Who Will Lead The Revolt Against Germany?

“Mr. Hollande has sought to reduce Germany's dominance over Europe's anti-crisis strategy, and open up Europe's debate over solutions to other voices. Since Mr. Hollande's election victory over Mr. Sarkozy in May, France has tried to play the role of a broker between Germany and southern European countries, including Italy and Spain, which are seeking more-generous European help against recession and financial-market strains.”
---WSJ, “Summit Reveals Wider Franco-German Discord”, Oct. 19, 2012

That seems to be the main takeaway from the just-concluded EU summit: that Hollande has chosen to directly challenge Merkel’s leadership of the union. I interpret this in two ways: (1) the good news is that the needy South is building a political coalition against the cold-blooded North; and (2) the bad news is that the Southern coalition appears to prefer public whining to real political action. But I hope I am mistaken about that. Maybe they are biding their time.

Of the three Southern leaders, clearly the intellect is Monti. I think that he grasps the enormity of the problem facing Europe, including the need for reflation. But, because Italy is not yet in the direct line of fire, his strategy is to lay low and work behind the scenes. For now, he prefers to work on structural reforms to make Italy a better credit (with market access), rather than launching a frontal assault on Frankfurt and Berlin.

Hollande seems to have the guts to take on Germany, but I am not sure that he fully comprehends the need to actually depose Germany from its leadership position in the EU and the ECB. The last sixty years of French foreign policy have focused on bringing Germany in, not on pushing her out. That would be a big step.

Rajoy appears to me to be wholly out of his depth, but I am not really in a position to pass judgement on him yet. I agree with what he doing (demanding as much as he can get), but I doubt that he understands the urgent need to take over the governance of the ECB. He is the most radical, but he is not radical enough. Begging for a bigger IV drip will not save Spain. Only a revolution in the eurozone can do that.

But there is hope. These three men have enormous political power in Europe, and they should be able to craft a large bloc of sympathizers out of the 17 members of the eurozone. As the next few months demonstrate that Europe is facing a future of endless zero growth, and as each of them fail to hit their fiscal targets, one hopes that they will realize that, as Mrs. Thatcher would say, there is no alternative.

The World’s Opinion Page

Help support Project Syndicate’s mission

subscribe now

It is a shame that, aside from dear departed Sarkozy, no European leader has dared to question the baneful role of the ECB’s single mandate of price stability. That is the intellectual breakthrough which is needed. It is ironic that the breakthrough occurred in the US, which is not facing zero growth, rather than in the eurozone, which is becoming a textbook example of Fisher’s debt-deflation spiral.
Europe needs to stop being afraid of the Bundestag, the Bundesbank, and the Constitutional Court. They don’t rule Europe and they don’t even have a veto.

  1. Sean Gallup/Getty Images

    Angela Merkel’s Endgame?

    The collapse of coalition negotiations has left German Chancellor Angela Merkel facing a stark choice between forming a minority government or calling for a new election. But would a minority government necessarily be as bad as Germans have traditionally thought?

  2. Trump Trade speech Bill Pugliano/Getty Images .

    Preparing for the Trump Trade Wars

    In the first 11 months of his presidency, Donald Trump has failed to back up his words – or tweets – with action on a variety of fronts. But the rest of the world's governments, and particularly those in Asia and Europe, would be mistaken to assume that he won't follow through on his promised "America First" trade agenda.

  3. A GrabBike rider uses his mobile phone Bay Ismoyo/Getty Images

    The Platform Economy

    While developed countries in Europe, North America, and Asia are rapidly aging, emerging economies are predominantly youthful. Nigerian, Indonesian, and Vietnamese young people will shape global work trends at an increasingly rapid pace, bringing to bear their experience in dynamic informal markets on a tech-enabled gig economy.

  4. Trump Mario Tama/Getty Images

    Profiles in Discouragement

    One day, the United States will turn the page on Donald Trump. But, as Americans prepare to observe their Thanksgiving holiday, they should reflect that their country's culture and global standing will never recover fully from the wounds that his presidency is inflicting on them.

  5. Mugabe kisses Grace JEKESAI NJIKIZANA/AFP/Getty Images

    How Women Shape Coups

    In Zimbabwe, as in all coups, much behind-the-scenes plotting continues to take place in the aftermath of the military's overthrow of President Robert Mugabe. But who the eventual winners and losers are may depend, among other things, on the gender of the plotters.

  6. Oil barrels Ahmad Al-Rubaye/Getty Images

    The Abnormality of Oil

    At the 2017 Abu Dhabi Petroleum Exhibition and Conference, the consensus among industry executives was that oil prices will still be around $60 per barrel in November 2018. But there is evidence to suggest that the uptick in global growth and developments in Saudi Arabia will push the price as high as $80 in the meantime.

  7. Israeli soldier Menahem Kahana/Getty Images

    The Saudi Prince’s Dangerous War Games

    Saudi Arabia’s Crown Prince Mohammed bin Salman is working hard to consolidate power and establish his country as the Middle East’s only hegemon. But his efforts – which include an attempt to trigger a war between Israel and Hezbollah in Lebanon – increasingly look like the work of an immature gambler.