Germany and France found themselves four times in one century, each in turn, in the position when they were able, through absurd or shameful decisions, to transform Europe into a field of ruins. And they did it. In 1914, both were involved in the chain of events that led to the First World War. In 1919, it was France, which took the wrong decision by demanding that Germany pays the cost of the war. In 1933 it was Germany which took the wrong path by choosing Hitler as chancellor. In 1936, it was France who made the mistake of letting the Führer reoccupy the Ruhr, paving the way for the second tragedy of the century. Each time, another decision was possible, that would have made the 20th century a time of plenty.
Today it is again the turn of Germany to hold in its hand the weapon of mass suicide of the most advanced continent in the world: If it refuses to accept the narrow path that goes through the redemption by the ECB of maturing bonds, followed by the issuance of a European sovereign debt, repaid by two points of European VAT and a reform of the treaties to better control the laxity of some and the selfishness of others, the disaster will take place.
So that Berlin does not bear, once again, the responsibility of a European suicide, Germany must rid itself of three illusions:
1. Germany which refuses to pay for the mistakes of others, does not have a good record in the Union. Public debt is 82% of GDP, almost equal to the French debt, ten of its banks, all public, which provide 20% of loans in the German non-financial sector, are in very bad situation. Its energy consumption will depend increasingly on Russian gas, which accounts for 37% of its imports. Its demography is catastrophic to the point that in 2060 there will be fewer Germans than French and that 44% of the German population will be over 65 compared with only 35% in France, making the repayment of the German public debt particularly difficult. Finally contrary to Germany’s belief the future of the German industry is not so promising: according to a recent British study, on the world’s 100 most innovative companies, 11 are French and only 4 are German.
2. Germany is the biggest beneficiary of the European Union, which has partially funded its reunification, representing a gain in market share of around 15 points within the euro area and allowing it to become the largest exporter of agrifood products by recruiting staff from Eastern Europe at the rate of these countries, which France cannot and does not want to do.
3. Germany has everything to lose if it leaves the euro area, which would ruin its banking system and which would cost, according to a Swiss study, 20 to 25% of its GDP in the first year and 50% for each year thereafter.
4. Germany believes wrongly that a temporary support from the ECB for banks’ liquidity and European states would lead to a massive inflation, which would ruin its elderly people, the majority, while there cannot be a massive inflation when unemployment is as high and when the financialization of the economy slows down the transmission of money towards the real economy.
Ray of hope: when reading the latest statements by the Chancellor, and the program of her party approved on November 15, (wanting a move towards a European federalism, and suggesting that she could agree to make the European Central Bank the guarantor of last resort) it seems that Germany is preparing to recognize the obvious. It is now up to France to take it at its words. Everything is still possible.