying that it wants to do what’s right for Germany as well as Europe rather than always putting Europe above Germany) this might be the end of Europe as we've known it.  It might be the end of Europe as a constructed, political entity built and supported by key nations, particularly Germany, no matter the cost.

For more of my thoughts through the week, I invite you to follow me on Facebook and Twitter and to bookmark the Global Public Square.

Post by:
Topics: Debt Crisis • Europe • From Fareed • Politics • United States

soundoff (644 Responses)
  1. marginal man

    Christ is never coming, get over it.

    August 19, 2011 at 3:44 am | Reply
  2. Jose

    Christ is already here awaiting resurrection –

    August 19, 2011 at 4:46 am | Reply
    • malasangre

      Matthew 28:20 I am with you always

      August 21, 2011 at 11:51 am | Reply
  3. Paul

    Europe is not going to fail. Of course, the Italians Spaniards etc are now owned by the Germans ... like, they won the war he he ... but they can only blames themselves. There is a very good outcome of the current crisis, the central bank of the EU will be now and for ever managed by the Germans and will have actual acting power to manage the repossessed economies (PIGS that is), so that idiots like Berlusconi will no longer be able to screw it up This is good news, because this means that Europe will have a future of solid economies.

    August 19, 2011 at 4:47 am | Reply
  4. Sam

    So Germany finally conquers Europe without firing a single shot! Germans know about inflation (Weimar Republic), thats why not QE there and they have real growth.

    August 19, 2011 at 6:47 am | Reply
  5. Gavin Jones

    4th Reich. Well Played Germany.

    August 19, 2011 at 7:33 am | Reply
    • Adrian R

      Germany needs Lebensraum!

      August 19, 2011 at 12:01 pm | Reply
  6. Don N

    This news about Germany is not surprising at all. Why should a successful country like Germany pump billions of its hard earned Euro into the sink hole called the EU, when other members such as Greece, Italy, Spain, Ireland, etc. keep promising reforms but do little. These countries are fast becoming the welfare states if they don't clean up their own houses fast...

    August 19, 2011 at 7:45 am | Reply
  7. tom in connecticut

    Germany is looking for a sustained peace in Europe and perhaps a means to repents it previouos crimes. It should be taking a leadership role in financing a better Europe. – It is is morally obliged.

    August 19, 2011 at 8:05 am | Reply
    • ZweiStein

      The people responsible for those crimes are long gone. "The sins of the father?"
      Using your logic, we should be responsible for the slavery championed by our forefathers.

      August 19, 2011 at 4:54 pm | Reply
    • Zilla

      Why would Germany really care about Europe. Because of the E.U.? The E.U. was a bad move, and I called it when it was being formed. Just another welfare organization. Germany should look out for their own interests, as they are obligated to NO ONE but themselves. This is why a North American Union will never happen, because Americans would engange in combat and riots in the street first.

      August 21, 2011 at 10:31 am | Reply
  8. Hartley555

    @FrmCdn,
    Please stop arguing with "former Jehovah's Witnesses". It is a waste of time. If they are former JW and actively speak against the organization, it means that they did not want to live up to Bible standards and teachings and were removed from the congregation. This is a Biblical practice, and the Bible commands not to even say a greeting to such ones. You will notice that their sole purpose is to tear down the work of JW, never providing a better understanding of the Bible, or a positive encouraging hope for the future. Everything they say is motivated by bitterness and hatred and they have no real interest in getting to know Jehovah or to obey His commands. Keep studying the Bibles, make sure that what is taught is based on Bible principles, and save your 'pearls' for those who are humble and meek. Cheers

    August 19, 2011 at 8:11 am | Reply
    • malasangre

      JW another child molesting cult preaching every one else is evil, but dont worry we know whats right. they are outlawed in some countries for the freaks they are.

      August 21, 2011 at 11:47 am | Reply
  9. Rick McDaniel

    Just like the US has had enough of Obama, Merkel has had enough of European states that don't get their house in order.

    August 19, 2011 at 9:08 am | Reply
  10. Greg Gilbert

    Eventually your going to have a country that has it finances in better order go back to it's old currency. Problem with that is as soon as it gets mentioned it will plunge the Euro down in value and make matters worse.

    August 19, 2011 at 9:25 am | Reply
  11. Eatenhogg

    Who needs ze army ven ve can crush dem vit our economy?!

    August 19, 2011 at 9:33 am | Reply
  12. Das Yankeestrasse

    "The Germans, 60-years after World War II, are understandably becoming a more normal country. They are deeply, purely European but they are not going to pursue Europe’s interests at the expense of their own".

    NOR SHOULD THEY!

    August 19, 2011 at 9:47 am | Reply
  13. PeterD

    A man stepping on a Banana is OBAMA & Banana is American People.

    August 19, 2011 at 9:50 am | Reply
    • Michael

      Well, Americans certainly are bananas...

      August 22, 2011 at 10:21 am | Reply
  14. RandomRules

    I don't know if the world is going to end soon or not, but after reading through this thread I'm really hoping it does.

    August 19, 2011 at 10:14 am | Reply
    • Darwin

      Well Said
      Cant wait till the all go to "the place" and play with Jesus. Since I am not a believer and will be barred from entry, I am gone hang around here. Then serious people can start solving the worlds problems.... I sure hope he comes and takes you all far far away

      August 19, 2011 at 12:35 pm | Reply
  15. Chris Honry

    It's amazing how no one sees the difference in culture as the real reason Europe sucks and Germany rocks. Europe= lazy to the point of sickness, Germany=driven, ambitious. I was in Europe December of 06 and there wasn't anything open for coffee or breakfast before 8:30AM. Ridiculous. Plus, they let in all the foreigners who are now destroying their countries. Last year France, this year England, which one next?

    August 19, 2011 at 10:27 am | Reply
    • ron brooks

      Exactly right. Go to some of these financially troubled countries and see how they operate on a day to day basis. I was once in Greece on a vacation to Turkey. I took a ferry ship over to a Greek island. We happened to be there during lunch. I walked into a restaurant that had doors open and saw the waiter asleep. I tapped him on the shoulder and asked if he could show us a menu. He said one word, siesta and then fell promptly back to sleep. That about summed it up for the country of Greece for me. I took the next boat back to Turkey and never wanted to come back to Greece. Expensive and basically unresponsive, not wanting to make any money during siesta and I truly believe the whole country is under Siesta most of the time causing their demise. Germany on the other hand is a robust country where you can get service most of the time and are usually willing to work hard. Customer service is not their strong point but they are punctual and hard working.

      August 21, 2011 at 9:09 am | Reply
  16. gr8

    The rest of the world will carried on before without Europe and America and will do so again. Looks like the white man's systems are failing. Jesus will come. Sure. Because there's another b!tch out there waiting to lie to her parents that she didn't sleep with anyone but is going to have a god child.

    August 19, 2011 at 10:39 am | Reply
  17. PeterD

    Actually Jesus wants to come for rescue BUT He is detained by JEWS.

    August 19, 2011 at 10:50 am | Reply
  18. biggdawgg

    How the h%$# did an article on German financial interests devolve into a discussion on Jehovah's WItnesses? Are you folks all bananas?

    August 19, 2011 at 1:37 pm | Reply
    • ZweiStein

      And that is why the banana in the picture.

      August 19, 2011 at 4:57 pm | Reply
  19. AndrewRyan

    All religions in the world were conceived in good faith but twisted by evil to control men and women by those who had the most to gain by doing so in the form of money and power. Now I'm not saying that nothing good can be learned from these religious texts as they do have some positive aspects; the problem is those in power use these in an manor simply to gain wealth and control those who find it easier to have someone else think for them and then simply repeat what they are programmed to do so. There very well is a struggle on this planet between good and evil whether or not its between two deities created by man and shaped in his image I know not. But I do know that the all men instinctively know the difference between the paths before them and it's our free will that decides our fate. Unfortunately those of an evil disposition control our world now and they have corrupted humankind so much that I'm not sure it's possible for the sheep to wake up before we destroy ourselves. The arguing on this very message board is all in line with the way we're controlled 'divide and conquer' but the division is easy when men divide themselves on baseless grounds and deceitful truths about each other. A great man once wrote "When bad men combine, the good must associate; else they will fall one by one, an unpitied sacrifice in a contemptible struggle." or as it's stated in it's most common form "All that is necessary for the triumph of evil is that good men do nothing." (Edmund Burke)

    August 19, 2011 at 2:00 pm | Reply
  20. god

    Oh and Zombie Nixon 2012!!!! for pres

    August 19, 2011 at 2:24 pm | Reply
  21. Virgil

    Oh where oh where did religion come into this? Render to Ceasar what is Ceasar's and to God what is God's, and I'm pretty certain that economics fall in Caesar's realm. As far as the militant atheist league is concerned suffice it to say that I think you badly misunderstand both people of faith and human beings generally.

    That said, I think that we're facing an economic varient of what happened in 1914 in Europe. It will not, of course, be nearly as destructive...but it will likely end or at least greatly modify the European project. Then of course, a string of alliances sent war from one country to another. Now economic distress will jump from country to country.

    I do not understand why Greece was bailed out to the extent it was bailed out on. There is a historical precedent. JP Morgan in 1907 allowed the first bank to fail, and, once the others were sufficiently terrified and motivated to clean up their act, bailed out the rest. Why was this not done? Instead the proverbial farm has been bet on Greece, and it is increasingly apparent that Greece will fail, and neither Germany nor France will be able to bail Greece out successfully. When that happens, there is every chance of a panicked atmosphere in which the contagion spreads from Greece to Portugal, Italy, Spain, and Ireland. France and Germany will then have some very difficult decisions to make.

    Zakaria brilliantly analyzes why Germany will not step up to bat this time...and then there seem only two possibilities. Either the Eurozone shrinks to a Franco-German core with much of East Europe thrown in, or it ends entirely., I think a contraction of the Eurozone is more likely personally, but it will still be enough to force us into a double dip. At this point reform of the pension system and health care systems becomes even more critical.

    I think that Germany may have the right idea here...a cooperation between non-profits and government (including the religious organizations) would probably be enough to save the situation. In all this, I think Germany would prove a better model than France or the UK...and I think the general credit status of these big three illustrates why. Simply put, the government is good at raising funds, but horrible (due to the layers of government officials that have to be paid) at dispensing them. An act that would allow for grants of funds to these organizations so long as they meet certain objective criteria would save money and make the system more flexible. The Catholic social justice principle of subsidiary would also be helpful...why send money to a centralized government to deal with local problems? Keep it local and private to the greatest degree possible.

    August 19, 2011 at 2:53 pm | Reply
  22. Aubrie

    I'll bet Germany's new stance is giving the Bilderberg group hives!!!

    August 19, 2011 at 3:32 pm | Reply
  23. DaveK Alabama

    Are there a bunch of insane people on this thread? How did religion even get involved? Of course Germany is not going to bail out the rest of Europe. Why should they?

    August 19, 2011 at 3:54 pm | Reply
  24. lynx Owe

    After living there for over twenty years it is easy to understand that the Germans have long been waiting for the promises of prosperity from a European Union promised by Kohl. Germany has paid dearly to support Europe and a Union that has spent trillions of euros and never been audited or produced a budget. The people are tired of unknowns spending their tax money to support welfare states and policies that run contrary to their interest.
    We should take a lead from them and stop our unbridled expenditures of Blood and Money around the world. Of course this would take a Congress that was responsive to the people instead of Oil Companies and war profiteers. Sadly, we appear to be a long way from that.

    August 19, 2011 at 5:01 pm | Reply
    • Brian

      well said and sadly very true....

      August 20, 2011 at 4:45 am | Reply
  25. jt_flyer

    Because no one likes to write checks.

    August 19, 2011 at 5:18 pm | Reply
  26. jeffision

    ...lookin' for my can of Jesus-Be-Gone.

    August 19, 2011 at 5:40 pm | Reply
  27. RealPolitik

    The problem is that different regional/ethnic/racial/religious groups developed apart from each other for thousands of years...only recently have they come in contact with each other. The presumption that free markets/capitalism is the end-all/be-all of all socio-economic systems because it "defeated" communism (rather odd considering that China owns 10% of the U.S. national debt while it runs surpluses regularly!). Greeks, for example, have a more traditional/communal view of the state and its role, so they'll, naturally, take to the streets when Grandma-the-Pensioner (with literally no debt or mortgages) has her social pension reduced from $60,000/year to $55,000 (equivalent). Americans, on the other hand, will keep screaming "God Bless America!" and "Greatest Country in the world! yeeehhhaaa!" as millions lose their jobs, have their houses foreclosed, and have to resort all kinds of vices to survive! The idea that we can peg everyone into a round hole, when there are many inherent squares out there, is insane. Socialism/Communism would destroy the U.S. and Germany, but it may actually be the most optimal system for many Latin American countries. That's just the way it is.

    August 19, 2011 at 6:16 pm | Reply
  28. Eric the Red

    How about Germany for Germans, England for the English, France for the French and America for Americans instead of unsupportable hordes of starving, ignorant, unskilled, uneducated refugees and their thirteen children. Just sayin'.

    August 19, 2011 at 7:04 pm | Reply
1 2 3 4 5 6 7 8 9

Leave a Reply to Virgil


 

CNN welcomes a lively and courteous discussion as long as you follow the Rules of Conduct set forth in our Terms of Service. Comments are not pre-screened before they post. You agree that anything you post may be used, along with your name and profile picture, in accordance with our Privacy Policy and the license you have granted pursuant to our Terms of Service.