www.german-foreign-policy.com , 2011/02/14
The „EU Competitiveness Pact,“ being pushed by Germany and France, is encountering massive resistance throughout Europe. The project, which is said to form the nucleus of the EU’s future economic governing body, is supposed to obligate all countries of the Euro zone to introduce so-called debt limitations, raise retirement ages and lower real incomes. This, in the name of creating an economic governing body, would impose a German economic concept on all Euro zone countries, an objective France has always sought. The objective would be to transform the EU, along the lines of the German model, into a global exporting power – at the expense of the prosperity of Europe’s populations, who are being forced to submit to increasingly precarious living standards. Even the German business press has begun to warn that the enforcement of this pact could lead to „violent conflicts – particularly in southern EU countries.“ As a matter of fact, massive protests are already in progress. Southern European media characterize this German-French economic dictate to the EU as a „coup d’Ã©tat“ and warn against a „Germanization of Europe“.
The hefty dissention over the future course of the EU’s economic policy had already escalated during the February 4 EU summit meeting in Brussels. It was truly a „surreal“ summit, at which Germany, with French backing, sought to impose its concepts of economic policy, reported the Belgian Prime Minister Yves Leterme. „There were 18, 19 countries who spoke up to make known their regret on the way it was presented and also on the content,“ said Leterme. Without previous consultations, Berlin and Paris presented a comprehensive package of measurements calling for the adjustment by each national economic, social and fiscal policy and stipulating each of the Euro zone member nations accept its obligatory character.
The mark of the German economic policy, aimed at massive salary reductions, general economic insecurity and aggressive export orientation, is unmistakably recognizable within the individual provisions of the „EU Competitiveness Pact“. The pact, which is described as the nucleus of a future EU economic governing body, provides for the Euro zone nations to introduce „debt limitations“ patterned on the German model. In addition, the future retirement age should be adapted to the demographic development, which, for the majority of the EU nations means it would have to be raised. The „pact“ also provides for the elimination of the increase in salaries to adjust to the development of inflation, which is the norm in every Euro zone nation. Finally, the corporation tax rates should be standardized throughout the Euro zone. Berlin and Paris‘ demand that the „pact“ be rapidly adopted outside of the EU’s institutions, in the framework of multilateral treaties, has provoked even more outrage.
Particularly Belgium’s Prime Minister, Yves Leterme and Jean-Claude Juncker, Prime Minister of Luxemburg and President of the Eurogroup, protested against eliminating the increase in salary, to keep up with inflation levels, and raising the retirement age. These proposals would signify „social overkill“ protested the summit participants. Even Austria, which usually is considered Berlin’s tried and true ally, criticized the pact. Italy’s Franco Frattini was one of those publicly criticizing the fiscal standardization and the „debt limitations“. Frattini, who considers that Italy was disadvantaged in this internal European power struggle, demanded that the discussion of the EU’s future economic and budgetary policy involve all of the EU nations. There should be „no single group leading the other nations.“ Irish Prime Minister, Brian Cowen engaged French President Sarkozy in a heated argument.
Core and Periphery
The German-French offensive has provoked indignation also among representatives of the Eastern EU nations, fearing a division of Europe could be galvanized into core and peripheral EU countries. „Why do you have to demonstrate a division,“ complained Poland’s Prime Minister Donald Tusk, „are the rest of us standing in your way?“ Warsaw has „basic doubts about these methods“ aimed at establishing an „economic governing body within the Euro zone“. The Hungarian Prime Minister, Victor OrbÃ¡n even labeled the German-French initiative an „unfriendly act.“ The Slovak Prime Minister, Iveta RadocovÃ¡ also rejected Berlin’s plans: „If there is a proposal to have a uniform retirement age in all of the EU countries, then I regret, but I to have to say no.“
Completely on the German Model
Many newspaper columnists criticized this German offensive even more bluntly. The Italian business journal, Il Sole 24 Ore, for example, unambiguously warned against a „codex for Europe’s gradual Germanization.“ For example there is „not a word“ in this German-French pact concerning the demands by numerous Euro zone countries for a rectification of the German trade balance surpluses, which are driving Southern European countries into debt. Instead, their paper proposes „to raise the retirement age“ and „halt salary adjustments“ along the lines of the German model and threatens sanctions against those countries that refuse to take these steps. The impending „European economic governing body“ will be implemented „completely along the lines of the German model.“
The Greek daily, To Ethnos, was also outraged over the putschist manner of Berlins approach. „Europe’s employees are growing ever poorer!“ warned the left-liberal journal. „The way decisions are currently being expedited in the Euro zone and the EU, resemble a coup d’Ã©tat.“ „The methods used to impose these measures“ are „utterly unacceptable“ especially since they „will radically transform the lives of all European citizens.“
Even in the Polish media, which had mostly avoided tones critical of Germany, since Donald Tusk introduced a rapprochement policy toward Berlin, have now begun to effusively warn against – in the words or the weekly Tygodnik Powszechny – an „all too German Union.“ The liberal pro-German daily Gazeta Wyborcza prophesied a „division of Europe“ imposed by the „Competitiveness Pact“. The daily, Gazeta Prawna made the calculation that Poland’s joining this „Competitiveness Pact“ would result in a loss of 160,000 jobs. In spite of these warnings, at the trilateral („Weimar Triangle“) summit with Poland’s President Bronislav Komorowski, Merkel and Sarkozy insisted on Poland joining the Euro zone and the „Competitiveness Pact“ soon.
Crisis as Leverage
The most important point of leverage at Germany’s disposal in this power struggle for the „Germanization of the EU“ derives from the European debt crisis. Berlin has already made it clear that it would only agree to enhance the Euro bailout measures, to salvage the highly indebted Euro zone countries from national bankruptcy, if the EU passes the „Competitiveness Pact“. This also places the EU countries under heavy time pressure. Already at the upcoming March 24 – 25, EU summit, a comprehensive crisis package, which will also include the sharply criticized pact, is supposed to be adopted. The outlines of German plans for the European economy are clearly defined. Berlin seeks to form a European Union in its own image, which will pursue an economic policy as aggressively and as export-oriented at the global level as Germany. This EU is to be created at the expense of the employees, who will be driven even deeper into poverty. Should this economic Germanization of the EU fail, Berlin seems prepared to risk a total collapse of the crisis ridden Euro zone, which, due to the dynamics of the crisis, is successively becoming less useful as an export market for the German industry.
 European Leaders Clash at Summit; Wall Street Journal 05.02.2011
 Merkels Europa-Pläne ernten heftige Kritik; www.spiegel.de 05.02.2011
 Ireland’s corporate tax regime comes under EU pressure; Irish Times 05.02.2011
 Slowakische Ministerpräsidentin übt Kritik an geplantem Pakt für EU-Wettbewerbsfähigkeit; www.ad-hoc-news.de 09.02.2011
 see also Die deutsche Transferunion and An Immoral Proposition
 Il Sole 24 Ore 04.02.2011
 To Ethnos 03.02.2011
 Czy Unia bÄ™dzie zbyt niemiecka? Tygodnik Powszechny 08.02.2011
 Pakt für Wettbewerbsfähigkeit – Berlin rudert zurück; www.euractiv.de 09.02.2011
 see also Die deutsche Transferunion