Cross-posted from Credit Writedowns
According to Der Spiegel, Helmut Kohl, the father of a unified Germany and the German politician most responsible for the single currency, is very unhappy with his protégé Angela Merkel. I found this article to be consistent with what I have heard for months about the Kohl-Waigel generation’s feelings about Merkel’s leadership during the sovereign debt crisis.
When reviewing the key players in the sovereign debt crisis, I said the following about Germany:
German Government: Led by Angela Merkel, first German Chancellor from former East; because of public opposition to bailouts, reluctant supporter of bailouts; Looking for bail-in of private investor losses; Finance Minister Schaeuble only minister with institutional memory of pre-Euro German political imperatives; More unilateralist and markedly less ‘pro-European’ than previous German governments.
Kohl has vehemently denied the Spiegel account as the disclaimer at the end of the article attests. Nevertheless, it is likely true in substance if not form. My translation of the full article is below.
"She is destroying my Europe." With these harsh words, Helmut Kohl is said to have criticized the crisis policy of the chancellor. According to SPIEGEL sources, the former Chancellor finds Merkel’s euro strategy "very dangerous". He is not the only party member who has distanced himself from the CDU leader.
As manager of the euro crisis Angela Merkel has been able to convince only the few. The Bundesbank boss cannot recognize a strategy from the government. European political colleagues like the Dutch Finance Minister Jan Kees de Jager demand more leadership from the Chancellor. And now comes even more criticism from former Chancellor Helmut Kohl who apparently has nothing left for Merkel’s approach.
According to a SPIEGEL source, Kohl criticized the European political strategy of the CDU leader sharply. A friend, who visited the former chancellor recently reported that Kohl thinks Merkel’s European policy "very dangerous". Kohl is to have said: "She is destroying my Europe", a confidant of the former chancellor said.
Given the euro crisis, other prominent CDU politicians have warned Merkel as well about squandering the the pro-European legacy of the party. "Europe is a political project. It is too important to leave it to the rating agencies," says the Minister President of Hesse and deputy CDU leader Volker Bouffier.
"The government must now go on the offensive"
Similarly, the business wing of the party finds a clear approach in European policy to be missing."The last thing that an export nation like Germany can afford is a eurosceptic population," says the head of the CDU’s economic council, Kurt Lauk. "The government must now go on the offensive."
A few weeks ago, the Chancellor even had to suffer the label of euro-populist. She had made headlines because she criticized the pension and retirement arrangements in the indebted euro states – and thus accused the Southern Europeans of working too little.
Regarding other important issues, the Chancellor was silent – perhaps out of concern that another gaffe could lead to renewed unrest in the markets. However, this strategy makes a lot of experts puzzled: What are the chancellor real intention? Some already fear that, with the euro the European project as a whole could fail. Finally, almost everywhere on the continent right-wing populist parties are on the rise.
Merkel: the new Thatcher?
European commentators, see Berlin as particularly responsible for doing something about the wasting away of the euro. Some critics are already comparing the Chancellor to Margaret Thatcher – because the former British prime minister drove along a decidedly Eurosceptic course.
Merkel’s reputation as blocker has recently strengthened, because she initially blocked a special summit on the crisis in Greece. She wanted to come to a summit only if a second aid package for Greece could be concluded. In the end, a meeting was convened. The Heads of State and Government of the Euro-zone will meet on Thursday to find a solution to the debt crisis.
Most recently, Finance Minister Wolfgang Schäuble (also CDU) warned of a collapse of the euro. "This crisis of confidence triggered by Greece puts the euro as a whole at risk," he said. In the CDU-CSU Union some MPs are requesting – as are some economic experts – a determined effort from European governments, to grant Greece a debt restructuring.
Editor’s note: Helmut Kohl has declared in the "Bild"-Zeitung that the statements attributed to him in SPIEGEL are fictitious. SPIEGEL stands by its account.
Source: Helmut Kohl rechnet mit Merkels Europapolitik ab – Spiegel
German readers should also see „Kohl ist nicht auf der Höhe der Zeit“ from Handelsblatt
Comments with further information appreciated
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Yes, pretty much the first impression one has with Merkel is that she is wasting the opportunity to have Germany leading Europe (it is a natural leader by both population and economic weight) and trying instead to create a colonial empire of sorts in the continent, with only a short-sighted ethnocentric vision.
However I think that she is right in demanding that the banks and not just the states carry the weight of the bail outs. Is it a de-facto default? Sure, who cares? We all know that Greece can’t pay and that eventually debts must be renegotiated (because indebtedness does not grow on parity with the economy but invariably quite faster – and that is the fault of the lenders anyhow, who gamble too happily at times).
So, yes, probably Merkel has been too rigid and short-sighted before the euro-crisis but on the issue of demanding co-responsibility from the private banks she cannot be more correct. Let Moody’s get moody, who cares? In the end who prints the money, who sets the rules for the banks and all the economy? The states and their association the European Union. Let the private sector suffer a bit: they deserve it in any case, more than the common citizen, who they want to burden with all the cost.
Just read the book “The Creature From Jekyll Island”. It will all makes perfect sense then, except for the part about how we and the two generations before us allowed this to happen.
ATHENS, Greece — U.S. Secretary of State Hillary Clinton said Sunday the United States strongly supports the austerity measures that Greece has taken to try to avert potential financial disaster. – CNN
Punish the Weak, Work is Freedom!
Cross border banking creates a lot of problems.
Herr Kohl is absolutely correct, Frau Merkel has rendered the nation I unified practically unrecognizable.
– Otto von B
Kohl might be correct, but he’s hardly blameless himself. Aside from the fact that he presided over the terribly-executed reunification of germany (and the mass and expedited privatizations that happened there) he also helped write, and signed off on the Maastricht Treaty, with its horrid ‘convergence criteria’. Would be a bit more honest of him if he also talked about his own role in that a bit before coming down on Angela for “destroying his Europe”.
The Treuhand privitisations were a boondoggle of monumental proportions, enriching the few in a very shameful and despicable way. What did it do for eastern Germans?
http://www.creditwritedowns.com/id/2010/05/the-soft-depression-in-germany-and-the-rise-of-euro-populism.html
Some are using this as a template for success to apply in Greece. This is going to get even uglier if so.
Thanks, nice writeup.
His Europe, what is he de Führer?
That’s arrogant, ‘his’ Europe.
Did he conquer Portugal, Ireland, Italy, Greece, Spain, like he’s greater than Julius Caesar, Augustus and Trajan combined?
After 2 trillion Euros gone the Germans are still bailing out the failed socialist state of East Germany with no end in sight. Evans-Pritchard estimated the cost to the northern surplus sovereigns to bailout the insolvent sovereigns at 10 trillion Euros. On how many levels is this not going to happen? It violates The Treaty of Maastricht, the various constitutions of the EU countries, promises made when the EU was born and isn’t going to pass any democratic referendum.
Apparently, the technocrats in Brussels couldn’t care less about the Rule of Law. Their jobs depend on a EuroZone, and, if necessary, they will attempt to impose a FRAUDULENT fiscal union on the EU, to preserve their ill-conceived monetary union.
What I find surprising is that many NC readers who would be castigating the GOP for subverting the Rule of Law in the US are cheerleading the brazen efforts of technocrats in Brussels to impose a fiscal union on voters overwhelmingly opposed to one.
But let’s say in the end, against the will of the German and other peoples, the surplus sovereigns do decide to bailout the insolvent sovereigns. Are the Germans going to occupy Greece to reign in those wily, corrupt, uncontrollable, Mediterranean Greeks? Send in colonial administrators to collect taxes, enforce austerity, check whether people actually are at work, curtail bribery, enforce retirement ages and keep the Greeks on the straight and narrow? Maybe a Geheime Staatspolizei would be in order.
Kohl forced the euro on his countrymen against their will. He lied to them saying Germany would never have to bailout EMU states. He consistently ignored both economics and the German public to push his beloved “European Project”. Germany is decidedly better off now that it has a chancellor who at least considers taxpayer interests.
The bottom line is that those upset with Merkel think she should be more loose with German money. Germany has been by far the biggest net contributor to the EU from the beginning. It is the largest contributor to EMU bailouts. Its’ creditworthiness underpins the entire system. But it’s never enough. Germany must always pay more. If they object, then they’re “anti-European” or selfish. Madness.
Germany should pay more because they are the greatest beneficiary of the EU and it’s single currency. Germany has been the world’s largest exporting nation as a result. If the Euro collapses and the Southern nations are free to depreciate their currencies, Germany will lose big time. Hence it is their national self interests to prop up the failing economies.
Having said that, I think the Euro is toast and there is not much Germany can do to save it.
To all those German whiners speaking about German taxpayers’ interests:
You surely know no one can analyze fiscal surpluses while ignoring trade surpluses?
You surely know Mediterranean countries are your *clients*, they owe money because they *bought* from you and they will not buy German products in order to keep full employment in Germany if they go down the drain?
You surely know the end of the euro would send German unemployment soaring upwards from 20% in a matter of months, possibly undermining German democracy… again?
Tens of billions flowing to south through EU budget annually is enough allready. Greece alone has received 230 billion euros of free subsidies from the north since it joined.
The south should first stop blaming the ones that both live responsibly and constantly, year after year, help to keep your corrupt societes alive. Then learn living like responsible grown up society. That will also solve the trade imbalances. Once you live by your means, you can’t afford to buy excessive amounts of imports.
We may see very soon how grown-up Germans are, when suddenly Volkswagen cars manufactured in Pamplona and Audis manufactured in Barcelona get a boost through some 30% devaluation.
You think the Chinese or the Saudis will notice any difference? Are they noticing it now?
Germans are not subsidizing anyone but their exporters, stupid, which are the ones ruling that country. The money they sent (and they would keep on sending if they didn’t think they’re our betters) goes straight into their exporters. Thus they keep Spanish factories at less than full employment so Bavarian factories have no competitors.
Very soon, sooner than you might say “uncollected debts and lost markets”, there will be another replay of the 1930s.
Spot on:
German banks -> PIIGS banks -> PIIGS consumers -> German export companies.
Banks profit, corporations profit, politicians profit, working class does not gain much. Structural problems are hidden for a long time, then it all explodes. Now xenophobia rises, point & blame games are played, EU is ‘destroyed’, etc. etc. etc.
Rather tiresome, same story as always, and people still as imbecile as always too, falling for the same politicians and bankster games.
Kill the euro and let nations and banks default if necessary. And next time, please control capital flows, these are much to blame in current world instability, inside and outside of Europe.
Merkel is a joke. If the EZ fails, it will be her fault. She is a horrific leader bending to stupid populist north euro trash propaganda.
The Germans will find plenty of buyers of their superior products among the rising nations. Propping up Club Med is a dead end. The South will hate them whatever they decide to do. Time for the PIIGS to grow up and start taking responsibility for their future.
We may see it very soon, when suddenly Volkswagen cars manufactured in Pamplona and Audis manufactured in Barcelona get a boost through some 30% devaluation.
You think the Chinese or the Saudis will notice any difference? Are they noticing it now?
Buy Japanese car, Diego. They’re much better than that German crap.
The German cars aren’t exactly ‘crap,’ but they are very definitely overpriced.
>The south will hate them.
Who exactly are u to say that ?
I’m french (north african origins)and i love Spain as much as Italy or Germany. I spend my vacations between the beauty of the italian shores and the unique creative energy of Berlin. Europe is a real political project that already exists and demonstrated its strengths.
If it’s all about selling products, then good luck to Germany dealing with Poland and Russia, lots of fun.
And South of Europe will go back to olive production i guess
/sarcasm
My friend, growing olives is the future. I’d like to see the Germans eat their Volkswagens when food hyper inflation hits.
How is Merkel a joke? Why is it so difficult for some to acknowledge the possibility that the EuroZone, with the Euro, is inherently flawed. Why is it so difficult for some of you to defer to German voters, who are overwhelmingly against a fiscal union?
If we believe the Technocrats in Brussels who argue that the German voters are too ignorant to know what’s best for them, what do we say when and if Congressman Ryan in the USA says the same about US voters and social security / medicare: That the American voter is too ignorant to appreciate the benefits of a voucher program in place of today’s entitlement?
Jim, German voters don’t understand they are living on a gigantic export bubble about to explode. That bubble is as dangerous and potentially destructive (if not more so) than the former real estate bubble in other advanced economies.
They do not understand this because they are not being told the truth by their media and politicians, both of them financed and bribed by German exporters.
You can’t have a monetary union without political union. That’s the main lesson to be learned here: so if you want euro, you need political union, if you don’t want political union, you don’t want the euro either.
You can’t have all: all other countries using the DM (aka euro) and not being able to influence the fiscal and monetary policies affecting it. That is imperialism of the worst kind – but I blame largely Southern Europeans for the sin of naivety and euro-utopism (though this utopism was caused ultimately, excepted Italy, by lasting dictatorships supported by the UK, the USA and NATO).
Southern Europe should come up with a plan for Southern Europe and impose it on Germany (or get Germany out of EU/Eurozone). It’s easier to modify the parameters of the euro than exiting the euro for Southern Europe, so let Germany move out if they want something else than a solidarious alliance, let them eat cake, so to say.
Kohl is just seeing the long-term effects of the screwed up system he, Reagan, and Thatcher helped create. Hey Kohl, you screwed up Europe. Merkel now has to try to put Humpty Dumpty back together again.
Fantastic:
Weekly magazine Spiegel says that one friend who visited Kohl told them that Kohl said “die macht mir mein Europa kaputt” (she is breaking/destroying my Europe.)
It is always best to use hearsay as the basis of a good argument!
Well, they both blew it. And Kohl would have been the first German Chancellor to talk favourably about his sucessor.
But who really blew it? I would argue the Finance Ministery from 1998-2008 where they let the banks, especially the Landesbanken, run amok while the BAFIN would chase petty crimes of outsiders.
Maybe Kohl should consider that his dream of a United Europe does not work in practice. Not much Merkel can do now except blow the thing up or bankrupt Germany (except both – what she probably will).
May I say something very simple and direct to the prussian commentators who keep attacking the club med? Mediterranean nations may not be too perfect, but there’s something we’ve never done to Europe: we have never destroyed it…for two times! (we just sticked to spread civilization between different peoples across the globe and making good poetry :) you poor huns!)
Also, contrary to popular believe, club meds were much more easy towards natives in their colonies than the average anglo-saxon and northern europe racists, which didn’t hesitate to kill natives as inferior people. If we want to play the point and shame game, let’s do it properly :)
P.S: Not saying they were saints, but at least not as barbarians.
Comment on Point. The Spanish found the natives in Mexico attractive enough to form a new “race”, Mestizo. The English systematically eliminated the American Indian.
That said, the Mestizo harbors so much self-loathing that this has arguably hampered Mexican social cohesion for centuries. Racism in Mexico is MUCH more pronounced than even in the US.
None of the colonial powers wre too easy on the colonized. Finger pointing, trying to paint once colonizer more benevolent than another is fraught with peril. I’d posit 2 exceptions.
1) Leopold of Belgium’s exploitation of the Congo was the most ruthless exploitation of all, a virtual genocide carried out solely fr/ greed.
2) Gandhi remarked that India would never have been able to win its independence w/ non-violent protest as the primary tool if the English were not gentlemen. Whatever their record of exploitation, they were gentlemen about independence.
Ghandi was the only gentleman there. The US entered WWII with one condition, which Great Britain could only accept: “What is yours, is mine”. An independent (!!!) India was part of the deal.
Churchill probably was the worst European leader of all time, on geoestrategic grounds.
Italy has to assume some responsiblity for Mussolini’s role bringing Hitler to power. Not possible w/out Il Duce and the House of Krups.
LOL! What about Britain? Without the mischievous politics of Britain in the 1920s and 30s not a single fascist regime would have surely flourished anywhere in Europe. I blame the UK for Mussolini, for Hitler and for Franco and all because they wanted to get the Russian debt paid and prevent the expansion of socialism through the continent! For them Hitler was “our son of a bitch”… until he invaded Poland.
Well, my point is much more inclusive: I would not oppose anglo-saxonic world to mediterranean world – what is common to both england, greece, italy, portugal and spain is that all these peoples (which were always essentially devoted to commerce and navigation) somehow were capable of building civilization not only by spreading culture but also by integrating foreign costumes. An then, there’s the rest of Europe across the rhine, a set of well-ordered tribes who are always very proud of being very hard-working peoples, very well-organised and living at the rythm of a swiss watch….blablablabla.
They are unable to understand that for Europe to retain some harmony we should stick to a sublime alliance (which populists from extreme right fail to understand): at the north of the rhine they work 10 hours a day (the weather is terrible; nothing better to do) incorporate solid banks and spread money across europe; at the south, med nations “work” (enough) for pleasant things to take place and promote beauty across europe from fashion design in Milan, to nice resorts, food and romantic poetry and music from greece to portugal. Pax romana :)
The EU and the Euro were two lousy and now failed experiments. It’s time for all good people of Southern and Eastern Europe to go back to the life they know and which worked well for them in the past. Screw the obsessive Germans and the parasitical French. We don’t need their junk.
And let us make one thing clear: nobody I know in Greece is about to give up their wonderful lifestyle just to become part of the EU imperial machinery of globalization.
So, let’s get one more thing clear: we won’t play ball. So stop wasting yours and our time. Got that?!
“Die Baume wachsen nicht in den Himmel” english translation.. “The trees never grow into heaven” german saying
To psychanalystus:
I am Portuguese. When I was born in 1981, the country was two years away from having an IMF bail-out, many people were using food stamps, and it took about 12h to cross the country north-south, which you can do today in 6-7h in the motorways built in the 90s, with european money. I saw an old 1986 housing credit contract with morgage, it had a 30% interest rate – of course, inflation was usually in the double digits, so it wasn’t that out of line.
Life wasn’t all that good before joining the EU. This is not a simple, black and white issue.
What is obvious now is that Merkel is isolated in the Eurozone (excepted two small states: Netherlands and Austria). It was also revealed in this Euronews report that 50% of Germans support the Eurozone at any cost (align with the majority across the EU) but another 50% is against any expenditure. So for Merkel is damned if you do, damned if you don’t: 50% of German voters will be unhappy in any case.
But it’s worse for Papandreu: whatever he does (unless he goes truly socialist and breaks all the capitalist rulebook, what he won’t) he will anger 100% of Greek voters.
Basically now Merkel and her doubts are paralyzing EU’s reaction ability. She is right in demanding banks’ responsibility however: EU is too big to fear default or devaluing the currency, it should rule on the banks and not be ruled by them.
Funny how liberals always use euphemisms to hide the truth. “We need decisive leadership from Merkel/Germany” really means “We need a market shocking massive bailout and permanent welfare for the PIIGS.”
Reminds me of “Comprehensive Immigration Reform” in the U.S., which really means “Amnesty for Illegal Immigrants”.
In fact, it would have been enough with some minor fixes to Germany’s economy, such as increasing consumption and wages so that Southern Europe could re-balance its trade deficit.
But OK, I suppose Europe’s periphery is also guilty of not raising the German VAT, liberalizing the internal market and reducing the German savings excess…
Anyway, it seems to be over now. Germans made an habit out of forgetting where they come from every 2 generations. They’ll be reminded, again.
I meant guilty for not *reducing* the German VAT, sorry…
The fact that you use the term PIIGS, indicates both your racism and your ignorance.
This is the same problem that the USA or the UK are suffering (with very minor local shades). However the USA and UK are devaluing their currencies and have been doing so for many years. As result of that and German stubborn worship of the ghost of the Deutsche Mark the euro is overvalued by 40% (in relation to 1999-2001, when it was near parity with the USD, the international reference). This results in most of the Eurozone not being able to compete internationally. Germany can but only because it has been exporting to Southern Europe, what is now obviously not going to be their market anymore. So Germany is bound to become like Greece, because it will also have to compete in the international markets and not just against its fellow Eurozone partners.
The only solution would be devaluing the euro, or rather having contained the undue appreciation of the currency. With such a super-strong currency we Europeans import a lot and export less and less. The industrial production of southern Europe, including France has collapsed in the last decade.
They say: lower salaries but do not lower living costs (housing, direct taxes, electricity, food) but that is simply impossible because a salary is after all a measure of what it costs to survive in local conditions (plus an extra to keep other sectors of the economy stimulated, to keep the market dynamic). You cannot pay below what costs to survive. You cannot get a salary lower than what renting an apartment costs. People work to raise a family so you have to give them enough for that!
If Germany is uncomfortable with the Eurozone as it is (too many “pigs” everywhere, not halal enough?), it should leave. If the vast majority of states are uncomfortable with the Eurozone as it is, they should reform it and, first of all, devalue the euro. The hard fact is that Latin Europe has three times the population of Germany and the rest is mostly balanced.
The only way Germany can get away is by manipulating France. But the exposure of French banks to the Greek crisis is so brutal that even someone as evil as Sarko can’t but want to help, to want to stabilize the Eurozone, Greece included, at almost any cost.
In the end there is a lot of Paris-Berlin divergence here, and both capitals are being pitted against each other from London and specially Wall Street, where the financial resorts actually are.
And in the EU there are no “illegal immigrants”, if you mean states: all are equal partners in full right. Germany has, or should not have, any privileges at all. But it does: the hyper-rigid Eurozone monetary policy is designed to favor Germany, in one of the most insolidarious abusive practices of all European history.