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The main problem in Europe is Germany
Material posted: Publication date: 20-11-2012

France, as they say, it is necessary to take measures to improve competitiveness, because its economic weakness may be a problem for the Eurozone. But did the economic policy of Germany does not create, at least, an equally serious problem?

If you believe appear in the recent information, the German leadership worried about the situation in our country, which in the absence of reforms will be unable to withstand changes in the global economy and to get out of the swamp covered it today. This concern touches us sincerely.

Indeed, from many points of view, the situation in France is going very heavy. However, we can say to our German neighbours, France has its own government and its experts. And that we have already taken important decisions. French policy is formed not in Berlin.

In addition, before you think about the weaknesses of its European partners, our neighbors would cost, probably, to draw attention to the consequences of their own policies. Then they could understand that the real European problem is themselves!

Such a statement may come as a shock. Unless Germany can boast one of the best management systems, balanced public finances, a much lower unemployment rate and a huge positive trade balance.

Nevertheless, such a more than satisfactory state of economic health can be viewed from two angles. The first view gives rise to the warmest of greetings: with its industrial tradition Germany has managed to perfectly adapt to the new situation in the world economy, and its outcomes are the result of hard work and deliberate strategy. The second suggests a much more cautious thoughts: this is good at first glance, the strategy is for the most part to the almost total blockade of domestic demand and of shifting production abroad, which creates the risk of increasing international imbalances, both at European and global level.

This has already been mentioned, but again, probably still will not be superfluous: the international imbalance can manifest itself in extremely large foreign trade balance, and both positive and negative. In countries experiencing a deficit in this area, lies a great deal of responsibility: this situation highlights the lack of competitiveness and low savings, and most of all - and both at the same time. However, States with a high surplus are not immune from blame, because it indicates excessive volumes of savings and lack of domestic demand.

Good reasons

Be that as it may, these countries usually have a good reason for such behavior. The country-oil producers can say that they need to think about those times when their mineral reserves will be depleted, and that they should accumulate financial reserves before that inevitable date.

China, to paraphrase a famous formulation, he wants to get rich before the country gets old: very soon he will no longer be able to rely on the increase of the active population to ensure economic growth. There are many other examples.

Germany has to deal with not the most favourable demographic prospects: once the population is decreasing, it simply cannot afford to accumulate public debt, which would lie on the citizens of the increasingly heavy burden. Recall that, according to current projections, as a result of demographic growth in France and recession in Germany, both countries will be equal to the population: this will take place around 2060. This point may explain the substantial differences in economic policy.

Negative consequences for Europe

Thus, the last ten years, Germany has consistently orients its policy on the foreign markets. And this process was painful for its population: seven million offers part-time and a salary of 400 Euro is a lot, even if we take into consideration that most of these jobs are taken up by pensioners, students and Housewives.

Whatever the definition of poverty threshold (40%, 50% or 60% of the average wage), in a proportion in Germany, there are more poor than in France, while in the middle of 1990-ies the situation was quite different, although the Germany of those times still lay the burden of absorbing Eastern Germany (more precisely, for this very reason, in the mid-1990s, the poverty rate in the country was already slightly above). So the German policy of competitiveness, of course, there is a considerable price.

Its European partners, too, felt the shock of competitiveness: last year they took over 70.9 per cent of all German exports (39,5% for Eurozone countries). France accounted for 9.6% of exports, giving Germany a positive balance at 35.1 billion euros (22,2% of the total). At the same time, sales to the BRIC countries (Brazil, Russia, India, China) account for only 11.4% of export volumes. Here itself begs the following conclusion: Berlin is pursuing its policy to the detriment of the neighbors.

Non-cooperative policy

And today Germany is concerned their weakness. All these States, of course, not the innocent sheep (in France we have to admit more than depressing facts), but its non-cooperative policy the situation is also not correct. In addition, it should be noted that this line is in other areas, for example, in the energy sector: the decision to abandon nuclear power plants was made without consultation, although energy issues should be given a key role in the European policy.

The Eurozone crisis has also shed light on the weakness of European solidarity. Procrastinating Germany largely contributed to the exacerbation of problems, although in such situations the speed of decision making and their implementation are crucial. Today we can see this on the example of refusal to discuss a new restructuring of Greek debt, which, however, seems inevitable if we want the country had at least some chance to improve things.

During a joint press conference with Angela Merkel on October 13 Francois Hollande did not hide his differences with her, but still stressed that he understands her difficulties in an election year.

The Chancellor really should not blame all the troubles. She has to reckon with public opinion. The Germans, as we have already seen, had to pay dearly for the restoration of the competitiveness of their economy, and therefore convince them that they need to pay for the salvation of others, will be very difficult. There is also the German Federal Bank, which now as never dogmatic and fundamentally disagree with the ECB (although he is his child). Finally, there is the management of companies and economists who resent Merkel's proposed measures for economic recovery.

Germany needs to take stock of myself

Be that as it may, in the current environment, these measures seem justified. Greece, Spain, Portugal and even France need to continue to tighten their belts. It is a necessity. But this process should be the reverse. Those who still have the means necessary to support demand in Europe, otherwise the recession in the Eurozone can only intensify and create barriers to exit from the crisis.

Germany is quite able to fill in a little General tank of fuel, without putting at risk their public finances (this is her, no one asks). If it fails to do so because of the election campaign, they will be committing a grave economic error. And all the European statements of the Chancellor will be meaningless.

Actually, I should probably soften the deliberately provocative title of this article. Of course, Germany is not the main problem of Europe. Everyone bears some responsibility and should contribute to the solution. Including Germany. She needs to take stock of myself. If she sees Europe only as hunting grounds for their exporters can expect big problems.

The conclusion is very clear: the survival of the Eurozone is impossible without close economic cooperation. This cooperation should not be limited to requirements to tighten fiscal policy. Its expression should be greater coordination of economic policy in all areas. And from this point of view Germany is hardly a good example.

Orny Gerard (Gérard Horny)

Original publication: Le problème de l'europe, C'est l Allemagne


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