Thursday, October 18, 2012

Germany Wearies of Euro Troubles

From the latest EU summit, a sign that the euro may be on the way out: a German call to give the EU the political authority to veto national budgets.

Supposedly the economics commissioner would only reject budgets that violated EU rules, but in practice, no political power of this magnitude is used in a completely orderly way. The authority to shut down a whole country’s government — which is potentially the effect if a budget is voided — is obviously greater than the authority any past individual or board has been entrusted with. At the other end of this hypothetical transaction, one doubts the response of a country such as Ireland or France if it is ordered by foreigners to shut its national government down, even for a day. The reaction would likely not be consistent with the Nobel Peace Prize that the European Union just won.

One of the great ironies of the proposal is that Germany itself has not kept to the rules it is now seeking to enforce. Imagine the outcry if the EU vetoed the German budget, yet what is to stop that from happening?

How could the German government propose such an unworkable and dangerous political mechanism? It can only be taken as a sign that Germans are getting weary of the troubles of the euro zone and may now be willing to give up the economic privileges the euro has given them in return for being able to wash their hands of it. But if Germany’s involvement in the euro is becoming one of reluctance, it is hard to understand where the impetus for a consensus solution to the euro zone’s current and future problems could come from.