The political vacuum at the heart of the euro
Schmidt asks, does Europe have the will it needs?
by David Marsh
Tue 7 Dec 2010
It is often said that the euro is an eminently political project, developed over the past 20 or 30 years by the governmental and business elites of Europe.
Yet, as Helmut Schmidt points out in an exclusive interview, during the deep crisis besetting the furthest-reaching scheme for European integration since the Second World War, the politicians who should be shoring up the euro have proven lamentably ineffectual. Instead of marshalling the Old Continent, political leaders in the 16-nation bloc have been shunting blame for the euro’s shortcomings among themselves and the financial markets.
As Schmidt says, the only helmsman to emerge with any credit is Jean-Claude Trichet, president of the European Central Bank, who is using the ECB’s firepower and his own crisis-fighting skills to fight a rear-guard action against the markets. And yet Trichet retires in less than 11 months — leaving a vacuum at the heart of Europe.
Together with Nelson Mandela, Schmidt ranks as the world’s most senior elder statesman. He delivers his judgments from a position of unique authority. He will be 92 later in December. Not in the best of health and still grieving the loss of his beloved wife of 68 years, Loki, who died only six weeks ago, Schmidt speaks unhurriedly in sharp, piercing phrases that cut through the inconsistencies and confusions of our times. He mixes criticism of the present generation of European leaders with hope that they will do better in a few years — though he thinks that this will happen through the emergence of a “core Europe,” a goal he outlines more clearly than ever before.
As one of the spiritual fathers of monetary union, Schmidt now says — more in sadness than in anger — that the euro’s founders made a mistake when it started in 1999 by allowing in the peripheral countries, and by not imposing binding rules on government finances.
Schmidt became chancellor of West Germany in 1974 when U.K. Prime Minister David Cameron was 7 years old and Barack Obama, Angela Merkel and Nicolas Sarkozy were in their teens. He has now been out of office for 28 years, more than twice as long as the period when he successively was defence minister, finance minister and chancellor. Earlier this year Schmidt surpassed Konrad Adenauer — the first West German chancellor, who served until he was 87 (in 1963) and died at 91 — as Germany’s longest-living former leader.
Schmidt believes Germany still has a political and moral obligation to shore up Europe as a result of the crimes of the Nazis who disfigured the Germany and the Europe of his youth. The man who told the Bundesbank in a secret speech in 1978 that the Germans were “vulnerable because of Auschwitz” now says that, as a result of past misdeeds, “Germany will remain in debt for a long time — for all of the 21st century, maybe even for the 22nd century too.”
Schmidt does not simply possess a sense of history; he exudes it. He now gives the strong impression that, for the euro, the clock is ticking. Six months ago, during the previous upsurge in tensions, European governments together with the ECB and the International Monetary Fund assembled a €750 billion support package to shore up weaker countries at the periphery of the system. Chancellor Angela Merkel said then Europe had “gained time” in putting its house in order. As witnessed by the wrangling over Ireland’s bungled approach to the European support fund, amid widespread expectations that Spain and Portugal will be next, Europe’s leaders have failed to use that time wisely or well.
Amid the spiral of burgeoning debts and impending losses, Merkel has been speaking of an “existential crisis” for the euro — implying that the very survival of a project favoured by the politicians but never too popular with the public is now at stake. Schmidt’s words, too, are a warning signal. If the euro does go under or changes shape radically in the next few years, it will be because the governments that spawned the project ran out of time, imagination and the will to defend it.
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