Europe

A Response to Germany’s Austerity


The European Union (EU) is at a crossroads, with increased economic inequality across the member states having the potential to further break apart the EU. Germany has a unique opportunity to step up, and fight this fracturing. To do so, Chancellor Angela Merkel should not continue to focus on sustained austerity measures, which seek to reduce budget deficits through a combination of spending cuts and tax increases as the solution to this problem. Rather, addressing economic inequality will be the most important role for Germany to play if it hopes to save the EU from further fracturing. Germany can rise to this imminent threat by turning to new policies and accepting an increased role as an investor in the EU.

 

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Since the Great Recession, numerous nations in the EU have struggled to gain stable economic footing. During these hard times, Germany has weathered the storm with considerable ease. This success has been credited largely to the nation’s tough austerity measures, which included cuts to the country’s welfare state, elimination of over 10,000 civil service jobs, and downsizing the military. Germany’s successes have spurred economic conservatives in both Europe and the United States to double down on their advocacy for austerity. Under the German government’s advice several economically weak EU nations, including Greece and Italy have embraced austerity (albeit versions that diverted from the German model). The results have been economically catastrophic with skyrocketing unemployment rates and shrinking public services contributing to widening gaps of economic inequality.

However, Germany can still aid the EU from this ballooning crisis by turning its focus to a more flexible economic plan that relies on greater social investment in the Eurozone rather than the promotion of austerity measures. One plan in particular that Germany should consider investing in is French President Emmanuel Macron’s bold blueprint to reform the EU.

Since taking office last May, Macron has proposed numerous reforms that would serve to address the various symptoms of economic inequality in the Eurozone, including unemployment and upward mobility. These reforms would task wealthier EU nations with issuing common bonds to poorer nations to aid in economic recovery and social investment efforts. Additionally, Macron has advocated for several comprehensive long-term fixes, which include the establishment of the European Monetary Fund, and the creation of a Eurozone budget. France and Germany would also increase their role in leading military operations to relieve poorer EU nations of having to spend too much on defense and border security.

Macron has been steadfast in his advocacy for these new policies, which he believes could save Europe from further economic woes, and beat back the further fracturing of the EU. He believes that German chancellor Angela Merkel could be a crucial and valuable ally in carrying out this vision.

Merkel in spite of complementing Macron for his ‘European passion’, and even being open to the prospect creating the European Monetary Fund, has remained hesitant to fully embrace his plan, claiming that it was “too early” to determine how successful Macron’s approach would be. Indeed the French president’s plan has been met with cold skepticism in Germany, facing allegations of being a ‘transfer union’ where fiscally responsible European nations bear the burden of subsidizing seemingly negligent ones. Additionally, Merkel’s own underwhelming performance in last year’s election has deprived her of the public mandate necessary to for her to take bold action.

Merkel’s hesitancy is understandable. An earlier attempt at a monetary union within the EU in 1999 fell apart due to several states violating provisions meant to promote growth. However, Macron’s plan does more to promote economic integration through establishing a Eurozone budget, which the former pact lacked. Germany would be a vital player in this new deal, but it would not be overburdened with providing for the entire EU. Macron’s desire for France to play a major role in reforming the EU signifies that France is eager to confront the problems that the EU faces as an equal party to Germany.

Germany is in a strong position to help lead the EU. To do so Germany will need new solutions to confront the extraordinary problems that could further damage the EU or its stability on the global stage over the course of the next decade. These problems would require Germany to turn its focus from current austerity measures and embrace investment in the EU. History is filled with prime examples of leaders who have acted boldly in the face of great uncertainty. Merkel should reconsider her stance, and move closer to embracing Macron’s proposed reforms. The time for Germany to act is now.

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