The German Pill
A very good idea like the European Union (EU) is in such a mess today. Talk to those who are still able to think on the continent, and you will be told that this is because the European project is unfinished business. Economy alone does not make a community happy.
The EU came into being to economically unite the constantly warring nation-states on the continent. The rationale was that when economic interests are at stake, member states will not wage war on each other.
It was in 1951 that six countries of the war-weary continent agreed to hold hands to form the European Coal and Steel Community and the European Economic Community. This idea did bring peace and prosperity to Europe. However, since human beings do not live by bread alone, concentrating only on fixing the economy no longer works. The generation born after the last world war takes peaceful times for granted and has other problems that are political, social and cultural.
The way the common currency crisis is being handled today is aggravating economic and other woes of the people. Europeans are in tears because of a financial crunch and the absence of goodwill on the part of European leaders like Germany.
George Soros, Hungarian-born American investor and philanthropist and great supporter of liberal, progressive and democratic causes, is also founder and chairman of the Open Society Foundation. Ask Soros about the financial crisis and his finger points to Germany and the way the main creditor country handles the euro crisis.
Soros compares the German pill to the heartless way the International Monetary Fund (IMF) had put financial markets on artificial life support after the international banking crisis of 1982. In a public discussion in Vienna, Soros reminded the audience about how the IMF and international banking authorities saved the international banking system by lending just enough money to heavily indebted countries to enable them to avoid default, but at the cost of pushing them into lasting depression.
“Today, Germany is playing the same role as the IMF did then. The creditors are in effect shifting the whole burden of adjustment onto debtor countries and avoiding their own responsibility for the imbalances. Yet, they were largely responsible not only for the faulty design of the euro but also for continuing to enforce rules that aggravate the situation.”
The euro crisis is complex. It is a combination of banking and sovereign debt problems. Those in charge do not seem to understand the complexity of the crisis and therefore are unable to find a solution. What the boys in Brussels are doing is simply waiting to buy time.
The euro crisis is complex. It is a combination of banking and sovereign debt problems. Those in charge do not understand the complexity of the crisis and are unable to find a solution. What the boys in Brussels are doing is waiting to buy time
Soros says usually that works. Financial panic subsides and the authorities realize a profit on their intervention. Nothing seems to work today as the financial crisis is fused together with political disintegration. While the continent concentrates on the currency crisis, there is not a word about fixing the rotting political set-up.
The EU was created with a lot of good intention and empathy. It is a well-meaning idea that stood for a peaceful, prosperous and open society. A society that voluntarily wanted to be united as part of an association of equal states. The first members had even surrendered part of their sovereignty for a common good.
Today, the crisis faced by the continent is not just financial but a heartbreaking human crisis. But the fixers are unable to surface above currency issues. The euro crisis has in fact turned EU leaders into hard-hearted nothings.
Soros divides today’s member countries into two groups, of creditors and debtors —where creditors call the shots. As the strongest creditor country, Germany has emerged as the hegemon. The bank of Germany concerns itself only with the trauma of inflation. It ignores deflation which Soros feels is a more real threat.
As Germany imposes austerity on debtor countries, the danger is that both human and financial resources will leave home to come running to whereever wealth is concentrated. This will eventually drain poor countries, over-crowd rich countries, and, worst of all, divide the continent between the rich and the not-rich.
When climate change is a disaster already unfolding, family and community life are breaking up, intellectual life is most uninspiring, and gender inequality does not go away, then, the crisis is surely more than just about the economy. At a time like this, can war within one’s own people be far behind?