Rise of the Fourth Reich, how Germany is using the financial crisis to conquer Europe

By Simon Heffer | DailyMail.co.uk | 17th August 2011

Yesterday’s crisis meeting between Angela Merkel and Nicolas Sarkozy was arranged before the participants knew of the disastrous growth figures in the Eurozone that emerged in the morning.

The background to the meeting was last week’s tumult in the world financial markets. Shares had gone into freefall after the downgrading of America’s credit rating.

Angela Merkel and Nicolas Sarkozy met to discuss the crisis yesterday, with the outcome of conversations suggesting a fiscal union could be created - of which Germany will dictate terms

Worse than that, however, were the tremors rattling some of Europe’s most important banks, notably in France, caused by further evidence of the utter failure of even the more developed European economies to live anything like within their means.

Chancellor Merkel has managed to use the hard-earned money of German taxpayers to bail out profligate Eurozone countries without suffering any political fall-out. This is unlikely to remain the case and Mrs Merkel knows it.

That is why yesterday she played down talk of the European Central Bank — funded by German-backed Eurobonds — paying off the debts of these all-but-bankrupt nations.

Instead, there was forceful talk of Eurozone countries being coerced into balancing their budgets and reducing their debt through what Merkel and Sarkozy called a ‘true European economic government movement’ made up of all the heads of state and led, initially, by the EU President Herman Van Rompuy.

Frau Merkel called for a ‘stronger coordination of policy’ and ‘a new quality of cooperation’ within the Eurozone.

Although she will not yet admit it, this all suggests the first step has been taken towards a fiscal union that will leave Germany dictating the financial terms for the rest of Europe.

It is the one country that is able to do so. Greece, Ireland and Portugal are economic basket cases. We have heard more and more about the trouble in Spain, where unemployment is over 20 per cent.

Italy is tottering — the figures for 2010 show it has debts of 116 per cent of GDP, making the country second only to Greece at around 143 per cent.

Meanwhile, the recent addition of France to the list of at-risk economies has caused real shock and panic across the Channel. Its banks hold about an eighth of Greek debt, or $57 billion, its stock market has tumbled and credit rating agencies are talking of removing France’s triple A status.

So, after a summer of increasingly shrill panics around the Mediterranean, the contagion is moving north. Individual bail-outs have been tried, but they obstinately refuse to work. Only an idiot would think they would: they treat only the symptoms of Europe’s economic decline, not its causes.
If only everybody could be like the Germans, and spend just a mite more than they earn, then all would be well, the markets seem to say.

Germany lay in ruins in 1945, but it then invested in manufacturing plant, developed first-class education, innovated, raised its productivity and competed on quality not price.
Over the next 60 years it won the peace as comprehensively as it lost the war.

If the euro is to survive — and with it the European project — the other 16 Eurozone countries will have to be like the Germans. Indeed, they must lose the freedom not to be like the Germans.

Be in no doubt what fiscal union means: it is one economic policy, one taxation system, one social security system, one debt, one economy, one finance minister. And all of the above would be German.

That means a complete fiscal union in which Germany, as the EU’s most powerful economy and principal paymaster, makes the rules and makes them unbreakable.


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