ANALYSIS:BUNDESBANK PRESIDENT Jens Weidmann has said a "cacophony" of political voices are undermining euro zone rescue efforts, as Germany resisted French efforts last night to call an emergency EU summit.
Berlin officials said there was not enough time to prepare anything meaningful for EU leaders to agree tomorrow.
Despite market turbulence, existing agreements would “hold water” until a second Greek bailout was agreed at the end of August, said government sources.
“The cacophony of voices in public discussions of recent weeks . . . has not helped instil confidence in the politicians’ problem-solving abilities,” Weidmann told Die Zeit newspaper.
His remark highlights the tension running through the euro zone crisis. For Germany’s detractors, Berlin is plodding and pedantic, while Berlin argues that doggedness to principles pays dividends in pushing reforms to save a currency.
“Of course we are not operating in a bubble but you cannot let yourself be completely dictated to by markets,” said one Berlin finance ministry official yesterday.
“Monday was awful on the markets, Tuesday was okay. This is no justification for making stupid decisions.”
Ongoing euro zone spats expose the sometimes contradictory views of countries sharing the single currency. Some countries have a culture of pragmatic flexibility – towards spending and saving – while others, led by Germany, favour rule-based (austerity) measures.
For its philosophically inclined critics, Berlin has an unhealthy obsession with the “categorical imperative”, a central idea of German philosopher Immanuel Kant.
His influence on German thinking can be seen in the euro zone crisis: a refusal to react to hypothetical threats – to Greece – until it becomes an absolute, unconditional requirement – to save the euro zone. Once acted upon, however, this action becomes a universal law.
What this thinking means for the rest of the EU can be seen in Germany’s debt brake legislation. Just as a stomach clamp prevents overeating, the national debt brake makes it unconstitutional for politicians to overspend.
“Politicians have to agree to be lashed to a regulatory mast so they can resist the temptations to spend, like Odysseus who knew he was doomed if he succumbed to the sirens,” said researcher Michael Wohlgemuth of the Walter Eucken Institute.
The idea of Germans imposing rules sends shivers down the collective European spine. Not least because, as Kant noted, everyone “is secretly inclined to exempt himself from them”. Not even Berlin felt the need to adhere to the stability pact.
But what if an improved, rule-based solution is possible? Kant suggested that “when private intentions conflict, they check each other; the result is that their public conduct is the same as if they had no such intentions”.
In other words, Germany wants EU members to check each other on spending. Eventually, like someone on a diet, countries realise that consuming isn’t always good fun but sometimes necessary.
German officials are not naive enough to expect the crisis will trigger a full handover of budget sovereignty to the EU. But Berlin’s euro zone crisis diagnosis is clear: budgetary stomach clamps for all. Just don’t tell Angela Merkel it Kant be done.
