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.

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

soundoff (704 Responses)
  1. NVresident

    What! Does this hint of tea party logic?

    August 18, 2011 at 5:07 pm |
  2. Fuyuko

    The german teutonic mindset is different than the rest of Europe. They aren't really into following the leader and are more isolationist. If people want to understand Germanic thinking, study the history of the country. Lumping them in with france and England as being simply european is an amateur mistake.

    August 18, 2011 at 5:12 pm |
  3. russ46


    August 18, 2011 at 5:12 pm |
  4. johnny from germany

    we won't pay. and this awful german government wont last forever. but the opposition is the same
    people getting angry more and more overhere. because of the undemocratic lobby government. the
    firms which just think of there own and the europe disaster in all way. money, people who are not welcome overher, 1 euro jobs etc.

    August 18, 2011 at 5:33 pm |
  5. Bob

    The British have been disadvantaged for a long time by the French-German partnership that led, first to the Common Market and now to the Euro. In the end, Britain's choices may be vindicated.

    August 18, 2011 at 5:50 pm |
    • Chris

      Oh well, you still got your Britt's-Rebate.

      August 30, 2011 at 6:39 pm |
  6. johnny again

    europa wird genauso wie die usa bald bedeutungslos sein! die chinesen und inder werden uns stürzen!

    we have no real democratic governemnts just lobbist for banks and firms. we have many turks which will
    take over germany very soon.

    but dont mess with the germans. they will take alot but when the feel its enough its to late but unfortunately
    people not learning...

    August 18, 2011 at 5:52 pm |
    • oldbear60

      Johann ol son, I know english isn't your native tongue, but please take some time to write coherently. Other than that I agree with some of your statements, but Germany has to be careful not to forget some past mistakes and get too big for it's britches. Good luck with getting out your guest workers and keeping your language

      August 18, 2011 at 6:53 pm |
    • S1N

      There's one main problem with getting Turks out of Germany. No Turks means no Doener. Do NOT screw with my Doener.

      On a side note, I really need to google the ascii code for that little o with the dots on top.

      August 19, 2011 at 1:36 am |
  7. Matt

    I bumped my toe today. Jesus is coming! What other bad stuff happened to people today? It's a sign Jesus is coming! You'd be ignorant to think it's not. I can't type any more than that, though, because I need to go back to dusting all the crucifixes on my walls and talk about how crazy the Muslims are.

    August 18, 2011 at 6:15 pm |
  8. oldbear60

    germany is not like the rest of europe and makes a mistake in trying to be. The french would sell their mother for a sou if it would mean someone else would do the work and give them the benefit. Germany should go it alone. Drop out of NATO, form defense alliances with the US and England, who genetically and historically have a great deal more in common and let the chips fall where the may. As for Jesus coming- heck I didn't know he was breathing hard. DId Mary Magdalene?

    August 18, 2011 at 6:50 pm |
    • Zara

      Haha.. and why should they form alliances with incompetent arroant freaks that control America and UK? People who gamble trillions of dollars in the worst investment schemes and illegal wars, have nothing in common with the Post-war Germany which personifies modesty. Germans wisely invested their resources in developing technology while America spent billions on nuclear warheads (and in its typical aggressive hypcricy, oppses Iran and North Korea in similar endeavors)

      August 18, 2011 at 7:59 pm |
      • S1N

        Actually, Germany is a strong military ally of the United States. Their current forces are designed mainly for peacekeeping and defensive operations, which is why you usually see them deploy to joint areas after infrastructure is already on the ground. They are great people. They just don't have the same ground war capabilities of the US and the UK.

        They've been helping in Afghanistan for years now, and are quite good at what they do.The Kiwis and Australians made the best drinking buddies though.

        August 19, 2011 at 1:32 am |
  9. Chettahe

    Well how long is Germany going to bail out the rest of the euro zone?
    If the countries in trouble get the economic disciple and show progress towards curtailing their spendthrift ways the union may stand, otherwise their bonds will be worthless and a lot of banks and people may loose a lot of money.
    The financial wizards have made a miscalculation of expecting Germany to save the euro after all these countries piled up a lot of debt living la dolce vita.
    As for England it is on the same path to economic irrelevancy as most of the euro zone countries. They may inflate their way out of their mess, but the PIGS also eventually will do the same when they get their own currency back.

    August 18, 2011 at 6:54 pm |
  10. Hockeyn109

    Germany has always tried to dominate Europe. They finally have their big opportunity this time, without guns, just their wealth and economic strength. They practically own Europe anyway.

    August 18, 2011 at 6:57 pm |
    • Zara

      Well.. sorry to say but they actually created that wealth and economic strength by developing their industries. Berlin suffered one of the worst inflations after the Great War and now commands the solar energy industry all over the world. While America, in its conceit, chooses to wage a trillion dollar war and its hippy allies foolishly join in and now we all pay the price. So Germans are not obligated to give a dime to Europe's corrupt nations like Greece. they have already paid for the WWII damages, changed their education and social system to educate their generations about the collective madness of Naziz.

      Jeez.. its narrow minded racists like you that makes the world a disgusting place.

      August 18, 2011 at 7:51 pm |
  11. Andrew W

    Deutsche Mark uber alles

    August 18, 2011 at 7:21 pm |
    • S1N


      August 19, 2011 at 1:27 am |
      • S1N

        Sorry if I misspelled that. I only speak conversational German in order to communicate with the in-laws. I have never attempted the reading/writing part.

        August 19, 2011 at 1:28 am |
  12. AMERICA!

    Oh no the 4th Reich damn!

    August 18, 2011 at 8:00 pm |
  13. Neurotoxin

    "Germany might *let* Europe fail"? Does anyone else see why al German might have a problem with that statement? Imagine the backlash of nationalism and foreign policy conservatism against a politician that said "The United States might let Canada fail," as if another country is our responsibility. In post-WWII Western Europe, Germany has always been the one country with a sustainable economy, so strong it even endured East-West reunification despite the GDR having been bled dry by Soviet economic incompetence. Every one of its neighbors has insisted on Keyensian fairy-tales ripe with unsustainability and corruption, and Southern Europe would have imploded decades ago if Germany hadn't carried their weight – Northern Europe having massive natural resources to inefficiently squander with very small populations. Yet even with Germany carrying the weight of everyone else, Zakaria's "soft landing" ideas are just pure fantasy. The ineffiency of economic systems like those of Greece/Italy/Portugal/Ireland is hopeless, it can only be purged with massive political shifts that require an economically desperate population – not accomplished through foreign bailouts. However, it seems the Germans are finally fed up with working to support spoiled Greek and Italian bureaucrats driving their work-issued cars to the beach, and Germany forcing the people in those countries take responsibility for the incompetence of their governments is long overdue. Merkel would be well-advised to move further toward austerity, we've all seen what happens when Germany elects nationalist politicians into power – not something anyone wants to see repeated.

    August 18, 2011 at 9:25 pm |
    • RealPolitik

      Perhaps countries such as Greece/Portugal/Spain were not meant to have their most optimal socio-economic operandi under those systems. Your argument is flawed because it presupposes a basic fallacy – that free markets/capitalism/credit-based economies are the best possible system for EVERYONE, regardless of culture, tradition and the historical narrative. Hence, you view them as being thoroughly "defunct" and in need of "purges" in order to set them "right." Have you ever thought of a possibility that, perhaps, Latin America, for eg., would be better off under a socialist system, because it may be THEIR most optimal system? Do you think that resorting to mass-murder and dictatorships in order to "instill" a set of socio-economic values could, maybe, mean that a given country/people were not meant to live in that system?

      August 19, 2011 at 6:05 pm |
  14. rick

    I can see why ppl are fed up with paying for others that want earlier pensions and don't want to produce as much during their lifetime....the balance is not there!

    August 18, 2011 at 9:44 pm |
  15. Counting Beans

    Why do we find ourselves in this situation?
    Germany is the last fiscally responsible nation on earth. They hate debt. This revulsion was pounded into them after WWI. They have a congenital fear of borrowing money. Therefore their personal debt is ridiculously low and their personal savings is ridiculously high, by the rest of the world's standards. The rest of the world is inhabited by spendthrifts, moneychangers, and financial engineers. This is why Germany finds itself in this position. If I were Merkel, I would say, "let the rest of the m****rf****rs burn". But I'm pretty sure Merkel will not have more cajones than Obama, so Germany will get sucked down the drain with the rest of them.

    August 18, 2011 at 10:02 pm |
  16. PhooBar

    Can't say that I blame the Germans for not wanting to bail out financially irresponsible neighbors.

    The successful are always expected to support the failures... And it is a vicious cycle that will never end.

    August 18, 2011 at 10:25 pm |
    • S1N

      The best part is that the German people had no say in this mess. They are about the only European country that switched to the Euro without a public vote, despite an overwhelming majority of its citizens opposing the move.

      Germany has already seen what happens when they have to support failed neighbors. Although the former East Germans are not at fault, many in the West German states still harbor resentment about having to fund the other half's pensions and government benefits. Why WOULD they want to do the same for the rest of Europe?

      August 19, 2011 at 1:26 am |
  17. Zsolt

    I agree with the article, that Germany might decide to pull the plug and disconnect, not wanting to finance other unsuccessful countries. But if the German leaders read the signs well they will not do so, even if they have to struggle politically at home. Today no country, not even the strongest ones can survive in isolation, and while the European Union is suffering at the moment still this is the only viable option for all countries involved. First all the nations need to understand their mutual responsibilities towards each other, and see that if they do not put the maximum effort in they are capable of, they would cause the collapse of the union that would affect all of them equally. So the strong countries cannot dictate just the way they like it, and the weaker countries cannot just hope they can piggyback on the bigger ones. We exist in one interdependent system now, we have to behave according to the laws of an integral network. And this is true not only for Europe, but to the whole planet.

    August 18, 2011 at 10:57 pm |
    • Willedolla

      Well said Zsolt, I totally agree with your comment. All nations should start working together for the most beneficial outcome for all, or they will all collapse in the end. United we stand, divided we fall has to become a global slogan.

      August 20, 2011 at 7:52 pm |
    • DebP

      I agree. Its more than just bailouts. Its about mutual responsibility. Not only that a stronger country should help the weaker, but that the weaker receive only what they need, and agree to the same premise – they must help others where it is needed. Only if we all start assisting each other can we climb out of this mess.

      August 20, 2011 at 9:11 pm |
  18. GER987654


    August 18, 2011 at 11:24 pm |
    • ZweiStein

      Das war nich erlaubt in der schule! Uberhaubt nicht!

      August 19, 2011 at 12:24 am |
    • S1N

      Halte fresse. Deine mutter ist eine schlampe, Herr Fuehrer... er GER987654.

      August 19, 2011 at 1:23 am |
  19. rogerwatson

    im a canadian of german/english extraction, ive got a relative from england here now and 4 relatives from germany just went home a few weeks ago so im aware of the european situation. hardwork ,financial responsibility are northern european traits "protestant work ethic" its driving my relatives crazy from both sides the amount of people coming into both countries and going on the dole. there getting pretty tired of bailing out the partiers from the suntan nations

    August 19, 2011 at 12:10 am |
    • Chris

      Interestingly, Germany's most prosperous states in the south (Bavaria and Baden-Wuerttemberg) are mainly catholic (that much about "protestant work ethics").

      But as I mentioned earlier, religion is a lot less important in Germany than it apparently is in the US. Just go to any church in Germany on a random Sunday. You will be surprised how empty it really is. You will probably find more people in the beergarden next door. 😉

      August 30, 2011 at 6:49 pm |
  20. ZweiStein

    We didn't like the bailouts once. Why do we expect the Germans to like bailouts repeatedly? I see their point.

    August 19, 2011 at 12:13 am |
    • Ryan

      Exactly, there is no need for the Germans to have to rescue half of Europe. Let them fall and restructure.

      August 19, 2011 at 1:31 am |
  21. Padmanabham Tadepalli

    How come the so called visionaries who envisioned free trade , global markets etc.. did'nt seem doom which came faster than ever perceived. Is it a lack of true vision of prosperity or were they trying to create an unsustainable political stunt of those times. At the end of the day, the brunt of all debt , downfall, financial disasters will be borne by the common man who strives for a square meal

    August 19, 2011 at 12:16 am |
  22. ZweiStein

    Based upon the population of the earth and unprecedented growth rate...I give it no more than 30 years before we see the biggest, ugliest World War ever. The earth can sustain only so many of us. Human nature will settle the matter. Good Luck!

    August 19, 2011 at 12:28 am |
  23. John

    I wonder how you know all these things. Do you speak to "the Europeans" and "the Germans"? Who are they exactly?

    August 19, 2011 at 12:28 am |
    • ZweiStein

      Who you talkin' to?

      August 19, 2011 at 12:33 am |
      • Saboth

        Judging by the rest of the thread, I bet it's Jesus.

        August 19, 2011 at 10:46 pm |
  24. Michael

    When and where in this article talks religion? Economies go through cycle. Apparently, when times are bad, the religious fanatics scream. Good economic times, no one is really screaming...

    August 19, 2011 at 12:55 am |
  25. Gene

    This is the only thing he's ever written that I agree with.

    August 19, 2011 at 12:55 am |
  26. Aloys Pagal Ongla

    The analysis of Fareed Zakaria makes sense and i think he is perfectly right on the fact that the debt of EU members should be centralized, exactly as it is done in the US. With EU balancing their budgets every year, they will probably be better off and they will avoid to be in the situation they are currently experiencing. The federalization is one of the corner stone of the US and the EU should take advantage of the US experience in that matter, though it will be really tough to achieve considering the cultural differences among the members. That's actually one of the serious limitations of the EU development. Let see what will be the outcome of the actual crisis; it will probably tell us a lot about the its future.

    August 19, 2011 at 1:03 am |
    • Marie-Noel Hiol-Hiol

      I totally agree with your point of view, the EU should follow the same path; but it's going to be tough because of the cultural barrier which could prevent the integration. Good point.

      August 19, 2011 at 1:18 am |
  27. Ryan

    I agree with Fareed Zakaria in the sense that Europe's days are numbered. I do not believe however that they should centralize the debt. For one, it's just downright unfair for the Germans to have to carry the EU and the Euro. The Greeks are defaulting, this is not the problem of the Germans. I expect to see the Deutshmark return in the next 2-5 years. It may have taken 60 years but Germany is back as a world power because they are savers. They save their money and rarely buy on credit. Something Americans and other nations around the world should look at doing! Anyway, you may all see me as some crazy college kid but the signs are strikingly obvious. Europe won't have the Euro in 5 years.

    August 19, 2011 at 1:28 am |
    • S1N

      I hope you're right. That nearly 3-to-1 exchange rate was awesome.

      August 19, 2011 at 1:33 am |
      • Ryan

        Must have been awesome! I was still too young to understand the world when the Deutschmark was in place but damn 3-1 sounds so nice.

        August 19, 2011 at 1:38 am |
  28. Tommie T

    I think that the EU should offer Germany a deal. Give them back what was taken in WWI. Namely Danzig and the Sudatenland. Poland and Russia can keep Prussia. They were too overbearing anyway. Spit and polish about absolutely EVERYTHING. Very annoying. Just hand over everything else. PLEASE. And Germany will save Europe!! For real!

    August 19, 2011 at 2:17 am |
  29. Tiger

    Seriously... religious freaks...wake up...there is no god. Nor any room in a modern intellectual world for this nonsensical mysticism.

    August 19, 2011 at 2:34 am |
  30. Calicorock

    I hope the Europeans work this out and remain commited to helping one another. Otherwise they will become more like the US i.e. fractured socially and politically.

    August 19, 2011 at 3:39 am |
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