THE WEEK THAT WAS... (Apr. 29, 2013)

by N. Peter Kramer

As the number of unemployed in Spain broke the 6 million barrier and France set a record with 3.2 million out of work, the debate about growth versus austerity begins to show an increasingly unpleasant tone. Germany, facing national elections in September, has to stick to the EU austerity policy; easing it would be committing political suicide: the opinion of German voters is that they have paid enough for ‘solidarity’ with Cyprus, Greece, Spain and others. The deal was (and still is) that weak countries should cut deficits and undertake harsh structural reforms in return for financial support from the stronger ones, Germany, The Netherlands, Finland, Austria.

It is evident that there is huge division in the EU and in the Eurozone specifically. However, most of Europe’s politicians, especially those in the ‘Brussels bubble’ of the European Parliament and Commission, behave like the three monkeys with hands before mouth, ears and eyes. But see what happened last week: Bundeskanzler Merkel was very clear, when she told her audience in Dresden and us, that Germany needs higher intrest rates in contrast to southern memberstates. EU’s most heavy-weight politician highlights in public the division between the prosperous north and austerity-hit south! ‘The ECB is obviously in a difficult position’, she said. It was a highly unusual intervention; made by Mrs Merkel at a well-chosen moment, a week before the independent bank is expected to cut its main interest rate.

It was interesting to read in a ‘secret’ paper, what the coterie of President Hollande thinks of the Bundeskanzler: ‘selfish intransigence’! Such a paper is, without doubt, very helpful in solving the problems. But at least we all know now what the French President means when he talks about a ‘friendly tension’ in his relationship with Angela Merkel.