A Game of Euro Chicken: Playing Until the Germans Lose Their Nerve
For Germany, being part of the European Union has always included an element of blackmail. France has been playing this card from the beginning, but now the Spanish and the Greeks have mastered the game. They’re banking on Berlin losing its nerve.
France’s newly elected Socialist government has just decided to lower the retirement age to 60. From now on, no Frenchman will be forced to work any longer just because it might help kick-start the country’s flagging economy. And there’s no way the French are going to work as long as their poor fellow Europeans in Germany, whose government is obliging them to labor and toil until age 67.
Blessed France, where the ruthless laws of the economy lose their ability to frighten people bathing in the eternal sunlight of socialism. Granted, this grand nation doesn’t produce enough children to guarantee the prosperity of its inhabitants into old age. But in France, something that would elsewhere be viewed as a serious demographic problem demanding tough attention is seen as a mere misunderstanding that the strong arm of the president can simply dispel with the stoke of a pen, should he so desire.
OK, things aren’t quite that easy, even for François Hollande, the freshly minted sun king of France’s Fifth Republic, and his fellow brothers-in-arms. At least they understand enough to know that economic problems can’t be solved by merely kicking them down the road. But, luckily enough, those in the Elysée Palace can also still rely on the willingness of the Germans to work hard. And it’s there that we come full circle.
Splitting the Bill
We’ve now reached a phase in the euro crisis when everyone is trying to feather their own nest at someone else’s expense. Hollande is campaigning to have the European Union help the Spanish rehabilitate their banks without involving itself in their business dealings. But, in doing so, he’s much less focused on Spain’s well-being than on France’s. Once the principle stating that countries can only receive financial assistance in return for allowing external oversight has been contravened, one is left with nothing more than a pretty piece of paper to insure against the vicissitudes of economic life. And, of course, the next banks that will then be able to (and presumably also will) get a fresh injection of cash straight from Brussels are the ones in Paris.
Sigmar Gabriel, the head of Germany’s center-left Social Democratic Party (SPD), has already called Hollande a friend. But Franz Müntefering, the wise party elder, has just warned his party colleagues not to sing the French president’s praises too loudly. The old fox knows when he’s standing face to face with someone who only has his own interests in mind. Indeed, despite all his calls for European solidarity, most of Hollande’s proposals are ones that others will have to pay for. Someone is obviously going to have to be responsible for all the social programs the French government is concocting. And why not the nation whose people are viewed as particularly hardworking and dependable by an overwhelming majority of the people surveyed in a recent poll?
Hollande’s policies depend on foreign creditors being willing to lend him the necessary funding, but their read on things differs from that of the domestic electorate. Since they’re worried about whether they’ll ever see their money again, they’re demanding higher risk premiums. However, another path to fresh capital with cheap conditions leads to the savings of Germans — which also explains why the French government has been so badger-like in its championing of euro bonds and, more recently, a banking union.
Then again, there’s always another option: having the French work harder. But Hollande would prefer not to ask that much of his countrymen.