Europe: a continent of nation states

“I have avoided predictions, because we are dealing with political processes, whose outcome is basically open-ended.”

“Incidentally, this is the only long-term chance for Europe: a continent of nation states, which pools its strength where it is appropriate and allows individual flexibility, if it is the wish of an individual country. The different forms of cooperation in Europe and the common currency are instruments of policy. However, we should not attribute an intrinsic value to them beyond their effectivity. That would be ideology, not politics.”

Thilo Sarrazin:
“Europa braucht den Euro nicht. Wie uns politisches Wunschdenken in die Krise geführt hat” 2012, S. 417 (“Europe does not need the Euro. How political wishful thinking has led us into the crisis”, 2012, p.417)

“The depressive feeling in the spring of 2012 is: The project ‘European Monetary Union’ is developing according to an order of its own, which the statesmen and their advisors hardly understand: They do not determine the policy, but merely respond, and Angela Merkel, whose voice is just the kind of the friendly woman’s voice in my car’s navigation system, seems to play the same role. After having driven in the wrong direction, I can hear ‘Make a u-turn, if possible’ and if the deviation has increased, I can hear ‘Please turn left’. If my car has left the mapped terrain, the friendly voice announces: “Your destinations are in the given direction”. In my car I know, that the friendly voice has no influence on the direction of the car, but reports only the current status. I am afraid, that the development of the monetary union might be similar. In a remarkable interview with Günther Jauch Angela Merkel told clearly, that she was taking more or less short-sighted decisions when it comes to the Euro, just as the situation of the day would require.”(p. 21)

“The Treaties of Rome which laid the foundation for the European Economic Community (EEC) in 1958, were based on the concept of a common market. This concept means, properly conceived and carried out, that freedom of establishment and equal opportunities are predominant everywhere. The Member States can influence the business competition by good education and training, efficient scientific performance, good infrastructure, reliable public services and by a cost-effective, flexible and corruption-free public administration. In this system of a common market all acting subjects retain their original responsibilities and of course, they are liable for their debts, and no one else does. This applies to all Member States of the Common Market. Even a common currency does not change this regulatory framework and is primarily compatible with the goals of the ECB, which is primarily committed to the steady monetary value.

Of course, all states committed to this treaty have the right to make mistakes and for example run up more debts than are favourable for their community. The citizens have to bear the damage, but they can elect a different government. The damage may also be with the creditor, if the state concerned gets into trouble when servicing its debts. As for companies and private debtors, creditors must even check on public debtors and verify to whom and on what terms they entrust their money.

However, one thing will not work – this is my initial hypothesis: forcing the public debtors to act rationally. First of all, we can hardly determine what would be rational. Different world views and political objectives can also lead to different viewpoints in debt policy, which can not easily be arranged on a scale between ‘right and wrong’. Secondly, an effective supervision of debt behaviour requires an intensity of interference that either deprives the state of its sovereign character, or is ineffective.”(p. 24f.)

“When I published my first book on the euro in 1996, I was still cautiously optimistic concerning the future of the common currency. However, I saw no major additional opportunities for economic growth and was more cautious in terms of its contribution to further integration. I in my opinion the common currency could succeed only by the following three terms:

1. The ECB copies the German Central Bank Model and abstains strictly from any monetary financing of state debts.

2. There will be no common bailout for the debts of member states.

3. The common currency will not lead to above-average prices and costs in the less competitive countries.

All three conditions were missed gloriously. Unfortunately we are not able to return to the starting point. We have to pick up where we have left off. Throughout this book I emphasized a neutral presentation of facts and correlations. I described risks and the likeliness of their occurrence. I avoided predictions, because we are dealing with political processes, whose outcome is basically open-ended.” (p. 410f.)     •

^{Excerpts from: Thilo Sarrazin, “Europa braucht den Euro nicht. Wie uns politisches Wunschdenken in die Krise geführt hat” DVA 2012, ISBN 978-3-421-04562-1. Reprinted with permission of the author
(Translation Current Concerns)}