Greek debt tragedy: A crisis for Europe or an opportunity for Germany to dominate By; Abid Mustafa
- Published in Politics
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As Greece edges closer to accepting a 45 billion Euros EU/IMF aid package to restructure its external debts totaling 300 billion Euros[i], the role of Germany in exacerbating the crisis has not gone unnoticed. Speaking to the Italian newspaper Corriere della Sera, the billionaire financier George Soros said,"The Germans have always made the concessions needed to advance the European Union, when people were looking for a deal. Not anymore. That's why the European project is stalled. And if it can't go ahead from here, it will go backwards. It's important to understand that if you don't make the next steps forward for the euro, the euro will go to pieces and the European Union too."[ii] Soros's view was shared by Germany's Finance Minster who said in an interview with Spiegel," We cannot allow the bankruptcy of a euro member state like Greece to turn into a second Lehman Brothers."[iii] So despite understanding the gravity of Greece's debt situation and its impact on the Euro, why has Germany allowed problem to fester and cause wide-spread uncertainty. What can Germany do to avert the crisis?
The conventional explanation advocated by most respected analysts usually revolves around three reasons. First, the German public opinion is deeply opposed to bailing out fellow EU countries- especially those countries that have failed to abide by the strict rules of Europe's monetary union. The countries accused of profligate spending that undermines the economic longevity of the union are commonly referred to as PIIGS i.e. Portugal, Italy, Ireland, Greece and Spain. Furthermore, the German chancellor Angela Merkel faces elections in North Rhine-Westphalia on May 9 in which the centre-right government's upper house majority is at stake. Her government fears that any move to help Greece and the public will punish the incumbent government. Second, there is a constitutional hurdle that must be overcome before Germany can participate in any bail-out of Greece. Some German professors are preparing to challenge the EU-IMF rescue package for Greece at Germany's constitutional court claiming that it violates the 'no-bail-out' clause of the EU Treaties. Dr Karl Albrecht Schachtschneider, law professor at Nuremberg and author of the complaint will argue that the rescue contains an illegal rate subsidy, threatens monetary stability as encoded in the Maastricht Treaty, and breaches the 'no bail-out' clause. The professor and others staunchly believe that Greece is clearly responsible for its own mess.[iv] Third and more importantly, many in Berlin and a few outside the country view that Germany-Europe's strongest economy- is stuck between a hard rock and the deep blue sea. If Germany helps to bail-out Greece, then a dangerous precedence will be set, Germany will asked to bail-out other PIIGS countries. On the other hand, if Germany does nothing then the international markets will continue to punish Greece and render it difficult for the Greek government to finance its debts. Both scenarios are likely to put an unbearable strain on EU member states and probably cause it to collapse. It is precisely for this reason that Germany continues to pile pressure on Greece to become more transparent and demonstrate that it can meet its long-term debt commitments. Speaking on this matter recently, Merkel insisted that Greece "must play its part in ensuring that Greece's finances return to a solid path ... The stability of our currency is the first priority."[v]
The aforementioned factors have created uncertainty amongst Germany's political elite and this in turn has caused turmoil in Europe. Some like Morgan and Stanley are predicting that Germany will cede from the European Monetary. The US bank said a bail-out for Greece may be necessary to avoid a crisis for Europe's financial system, but warned that it also "sows the seeds for potentially even bigger problems further down the road".[vi]
With regards to the second question-what can be done-, Germany once again faces a unique opportunity to break free from the clutches of the major powers that have tried to contain and subjugate her for the past 140 years.
Prior to Germany's defeat in World War II, Russia, France and Britain struggled to restrain German militarism. After 1945, Germany was contained by a combination of America and the Soviet Union endeavors. America diverted German ingenuity towards economic pursuits and exploited NATO to suppress German militarism. Additionally, US and USSR divided Germany into two East and West Germany respectively. In the late nineties, the euro was introduced to further contain a united Germany.
What was originally conceived by the architects of the Marshall plan and the Maastricht Treaty as a means of preventing Germany from attaining major power status has been turned on its head. Today, Germany through its economic might rather than its military prowess, stands at the cross roads to becoming a major power once more.
Muslims should also take heed of Europe's predicament and work to re-establish the Caliphate. The Caliphate will not only provide a sound economic system as an alternative to the degenerative capitalist system. But the Islamic state will adroitly exploit the differences between the major powers in Europe by giving encouragement to Germany to ascend and break away from union. Allah says in the Quran: "You would think they were united, but their hearts are divided" [59:14]
24-4-2010
