German Chancellor Angela Merkel and her government have worked hard and continuously to keep the eurozone and the European Union together since the outbreak Europe’s fiscal crisis, writes Prince Michael of Liechtenstein.
It is her view that the end of the euro would lead to the end of Europe. You do not have to agree with her opinion, but it shows her commitment. Chancellor Merkel also convinced Germany of the need for transfer payments to southern EU members in distress, although this was unpopular.
France has also benefited directly and indirectly from transfer payments, especially by the de facto guarantee of its debt by the European Central Bank. This guarantee can be thought of as an indirect guarantee from the more successful European countries, mainly Germany.
Germany used to support UK Prime Minister David Cameron’s requests for EU reform. These were also in Germany's interests. It also supported prudent fiscal policies, against requests from France and other, mostly southern European countries, for more deficit spending.
It was - and still is - in Germany’s interests to keep the UK in the EU. Even the disagreement between the German Chancellor and the UK Prime Minister over the appointment of Jean-Claude Juncker as European Commission President did not change Berlin’s view.
The French budget in 2014 will show a 4.5 per cent deficit, exceeding the European three per cent benchmark by 50 per cent. France is still unwilling to accept any requests for reforms from the EU and is offended by what it considers the European Commission’s intrusion into the affairs of one of its most prominent members. The EU - against its rules - has accepted the French deficit, but only for the time being.
Germany is annoyed with France and with Brussels for accepting the French position. The German Ministries of Finance and Economy prepared a document asking for stronger controls to enforce budget compliance.
David Cameron’s request to limit migration between EU countries is strongly opposed by the German government. For the first time, there is talk that Germany may not continue to fight to keep the UK in the EU because of Britain’s stance on immigration.
Germany’s reaction is understandable in this context.
French unwillingness to reform is damaging the finances of Germany and some other EU countries. Britain’s proposals for EU reform were sensible and useful, but its last demand to limit inter-EU migration goes against one of the basic principles in the EU and one of its four basic freedoms.
The German Chancellor and her government have been instrumental in making the EU run effectively. German frustration over the EU would damage our continent. The EU would also be weakened by the UK leaving and it would damage UK interests. France has to realise that, if it wants to benefit from Europe, it has to change to avoid being a potential liability to Europe’s economic stability.
The last thing we need right now are fundamental disagreements between the EU’s three largest members when Europe faces a big and serious economic and geopolitical crisis.
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