European solidarity is certainly one of weakest elements of the European project, but no solution will be found if we continue to undermine the project’s virtues and fail to address its flaws.
The idea is simple: the Germany must spend more so that the countries of the south, such as Portugal, can expand their markets and sell their products. The idea is noble-minded, and it’s based on a conviction that the Germans are taking advantage of the Eurozone.
Why? Because if they had the German mark instead of the euro, their currency would be even stronger, which would undermine their competitiveness – their exports. What’s more, due to the financial fragmentation of the euro, the German banks and the state itself have become the refuge of international investors capable of paying the high price of enjoying the security of the largest economy in the single currency.
Yes, solidarity is being demanded from Germany, particularly as some countries, such as Portugal, must adjust their economies the hard way and do it quickly. The question is: what should Germans do to promote the economic power of Europe and a project that they claim they want to defend?
Merkel Plan for infrastructure?
At the risk of being accused of a lack of patriotism, I do not believe that the solution involves an increase in spending in Germany. Firstly, there’s the question of who must spend more: businesses or the state? It is difficult, if not impossible, to impose on German companies salary increases that would eat away at their competitiveness. Therefore, only intervention by the government could guarantee that they would do that.
As we have been seeing in Europe, this solution is not possible. This leaves the state. Is that the idea? To take advantage of historically low interest rates – and even lower for Germany – to inject liquidity into the European economy, putting in place for example a kind of Merkel Plan for infrastructure? Is this the right answer? The recent past advises us against these practices, because the results will certainly be just as bad.
We live in a single monetary zone, stamped by large disparities in the financial blueprints. It is here, at this level, where Europeans should demand another type of solidarity from Germany, to rebalance the external imbalances within the euro. If a deficit of 6 per cent in the balance of current transactions is bad, a surplus of 6 per cent in another country of the same monetary area is not desirable either. How to correct these imbalances?
For example, by putting in place a genuine economic government of the Eurozone, in which more sovereignty would be shared, and by establishing a true banking union, which has not yet seen the light of day. These are the two aspects that the European Commission and the leaders of the countries of the south should focus on, instead of wasting their time asking the Germans not to be German.