Today's troubled Europe: History has transformed Germany from Europe's bete noire to Europe's best hope

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The financial fate of Europe seems to turn on the willingness of Germany to serve as the wheelhorse to pull the European economy out of crisis.

Given history, the irony of the situation is sharp and painful, perhaps especially for the Germans themselves, who cannot afford to be proud -- or at least to show pride -- in their crucial position. To disaggregate the situation it is perhaps useful to see recent history in two strands, one German, one European.

The Germans had a rough 20th century, which was mostly their own fault.

Germany lost World War I, then suffered a very raw version of the depression of the 1930s when its people went shopping with baskets of nearly worthless currency to buy food. Next came the horror of Hitler and the Nazis, the appalling events of the Holocaust and crushing defeat in World War II, leaving the country divided, occupied and in ruins.

With Marshall Plan aid from the United States and with the West assuring its defense, West Germany pulled itself up by the bootstraps. Then, starting in 1990, it had to bring the economy of communist East Germany, stripped and battered by the Soviet Union for 45 years, up to par with the rest of the country, a problem not completely solved to this day.

Now, based on hard work and logical governance, Germany has the fourth largest economy, after only the United States, China and Japan, and the largest in the European Union. As such it is being called upon to pull Europe out of the economic ditch.

It has to make everyone, particularly Europeans, nervous to acknowledge that Germany now dominates Europe, given the painful history of the past century. The Germans themselves dare not say so. They may say they could not have been so successful if NATO hadn't had their back during the Cold War face-off between the West and the Soviet-led Warsaw Pact.

For the record, that is a generous explanation of why U.S., British and French troops were stationed in Cold War West Germany. The United States still maintains some 40,000 troops in Germany. One reason was that the West did not want Germany rearming again, as it had after World War I.

Now, of course, the United States and NATO are eager to have German forces share the burden in places like Afghanistan. Never mind if Germany rearms. Never mind if the rest of Europe has to depend on Germany to pull the economic wagon.

For the rest of Europe, it might help that Germany is led at the moment by a strong but benign-seeming lady from the old East Germany. What if the chancellor they had to ask for money instead wore a mustache and uniform, and strutted?

As for the European string of this analysis, the European Union and the eurozone were, until the United States launched a global recession in 2008, the poster children for regional economic and political integration. Until the current mess, Africa, Asia and Latin America were regularly reminded to look to Europe as a model for solving some of their economic problems.

In fact, the European model remains valid. One factor that continues to guarantee African underdevelopment is the fact that Africa's 1 billion people are divided into 54 countries, many of them too small ever to be viable, few of them ready to play well with others.

The EU has grown steadily to 27 members. It has steadily broadened, deepened and insti- tutionalized its co-ordination. It has passed through several generations of treaties and covenants governing its members' cooperative approach to problems. Its participants have step by step given up pieces of their sovereignty while seeking to preserve their cultural identities.

The EU -- or more precisely, the 17-member eurozone -- is now facing one of the broadest rivers it has yet had to cross. The countries in financial trouble are asking the others, starting with Germany, to bail them out. They can't pay their debts, or, more accurately, it is costing them more to borrow to cover their expenses than they believe they can handle. The most troubled countries include Cyprus, Greece, Ireland, Italy, Portugal and Spain.

For other countries, the question is, "How are we supposed to bail you out if you are then free to continue to spend yourself silly and perhaps go even deeper into the hole?"

The obvious answer is to apply serious European control over all eurozone budgets, or at least over the budgets of countries seeking bailouts. Also needed is European control over all eurozone banks, or at least those banks in the countries asking for help.

Never mind why the United States government bails out its banks with taxpayers' money and then lets them continue their irresponsible shenanigans, including eight-figure compensation for senior executives. The United States has limitless money and its voters limitless patience with being rolled by their government and bankers.

Sure they do.

Once Europe-wide institutions exercise control over eurozone budgets and banks, what would be left of national sovereignty? And what of having bad old Germany holding the whip hand?

If you were a Greek treasury official how would you like opening your books to a German examiner? On the other hand, if the alternative is going fishing for your supper in a row boat, well, maybe.

Who would have guessed in 1945 that this is where Europe would be 67 years later?

dansimpson

Dan Simpson, a former U.S. ambassador, is a Post-Gazette associate editor (dsimpson@post-gazette.com, 412 263-1976). First Published June 20, 2012 12:00 AM


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