‘The Old Europe’ Is ‘Not An Option For Germany’

Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Share on RedditPrint this pageEmail this to someone

“The fact that we profit massively from the euro doesn’t mean that we have to accept every political horse-trade to save the common currency,” Anton F. Börner, president of the German Association of Exporters (BGA), told the Handelsblatt—a swipe at Italian Prime Minister Mario Monti who’d demanded that Germany dig deeper into its pockets to reduce the debt burden of other countries, such as, well, Italy.

“The Italian government is on the wrong track if it thinks it can get out of this without difficult reforms to strengthen its competitiveness,” Börner said. Clear political messages would be necessary; and Italy would have to deliver. But if countries like Italy that are mired in crisis—the Krisenländer—refuse to implement those reforms, then the breakup of the Eurozone would be a solution.

His voice doesn’t go unnoticed: the BGA represents 120,000 exporters—the lifeblood of the economy. Germany fights for the euro because failure would have a “massive economic cost and incalculable political consequences,” Börner said. It would mean “renationalization and protectionism” and finally “balkanization and marginalization of Europe.”

He’d already stepped into the spotlight in November when he uttered the then still unspeakable: “We need a common market, not one currency.” And he’d suggested an alternative: a mini-eurozone, one without Italy.

Each country must fight to retain the confidence of the financial markets or regain it through reforms, Börner said. But if “a country cannot keep its deficits and debt within the commonly agreed-upon limits, it must irrevocably accept a substantial reduction in sovereignty.” Germany is prepared to sink a lot of money into the Krisenländer to help them on their way to competitiveness, he said, but “the old Europe doesn’t have a future—and is therefore not an option for Germany.”

He isn’t the only one. Over the weekend, it was Wolfgang Reitzle, CEO of Linde AG, who’d elicited gasps when he told the Spiegel, “I don’t believe that the euro must be saved at any price.”

He feared that reform efforts would fade if the ECB takes pressure off the Krisenländer by buying their bonds. And he explained: “If it is not possible to discipline the Krisenländer, then Germany must exit.”

Yes, it would lead to an appreciation of the “Deutschmark, the euro-north, or whatever currency we’d have then.” It would be a shock to the economy. Exports would cave and unemployment would rise. But not for long. “Five years down the road, Germany would be even stronger in comparison to its Asian competitors.”

The German industrial elite now openly discuss exiting the Eurozone. The question no longer is whether or not to keep Greece in it—the capital markets had already “checked off” that topic long ago, Reitzle said—but what price Germany should pay to stay in it itself. Already, there is utter frustration with the ECB. Hans-Werner Sinn, president of Ifo, a large economic research institute, lamented that Germany was being marginalized at the ECB as neither its president nor its chief economist were Germans. “All the pretty words how the ECB would function after its model, the Bundesbank, and how Germany, as the largest country, would retain its special role turned out to be echo and smoke.”

But there is no agreement. Yet.

“A return to the D-Mark would be catastrophic,” BMW CFO Friedrich Eichner told Reuters (Spiegel). “We should to do everything possible to avoid that it will get that far.”

Siemens CEO Peter Löscher was more sanguine. “The euro is extremely important for the European industry,” he said. Frank Appel, CEO of Deutsche Post DHL, said, “whatever it would cost to save the euro will be less than that what the euro has given and will continue to give Germany and Europe.” The spokesperson for Merck KGaA was more ambivalent: “It’s part of our job … to be prepared for changes.”

Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Share on RedditPrint this pageEmail this to someone