Germany must defend euro, says Schäuble

Sat, Jun 11, 2011, 01:00

GERMANY HAS benefited most from the euro, and has the greatest responsibility to defend the single currency, finance minister Wolfgang Schäuble has said.

In a passionate Bundestag speech yesterday, Mr Schäuble reiterated his call for a “soft” restructuring of Greek debt despite criticism from the European Central Bank.

Berlin took seriously “sceptical voices and warnings” from the ECB about debt rescheduling, Mr Schäuble said, but expressed hope of reaching an agreement that trod “the fine line between appreciable private sector involvement and the avoidance of negative financial market reaction”.

In a lively Bundestag debate on further aid for Greece, Mr Schäuble set aside technical arguments to make an emotional case for the euro.

“No one should have any illusions about the seriousness of these decisions but we have to make the case to our citizens that there are good economic and political reasons for European unity,” he said

Recalling that Germany is the leading exporter – 60 per cent of the total – to euro zone neighbours, he said it has thus gained the most from the stable euro exchange rate.

“As we have the greatest benefit, we also have the greatest responsibility for Europe.”

Amid signs of growing bailout fatigue in Berlin, German MPs came together yesterday to vote on a non-binding resolution on further Greek aid under the condition of private creditor involvement.

After emergency sittings on Wednesday night, chancellor Angela Merkel got her parliamentary majority yesterday, strengthening her position at the upcoming EU summit.

However, the German leader also got something else yesterday: a lively debate about Germany’s role in Europe.

Mr Schäuble acknowledged that doubt had crept into the minds of Germans about the future of the single currency, but insisted Germany was aware of its responsibilities in Europe.

The euro is guarantor of Germany’s continued economic success, Mr Schäuble argued, thus its defence is part of Berlin’s obligation to a EU that offered Germany a way back after the second World War.

“We wouldn’t have had a second chance to become a dependable partner if we hadn’t had dependable partners in Europe,” he said.

Mr Schäuble reminded MPs that Germany had been no model pupil in recent years after breaching the stability pact and running up a sizeable budget deficit.

However, he said it had faced the inevitable austerity measures and expected others to do the same for the common good.

“It’s painful but there is no way to avoid a confrontation with reality,” he said.

Social Democrat opposition leader Frank-Walter Steinmeier congratulated Mr Schäuble for his speech. However, he said it underlined the lack of European leadership spirit elsewhere in a cabinet that “governs by the regulation book”, particularly on EU affairs.

“We’ve gone from European architect to European whingers,” he said, calling on the government to redress the euro’s failings.

“We need common economic and finance policy . . . a harmonisation of taxes and minimum taxation of corporations.”