Guardian
May 16, 2012
When Germany's chancellor Hannelore Kraft met France's president François Hollande in a sunny Berlin earlier this week, they agreed on a compelling strategy to save the eurozone. With no elections in any eurozone country for the next two years, they were able to stretch the austerity timeline for Greece, Spain and Italy, add some elements of growth stimulus, including increased demand in Germany itself, but also keep up the essential pressure for fiscal discipline and structural reform. As a result, even devastated Greece began to glimpse light at the end of the tunnel.
In our dreams, fellow Europeans, in our dreams. The reality is different. While François Hollande and Angela Merkel – not Kraft, the Social Democratic victor in last Sunday's North Rhine-Westphalia elections and possible candidate for chancellor in 2013 – meet under thunder and lightning-torn skies, there is capital flight from Greece (more than €5bn since the 6 May election), fear and trembling in the markets, self-reinforcing talk of Greek exit from the euro and another month of uncertainty until another election in Athens. Meanwhile, back in Berlin, Germany's finance minister Wolfgang Schäuble still preaches the gospel of Ordoliberalism as if it were revealed truth. And everywhere, all the time, there is that tiresome old Greek invention called democracy.
I recently heard a line attributed to the former Luxembourg prime minister Jean-Claude Juncker, now the head of the euro group, to the effect that "we know exactly what we should do; we just don't know how to get re-elected if we do it". It's not entirely clear that Merkel and Schäuble do know what is needed, since their economic doctrine is flawed. But even if they did, or if it were already federal chancellor Kraft, there would still be the problem of an election imminent somewhere in Europe, and the chronic difficulty politicians find in telling home truths to people whose votes they are courting.
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