The Last of the German Patriots

He is one of the most respected politicians ever to shape German policy. His integrity is beyond the shadow of doubt. He is truly one of Germanys greatest statesmen. Here is why Wolfgang Schäuble should resign. By Korbinian Rueger and Benjamin Zeeb

schaeuble

It is hard to overstate the respect we at the PDU have for Wolfgang Schäuble. The respect we have for the man, his career, his political legacy. He is frequently called one of Germany’s last remaining true Europeans, and rightly so. It is partly because of this that Schäuble’s actions of the past days, weeks and months are so hard both to understand and to accept.

In Germany it is not uncommon to hear something like “I can’t tell you which party I favour but parties are only as good as the people who lead them, and in this respect one person stands out: Wolfgang Schäuble.“ People then go on to praise the integrity of a man unshakable in his convictions, determined to keep the country he serves safe. From the moment Schäuble took over as Minister of Finance in 2009 and as Germany’s chief negotiator in all matters Eurozone, his standing exploded. He succeeded in becoming Chancellor Merkel’s second in command and a fixture in the debate on European crisis.

People praise the integrity of a man unshakable in his convictions, determined to keep the country he serves safe.

During his years in office, Germany reached a position of power unprecedented in the post-war era. Many in German politics and business credited Schäuble, the architect of Merkel’s Eurozone strategy, with this development: the voice of reason, the guarantor of German prosperity in times of crisis. In a sense they were right. Schäuble’s insistence on principle, his unflinching calm in the face of possible catastrophe, and his sense of responsibility did indeed help cement Germany’s path towards becoming the economic powerhouse it is today. And yet, despite all well meaning efforts, despite the intellectual, perhaps even moral superiority that radiates from the man who has made it his mission to protect his country’s interests, his legacy will likely be overshadowed by his handling of the most recent Eurozone crisis.

While Schäuble’s actions up until this day make perfect sense in a world ruled by sovereign nation-states, where each actor seeks to extract the most benefit for his or her constituency, they have become ironically self-defeating in light of the actual mechanisms by which the Eurozone functions today. For Schäuble, a true German patriot, the new realities of the European situation don’t compute. Something big has changed but it fails to register in the mind of a man who perceives all his actions as standing in the context of the nation to which he has sworn his allegiance. That is not to say that he is not a convinced European. Time and again Schäuble has expressed his commitment to the European project and the German responsibility to see to its success. But, tragically, this success has now become impossible to attain within the very concept of multilateral partnership that he perceives as the only realistic way of structuring Europe’s political system. The problem with this is that the parts of Europe’s political system (nation-states) no longer adequately represent the whole. It has become impossible to perceive national interests outside the context of joint European interests and therefore also impossible for any one nation to escape the continent’s larger trajectory.

While Schäuble’s actions up until this day make perfect sense in a world ruled by sovereign nation-states, where each actor seeks to extract the most benefit for his or her constituency, they have become ironically self-defeating in light of the actual mechanisms by which the Eurozone functions today.

This has led to a situation where all the policies that worked so well for Germany in the past, when she struggled to overcome her own economic malaise under Chancellor Schröder, cannot and will never work for the Eurozone. The Greek Syriza government might be a nuisance, its bureaucracy permeated by incompetent and inexperienced officials, but to claim that Greece has not done enough austerity by now is simply ludicrous. One look at unit labour costs relative to other European nations puts such claims to rest. Unit labour costs in Greece have fallen much further than in any other European country since austerity measures began. They are down almost 15 per cent. Greece has proven capable of swallowing an astounding amount of internal devaluation and massive reductions in level of wages and government spending.

Yet Schäuble hammers on by saying “not enough, not enough, not enough”. Despite the fact that austerity has clearly worsened the Greek debt outlook, unshakable in his conviction that Greek profligacy has to be contained, unperturbed by evidence that the course to which he has committed himself and the entire Eurozone is clearly running Europe over the cliff, he is unwilling to accept the reality. “The refusal of the rest of Europe, and especially Germany, to acknowledge Greece’s massive debt overhang has been the big lie of this crisis. Everyone has known the truth – that Greece can never service its current debt obligations in full – but nobody involved in the negotiations would say it,” says Jeffrey Sachs.

Other than the negotiation “result” of this week, there is no longer a middle way. Greece will have to exit the Eurozone or receive prolonged and automatic transfers. A sustainable union must be a transfer union. In the US this is uncontroversial and many commentators shake their heads at Germany’s reluctance to face the reality. In a country where weaker states like South Carolina, Pennsylvania, or Wisconsin receive tens of billions of dollars each every year from stronger ones such as New York, Texas and California by way of automatic transfers, the European controversy about assisting weaker members of the Eurozone doesn’t seem to make much sense.

Despite all this the fact remains: Greece needs reforms and credible governance. So do many states especially in Europe’s so-called periphery. It is very hard to see them get there without outside help and downright interference by European institutions in their national affairs. Because of this, Greece should accept that transfers (or credits) come attached with a list of needed reforms, and those reforms must be supported and watched over from the outside. And despite early announcements to the contrary Alexis Tsipras has agreed to such supervision, but there are boundaries within which supervision and outside interference must remain as long as Europe wishes to uphold the facade of national sovereignty.

The list presented by the Eurozone finance ministers, and obviously shaped by Schäuble, “is a grotesque betrayal of everything the European project was supposed to stand for“. It is an attack on Greek sovereignty, lacks solidarity with or sympathy for the Greek people and, if enacted, will make sure that the Greek economy will not breathe again for years to come. How has it come this far?

For the past weeks, Schäuble has been doing, or rather inventing, the politics of “wer zahlt schafft an”, which means nothing else but that whoever picks up the cheque decides what everyone gets to eat.

For the past weeks, Schäuble has been doing, or rather inventing, the politics of “wer zahlt schafft an”, which means nothing else but that whoever picks up the cheque decides what everyone gets to eat. His whole demeanor towards the Greek government and by extension the Greek people is saying “as long as you have your feet under my table…”. But this is not how international politics works. In fact, such behaviour is exactly what Ms Lagarde of the IMF critiziced when she wanted to have a “conversation among adults”. Her comment was directed at the Greek government, but it works just as well when directed at Schäuble, whose actions, it seems, have been led by emotion rather than reason ever since Yanis Varoufakis infuriated him. It is not clear whether he was offended more by the former Syriza finance minister’s demeanor, which was arguably not appropriate on the international stage of politics, or if the clear intellectual superiority of his Greek counterpart’s arguments put him over the brink. In either case, this should not be something that makes a man like Schäuble lose it.

With the deal he has now forced Tsipras to sign, Schäuble, who has often emphasized his own pro-European  outlook – at times he even voiced frustration at the slow pace of integration which he blamed on French nationalistic attitudes – has done Europe a huge disservice. Not so much because of what was in the deal, but because of what wasn’t. Probably he means well. Probably he, just like Hans-Werner Sinn (clearly the architect of his “temporary Grexit” idea), really believes that upholding the rules matters most in the present situation. But why uphold rules that are clearly bound to fail sooner or later anyway? No solution that doesn’t involve debt relief, automatic transfers (for example by way of a European unemployment insurance) the voluntary surrender of national sovereignty, and a limited but effective democratic government of the Eurozone to reinstate said sovereignty will ever lead to sustainable stability. Schäuble can’t fathom this step. Instead of seeing the larger picture, the systemic failures of the single currency as well as the geopolitical and cultural implications of a Grexit, he fetishizes numbers in a way that has long lost all meaning in the context of the single currency. His political imagination doesn’t reach far enough to see the obvious. If he is allowed to go on his blindness will ultimately destroy the single currency and with it the entire European project.

The last weekend saw Schäuble drafting a note directed at the Greek government that basically said “either you leave the Eurozone for now or you give up your sovereignty to your creditors”. Maybe he wanted to increase pressure on the Greek government or maybe he thought that this would do the trick to push them out of the Eurozone – but he only underestimated how desperately Tsipras wanted to keep his country in. Either way, he changed the political climate in Europe for the worse, which will not be the same for months or maybe years to come. It has been poisoned by the rhetoric of “us against them” when it should be “we together”, and Schäuble has done his part. Under the Schäuble regime the Eurozone is no union, it is a creditor-debtor relationship. We will now have to start to clean up this mess and it will be much easier without a man, who, despite all his virtues, clearly doesn’t have what it takes to move Europe forward. There is no shame in that. There have been other examples of public figures, like CDU heavyweight Wolfgang Bosbach, or former Bundesbank President Jürgen Stark, who felt that they couldn’t reconcile their position with the necessities that come with governing the single currency and as a consequence chose to quit. So thank you for your service Mr Schäuble. Now please resign.

Image: “HE Dr. Wolfgang Schäuble” via WIkimedia Commons, uploaded to Flickr by Chatham House. Published under Creative Commons 2.0 license.

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