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.

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

soundoff (704 Responses)
  1. Carl, Secaucus, NJ

    >>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'.

    What kind of people do you think settled all those countries to begin with? To the Romans, Germans were barbarians. Who is a traditional "English" person? Is he or she a Celt? A Norman? A Dane? A Fleming? A Huguenot? Likely they are a mix of all those people. There are people who came from Bangladesh who are now proud to call themselves English.

    August 19, 2011 at 8:37 pm |
    • Brian

      New Jersey should be expelled from the USA and then attacked without mercy...till everyone in that hole is naught but an unpleasent memory....and then finally the smell will go away....with some huge amounts of Lysol of course..

      August 20, 2011 at 4:44 am |
  2. cinman

    Poland will be first. Wait didn't we do that already? Oh well we hate to learn anything so let history repeat itself.

    August 19, 2011 at 9:46 pm |
  3. Flyover

    And Germany should given its treatment by other Europeans after WWI. I wonder why other nations, principally the US, had such economic problems and massive financial fraud, yet Germany didn't? Hmmm, matter of post war demographics?

    August 19, 2011 at 10:12 pm |
  4. marinagp

    This is grotesque!

    August 19, 2011 at 10:16 pm |
  5. Brian

    Sell France to Germany over a period of a fifty years....deport the French to the other nations over said years while the new German owners move in to replace them....Germany gets the low countries they always wanted and the European Union is saved.....thinking the French should be moved mostly to Greece, Spain and Italy seeing as their economies are the most in debt....and for those asking why not give one or all of those countries to Germany...simple they don't border Germany and are not as desired as France...buyer chooses...

    August 20, 2011 at 4:32 am |
  6. Hannibal7

    The German people are well represented by Angela Merkel in this instance (I am no blanket fan of Merkel). The reality is simply that the Germans cannot and should not carry the debt of Europe on their backs. Incredible that the nations that have far less productive cultures and insanely generous (unsustainable) pensions should think otherwise. The liberal "free lunch" syndrome is alive and well in Europe as it is here the United States. The Euro is doomed and was ill conceived. There are far too many takers and not enough producers to carry the weight. The countries that demand the bail outs remind me of the liberal democrats in the US. They spend other peoples money and are indignant when asked to be accountable. The Germans are highly productive and efficient people. They also have fish-hooks in their pockets when it comes to paying. This situation is the perfect storm. They have money, they have earned it honestly and they sure are not going to waste it by paying for the Greeks to retire in their fifties. Nor should they.

    August 20, 2011 at 5:06 am |
    • Stevarino

      This is the most concise and cogent explanation on this post.

      August 20, 2011 at 1:40 pm |
  7. Thomasina Paine

    Now here's a thought...modern Germany has conquered more of Europe with the Euro, than the Third Reich did.

    August 20, 2011 at 6:18 am |
  8. vegasbaby

    As long as governments keep bailing out investors who are betting other's people money we will have these problems. They bet on risky investments and when they loose they cry and demand to be paid. Governments may be chosen by people but they are owned by banks, corporations and special interests.

    August 20, 2011 at 8:28 am |
  9. Zapod Galaxy

    Europe is history. Its real future are third world children being born
    right now in the free housing provided in britain, france, sweden and italy.
    In fact, you can actually visit exactly such 3-rd world europe – go to Portugal, Corsica, Naples, burning/burnt London neighborhoods, turkish-speaking germany etcetera, etcetera.

    The future is now, and it is NOT european.

    August 20, 2011 at 9:53 am |
  10. Steve Fix

    I know how Germany feels. US taxpayers have been bailing out banks, insurance companies and auto mfers who could not keep their house in order or simply cheated the system. The US Govt has instilled fear into the populace claiming that if we did not do so, "it" would all unravel and we'd have a "catastrophe." What a crock of BS!

    August 20, 2011 at 9:54 am |
    • Jason

      If Germany felt confident that the other states of Europe truly could pay back their debts as quickly as the banks, automakers, etc have paid back the US government, they'd bail them out in a second.

      August 20, 2011 at 4:09 pm |
  11. Heyryk

    This is a matter of survivorship, in the Time of Global Economic Downturn.

    August 20, 2011 at 10:41 am |
  12. guy

    Best thing for everyone is to go bankrupt, clear the debts and start fresh rather than accepting more loans to end up putting the countries behind for decades to come and having our grand kids and great grand kids have to pay for our over indulgence

    August 20, 2011 at 11:23 am |
  13. Retspool

    why are them nazis indulging in Jew tactics?

    August 20, 2011 at 12:18 pm |
  14. michelle in san francisco

    who are we to judge Europe?

    August 20, 2011 at 1:37 pm |
  15. Dan

    Deutschland uber allles !

    August 20, 2011 at 1:42 pm |
  16. P


    Europe has always shat on Germany and now look at them...begging for help. You made your bed Europe...time to sleep in it!

    August 20, 2011 at 2:03 pm |
  17. CountZero

    Germany should let them fail. The whole thing was a puppet show set up on Germany;s back,

    August 20, 2011 at 2:51 pm |
  18. Northof39

    It's always the end times. The world is always going to end. Every time some idiot takes his head out of his a$$ & sees something different, the cry goes out – THE WORLD IS COMING TO AN END!!! The religious nut jobs start preaching up a storm & the lemmings follow them right over the edge of the proverbial cliff. And then the scammers go into high gear selling survival kits, water purifiers, guns & ammo. Ah, don't you just love it?

    August 20, 2011 at 2:56 pm |
  19. Carl van Zijll de Jong

    The European nation will not cleave one to another for the simple reason; they differ in culture.
    Nevertheless, all nations need to unite our monetary order to avoid a devastating disaster to the entire human race.

    August 20, 2011 at 3:13 pm |
  20. Endofsociqlm

    See what happens when you mix politics and policy. German electorate is angry.
    Is called socialism.

    Just like the soviet union fell, it too, must fall.

    August 20, 2011 at 3:40 pm |
    • Jason

      Socialism is bad because it makes you the economic powerhouse that support the poor policies of an entire continent in addition to granting incredible benefits to your own citizens?

      Sounds pretty terrible to me. I sure hope the US never adopts any of the systems that lead to such prosperity...

      August 20, 2011 at 4:07 pm |
  21. Prophet

    "its not so much that backwards ideologies turn to more enlightened ways.....it's simply that that the people who hold these ideas end up dying off"

    Is sac newton.

    August 20, 2011 at 3:46 pm |
    • Jason

      ... completely ignoring the enduring appeal of organized religion...

      August 20, 2011 at 4:04 pm |
  22. Aaron

    Let's hope that Merkel knows what's she's doing. Germany is extraordinary since, despite its lack of natural resources, it rose from the ashes at least 3 times during the last century (WWI, WWII, and the Russian occupation). I couldn't blame its citizens for saying no to bailing out other countries that were run much less effectively.

    August 20, 2011 at 4:18 pm |
  23. Pray this Prayer

    CONSCIENCE predicted by Our Lady in Garabandal in 1961 will take place soon to
    save the world.

    The Warning is taking place to:

    1. Prove to all that God exists.
    2 Bring everyone to Jesus and the Way of Truth.
    3. To help save us before the final day of judgement by giving us a chance to ask for
    forgiveness for the sins we have committed.

    What will Happen?


    The sky will turn red, it will look like fire & then you will see a large cross in the sky to
    prepare you.

    Everyone over the age of 7 will experience a mystical encounter with Jesus Christ which will last
    anything up to 15 minutes.

    Pray this prayer to be prepared: Oh my precious Jesus,embrace me in your arms and allow my head to rest upon your shoulders so that you can raise me up to your glorious kingdom when the time is right. Allow your precious blood to flow over my heart that we can be united as one.

    August 20, 2011 at 4:36 pm |
  24. Bob

    An economic article turns into a jesus-freak forum. Sigh.

    August 20, 2011 at 5:45 pm |
  25. MichaelMRW

    Germany is now ruled by the first generation that does not remember the War. They are no longer fearful of the stigma carried by their parents over the war. They are not afraid to complain about the devastation to their cities and the immense loss of civilian life resulting from American and British Bombings. They are not about to sacrifice their way of life or financial gains to save what they consider to be societies that culturally have run themselves into financial bankruptcy. The dream of Karl Der Grosse of a unified Europe will not survive this crisis.

    August 20, 2011 at 6:05 pm |
  26. the blob

    "He died"

    August 20, 2011 at 6:18 pm |
  27. clarissa

    aaah...the old German banana peel trick....the oldest trick in the book.

    August 20, 2011 at 7:36 pm |
  28. chedar

    Can Germany print Euro and lend them to Greece to avoid default? The situation here is different, Washington can print more money to avoid default.

    August 20, 2011 at 8:18 pm |
  29. John D.

    I think Germany has benefited greatly from having a common currency with its main trading partners in Europe. Since the earlier 90s when the first moves toward a common currency began, Germany has had a continuous trade surplus, allowing it to keep more of its people employed and gain financial leverage and influence within Europe. If its trading partners had kept their relatively weaker currencies, German products would have been more expensive in places like Greece, Portugal, Italy, and Spain and German exports would be much lower. German reluctance to back the debt of these other countries is shortsighted. If the Eurozone dissolves, German unemployment will go up.

    August 20, 2011 at 10:10 pm |
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