Referendum is as much about Left vs Right as it is about the €

What will we be voting about on May 31st? It is one of the toughest Treaty referendum questions to answer.

European Central Bank
The ECB on Frankfurt’s Way?

If you are to believe the thousands of posters that adorn our street lamps we are either voting yes to stability and jobs or voting no to austerity. A simple enough choice… or so you’d think? Unfortunately, as the campaign progresses, it is becoming clear that neither the Yes nor the No poster claims stands up to much scrutiny.

Do we really think we will suddenly achieve stability and more jobs if we vote yes? I suspect that even the most ardent of yes voters believes that to be case.

On the other hand does the most convinced no voter think that the austerity measures, including household and septic tank charges will disappear if 50% plus one of us votes no? I doubt it.

So what are we voting about?

The best answer I have heard so far has not come from a member of government, the ULA or Sinn Féin. It came, peculiarly enough, from a Euro bureaucrat, a former member of the board of the European Central Bank member. Not the type of person you would expect to speak with simplicity and clarity, yet he did.

Speaking on RTE Radio One’s This Week programme, Lorenzo Bini Smaghi described the decision before us with a cheque book analogy. After years of having separate current accounts, he explained, the Eurozone countries have decided to have one current account and one single chequebook between them for certain purposes.

The risk with this is that any individual country could abuse their access and stick others with the bill, so it is important to agree a set of strict and enforceable rules beforehand. These rules are set out in the Fiscal Treaty. If you want to be able to use the joint account, you need to agree the rules. Refuse to agree the rules and you won’t be allowed near the chequebook.

It is a simple and effective explanation.

What we are voting about is our relationship with the Eurozone countries. Do we want to continue and strengthen that relationship or do we want to weaken it. This does not mean that voting No is the same as being against the Europe, but the choice we are facing has become starker than we would like it to be.

Ok. So now that I have attempted to make the issue a little clearer and get behind the hype and hysteria printed on the posters let me now reverse the process and confuse it again.

While much of the debate has been about the EU and the Euro let me point to another level in the debate. Though it does not get mentioned so much, this referendum has become a proxy battle on the future of left versus right politics in Ireland.

Before The Declan Ganley entered the fray the battle lines had been drawn up along clear Left/Right lines.

On the Yes side you had the right/centre right parties (FG, FF and even Lab), the employers’ and business organisations, the farmer’s groups and the more conservative trade unions.

On the No side you had the radical and left parties, People Before Profit, Joe Higgins Socialists, Sinn Féin, the more radical trade unions.

A Yes result would recalibrate the centre of the Irish political spectrum several degrees to the right. While this would not vanquish the left, it would limit their scope and hem them in.

This could help explain why Sinn Féin has been so fierce in urging a No. A Yes vote would place a definite ceiling on their ambitions and make the centre/centre right economic approach the norm for at least the next decade.

This would leave the hard left /socialist factions with no influence, just sitting on the sideline spouting rhetoric – so, no change there.

The main casualty could be Irish Labour Party, no matter what the result. “Frankfurt’s Way or Labour’s Way” may turn out to be the most devastating political slogan of recent times – devastating to its authors, that is.

I Don’t Like The Fiscal Compact Treaty, But I Will Still Vote Yes

My thoughts on why I am not impressed with this Fiscal Compact Treaty, but why I will vote for it and urge others to vote Yes too.  

A few nights ago I was on the cusp of penning a piece as to how it was possible to be a committed pro European and still urge a “No” vote at the forthcoming Fiscal Compact Referendum.

My reasoning broadly ran as follows.

  • While the Fiscal Compact does contain some important measures that would have addressed the fiscal problems that others, not Ireland, had experienced in the run up to the crisis – it effectively does nothing about the core issue facing the EU and the Euro: the dysfunctional European banking system.
  • The EU Council and Commission have wasted over two years taking pointless half measures that tinker about with the symptoms of the problem while studiously ignoring the core problem: the banking crisis.
  • This fiscal compact is just the latest in a series of well intentioned, but minimalist attempts to assure the markets that it ready to address the crisis. Like the others it will fail.
  • What the EU needs now is a short sharp shock to jolt it into effective and decisive action. By decisive action I mean tackling the banking and credit crisis head on and bolstering the role of the European Central Bank to become the lender of last resort.
  • Ireland can not only deliver that shock by rejecting the Fiscal Treaty as inadequate and lacking substance, but it can take the lead – particularly among the smaller, peripheral nations – in demanding that the Commission, particularly President Barroso stop acting as the servants of the French & German governments and get the EU back to being a Union of countries that work together, in partnership and in solidarity for our mutual benefit.

That was my broad theory.

It is not heresy or anti European to say that the Fiscal Compact Treaty does not address the biggest problem facing the economies in both the EU and the Euro.

The point is not that the Fiscal Compact goes too far – it is that it is too one sided. It addresses a secondary problem – not the primary one. It almost completely omits the measures required, specifically on the ECB, to tackle the real problems facing us all.

As I was writing the piece I realised that while I still fully believe in points 1 – 4 the reasoning underpinning Point 5 was fatally flawed.

Ireland rejecting the Fiscal Compact will not be seen as us rejecting it as a half measure. It will be seen as Irish petulance. We have thrown down the gauntlet before – on Nice 1 and Lisbon 1 for reasons that most in the EU failed to grasp.

The Taoiseach and his Ministers have shown not the slightest interest in showing Leadership at the EU Council or of building any consensus among the smaller peripheral countries.

Rather the Taoiseach has been content to roll over and have his belly tickled (metaphorically – I hope) by the big two, and hope that no one will ask him any difficult questions.

He has consistently underplayed his hand for the past year. Stories that talked tough and banged the table at his first Council meeting yielded nothing. Since then he has been content to keep his head below the parapet. The same applies to Eamon Gilmore.

There is nothing to suggest that either are capable of building a consensus across the EU. The reality is that neither have attempted it. Their antithesis to travelling to meet other leaders or hold bi-laterals here is mind boggling, especially when you consider how they howled in opposition that the last Government was allowing Ireland’s reputation to slip.

None of this augurs well for Ireland’s forthcoming EU Presidency, but that’s another story.

Those pointless rejections of Nice 1 and Lisbon 1, are now coming back to bite us. Those who urged us to say No then, are once again in the vanguard urging us to Vote No once more. Their reasoning has not changed. They are as Eurosceptic and anti European as they ever were.

Saying No now would be seen as biting the hand that feeds us – even when that hand has been making a few bob from what its been doing.

Worse still saying No would not gain anything by saying No – except to put ourselves in some undefined limbo beyond the revised European Stability Mechanism. Whereas our saying No in Nice 1 and Lisbon 1 held up the process of ratifying those treaties, saying No now will halt nothing.

We have no veto. We have no bargaining chips on this one. There is no point in threatening to pull the trigger when everyone else knows we have no ammo in the chamber.  UCD’s Dr Ben Tonra makes this point very clearly in an excellent post on the politicalreform.e page here.

The conclusion is that we must pass the Fiscal Compact treaty and then use that passing of the Treaty to build a coalition of smaller countries across the EU to tackle the real problem facing us.

I would love to think that saying No would urge the EU into actions that are long overdue. The sad reality is that it will not.

So, just like the French Socialists who were compelled to vote for Chirac in Round Two of the 2002 Presidential elections, rather than seeing Le Pen slip through, I may be taking a disinfectant mat with me to the polling station as I vote Yes.

I want a better treaty. I want a treaty that tackles the real problems. This treaty itself even acknowledges the need for a further treaty.

If passing this one is the price we must pay to get to that point – then let us do so – and quickly.

To burn bondholders or not to burn them – is there a third option?

Is it any wonder there is so much confusion about what to do with the bank bondholders?

Less than twelve months ago (February 10th to be precise) Leo Varadkar was saying:

Any bank coming to us looking for more money is going to have to show how they are going to impose losses on their junior bondholders, on their senior bondholders, and on other creditors before they come looking to us for any more money. Not another cent.”

That was before the General Election. Eight months after the election; the now Minister Varadkar had changed tack and was saying:

What’s happening in relation to the Anglo bondholders is they’ll be paid from Anglo’s own resources, from the sale of its own property assets, for example.

By last weekend the line had developed further. On Sunday he was  says that the Government “had to weigh up the costs on the one side and the risks on the other.” and that not paying the €1.2billion of Anglo bonds due this Wednesday: “…would have implications for other State companies like ESB and Bord Gáis,”

It is probably a littler bit unfair to single out Minister Varadkar like this. He was saying pretty much what everyone else was saying in FG during this period. His skill and talent was that he said it more directly and concisely than almost any of his colleagues. It is what makes his quotes more memorable.

Whatever about the changes in the Fine Gael script, two bigger truths have not changed over the past year. The ironic part is that these truths are contradictory.

The first is that the ECB is still holding to its line that bond holders should not be ‘burned’. By that they mean that bond holders should not be forced to accept any reduction in the monies due to them.

The other is the reality that there is a very active market in bonds being sold off at a discount in return for hard cash. These discounts can be fairly hefty, particularly where those bonds have a tasty coupon included.

This trade in bonds was touched upon at a recent seminar on the issue of offset debt, hosted by Thomas Pringle TD and how it could ease the plight of those in negative equity.

Some bond holders are deciding, in their own business interests, to mitigate their losses and sell bonds at a discount. Their rationale is that a bird in the hand is better than two in the bush: a not uncommon business approach.

They sell the bonds on to vulture capitalists who buy the bonds at a 30, 40 or even 50% discount. They retain the bonds face value, and so, they stand to make a hefty profile when the bonds are paid off.

While bondholders may choose to do this, the ECB says they must not be made to do it – except in the case of Greece, but let’s put that to one side for the moment.

This leaves a classic Catch 22. Investors, speculators and traders are selling bonds between each other at varying hefty discounts, with the prospects of making even bigger profits.

It is one thing to say that bond holder’s rights should not be ridden over and allow the market to function, but telling European taxpayers that they should not enter the open market and offer to buy back those bonds, is another.

Its like signing an IOU and watching it being traded among your friends for less than its face value, but being told you cannot dare attempt to buy it back: even if the guy currently holding it would be willing to sell it to you.

Ireland cannot do a solo run and give two fingers to the ECB, but it needs to start canvassing opinion around the EU table to start looking at this issue again.

The noises coming from the new Belgian government, coupled with the prospect of a new occupant of the Élysée Palace come the summer suggests it may be a route worth exploring. Something, perhaps, for the Taoiseach to consider as he heads to Brussels?

Thus leaving Gay Mitchell as the last man standing…..

And then there was one. It is just over two and a half years since we elected Gay Mitchell, Proinsias de Rossa and Joe Higgins as our three MEPs.

Within eighteen months Joe had made his way back into the Dáil. He waved goodbye toBrusselshis seat was taken by Paul Murphy. (No, I don’t know much about him either).

Fast forward another twelve months to this week and veteranDublinMEP Proinsias de Rossa announces that he is to stand down and his seat will pass to Dublin City Councillor, Emer Costello.  As if to complete the row of falling dominoes, Cllr Costello’s vacancy on the City Council will in turn be filled by someone selected by her local labour organisation.

And so, two of the three people who asked us in June 2009 make them MEPs for a five year fixed term have decided to move on or move out. Thus… and who would have imagined we would ever again hear these words…leaving Gay Mitchell as the last man standing.

Everything that Joe and Proinsias have done is entirely and wholly within the rules. Casual vacancies arising from MEPs dying, resigning or otherwise being disqualified are filled this way. It applies across the EU.

It is arguable that this method of filling occasional vacancies is fairer and more democratic than the by-election route.  The people’s decision on the five year mandate of their MEPs made in 2009, by proportional representation, is allowed to stand for the duration.

Nonetheless, it is disappointing that some of those who contested the Euro Election so fiercely can so easily renege on their mandate mid way through the term. I won’t dwell on this point as I cannot claim to be an impartial observer on this aspect having worked on Eoin Ryan’s 2009 campaign.

The point I will comment upon is broader. It is the degree to which these seats are becoming the property of the political party in a manner that starts to resemble the introduction of the party list system.

This may look like a big extrapolation from just one or two co-option processes, but when taken together with recent commentary from Prof David Farrell and others on changing Dáil sitting times to drag TDs away from constituency work, then the leap may not seem so great.

One of the particular features of our multi-seat PR/STV system is the level of personal attachment and connection between Public Representative and voter. This can often transcend party affiliation and may even be said to be on the increase.

Yet there is a curious clamour for this personal connection to be broken. The accusation of the parish pump and cliental-ism is made TDs are said to be so obsessed with getting re-elected that they encourage constituents to think that entitlements they were due were only won thanks to the intervention of the TD.

They argue that TDs should be spending their entire working week legislating and debating. They miss the risk that such a system would just institutionalise the control of party hierarchies.

TDs based in Leinster House Monday to Friday, doing virtually no constituency work for almost five years would be dependent on the national party structure to get them re-elected. Bad news for mavericks.

Not to mention the loss of to our system of representative government. How else can you represent people if you do not spend a good proportion of your time meeting with them and really learning their concerns?

Like all things; there is a balance to be struck. You cannot have TDs who only see life through the prism of how it will affect their re-election chances. But going to the other end of the spectrum is not the answer either.

You don’t learn much by sending out glossy 8 page A3 newsletters every six months. You got to get out and knock on doors. There is no point speaking in the Dáil if all you are churning out is what you found on Google; read from a focus group or what popped into your head over night.

The personal connection between the elected and the elector is important. Anything that diminishes it, undermines the democratic process.

Though I never voted for him (not even a 3 or 4) I will be sad to see Proinsias quit the stage. I wish him well.

Twitter @dsmooney

 


Joan Burton’s Second Law of Inverse Stability

Hadn’t posted on here in a few weeks – catching up on missed items today. This is the most current of the three blogs posted today. It was originally intended for today’s Evening Herald

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As far as I am aware the only eponymous Irish Rule of Politics was named for its creator, the much missed political journalist Gerald Barry.

The rule roughly states that “every leader of the opposition will, be at some point, be hailed as the worst ever leader of the opposition.”  Its strength lies not just in its inherent truth; but also to the fact that it applies in almost every jurisdiction.

Look at poor Ed Miliband. How he manages to drag himself into Parliament after reading reports of backbench murmuring and discontent in that morning’s papers is beyond me.

Yet he does, thus highlighting the fundamental truth that scorn and opprobrium goes with the job of being opposition leader. Maybe Enda Kenny could give Ed some pointers on this

But I digress. While the US has numerous rules and laws of politics, Gerald Barry’s is the only one I can think of in the Irish context, or at least it was until now.

Over the weekend the Social affairs Minister, Joan Burton reminded us that there is a second immutable rule of Irish politics, even if it hasn’t had a name up to now.

This Second law states that “large government majorities can lead to disaster and indiscipline”. It so might have been drafted with Minister Burton’s tactics in mind that it probably should be named for her: The Burton Second Law of Inverse Stability.

It’s most notable occurrence to date was during the 1977 – 1981 Fianna Fail majority Government. In 1997 Jack Lynch returned Fianna Fail to office with a twenty seat majority.

Two years later a variety of backbench insurrections on issues from the Farmer’s Levy to British Army border flyovers had so weakened and undermined his leadership that he lost two by-elections in his own back yard and would see his leadership ended by December of 1979.

While at first sight it would appear that big majorities would leave a government comfortably placed to win Dáil votes, the counter intuitive truth is otherwise.

Such big majorities allow backbenchers the scope to flex their muscles and run risks they would not dare try if they thought their actions might herald an election and the loss of their own seat.

Enter Minister Joan Burton. Almost since her appointment to government she has erred on the side of expressing her own strongly views rather than merely defer to the broader FG/Lab consensus.

She has some entitlement to feel aggrieved. She did the heavy lifting as the party’s Finance spokesperson in opposition. She carved out a separate position for the Labour party on the economy, differentiating itself from Fine Gael.

She played a vital part in securing the Labour swing, only to find herself having to standby while Labour effectively disavowed her policies, not in favour of Fine Gael’s but, in favour of those of the outgoing Government.

A hard pill to swallow, made harder by seeing front bench colleagues leap frog her into Cabinet.

It would seem her response has been to work the Labour back benches and strive to speak more for them than for her FG colleagues. A good strategy for positioning yourself within the party: not a great one when it comes to conveying the impression of strong and cohesive government.

While her comments on a second bailout may not send the markets into a spin or (regrettably) make President Sarkozy’s political headaches any worse, it will not endear her to her party leader or Cabinet colleagues.

It also sends a signal to others to feel free to do the same. Clearly, with three of them jettisoning the Labour Whip so far, labour backbenchers do not need much encouragement, but for how much longer can or will Fine Gael be prepared to tolerate this?

Which brings me back to the issue of rules and laws. Newton’s Third Law of Motion states: “To every action there is an equal and opposite reaction”. It is just as true in politics.

While they have been disciplined up to now, I suspect it won’t be too long until we see some Fine Gaelers feeling the same need to unburden themselves and say their piece.

Maybe we will then have our third law of politics: Varadkar’s Third Law of Political Momentum?

Twitter @dsmooney

Why current crisis is more political than economic

My latest Evening Herald column from August 8th 2011 – you can also see it online: here

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Euro Parliament Committee Room - Bxl

Success has many fathers, but failure is an orphan. Clearly, no one has told the economists this.

In any other walk of life — architecture, dentistry, cake decorating — people run away when they see failure or disaster looming.

Not the economists. They embrace disaster. They revel in it.

As soon as a crisis looms they rush to the TV camera and the microphone to say how they predicted it.

They take a pride and pleasure in being associated with doom and failure that would do your heart good, if the consequences were not so dire for the rest of us.

In the wake of last week’s market turmoil, the weekend papers and discussion shows were full of economists doing what they do best.

Switching between the radio stations on Saturday and Sunday mornings was like playing some demented radio five-card stud — I see your dollar bond collapse and raise you an Italian bailout.

The Sunday newspapers were as bad with even more dire predictions of either the collapse of the euro or the dollar, or both.

We are living in uncertain economic times … and will be for some years to come. No one needs to tune into the radio to learn that.

This is a major culture shock for many, though not for those of us who lived through the Eighties … and no one wants to see another decade lost to despair and inactivity.

But I digress. So why have we seen renewed predictions of crisis this week? They do not seem to have been prompted by the publication of any eurozone statistics or hard figures.

Neither could they be reasonably explained away as just the result of a global slow news day.

While they may, in part, be due to the outworkings of the American debt ceiling compromise, the giveaway is in the word most often employed by economists in describing the crisis: confidence.

We have seen share values drop and bond costs increase over the past week because market analysts and investors do not have confidence in the capacity of eurozone countries to deal with all the debt in the system.

Could these possibly be the same investors who were protected from massive losses in banks and bad investments by those same governments?

Ironic, isn’t it? Eaten bread may be soon forgotten, but never with anything like the speed and hypocrisy with which socialised private losses are forgotten by the markets.

It is tough to make someone have confidence in you, particularly when you have not got much confidence or trust in them. But wringing our hands in anger on this won’t make the problem go away.

As I said earlier, the past week’s scare does not have its origin in a spreadsheet. It is fundamentally a political issue; not an economic one.

The real danger for us is that the dramatic actions and reforms the market is demanding in return for their “confidence” would be deeply unacceptable to people here and across the Eurozone.

This is the almost impossible balance that the eurozone leaders are trying to strike. To make the changes just about needed to gain market approval without totally alienating public opinion at home. The political spectre of Brian Cowen must stalk their deliberations.

Not that the eurozone leaders merit much sympathy. Merkel and Sarkozy’s slowness to act decisively in the early stages of this crisis has cost us all. Their dithering and loose talk threw Ireland to the market wolves in a futile attempt to stem the tide at no cost to themselves.

Their recent reforms to the European Financial Stability Fund have been more carefully judged, though these will take a while to work their way through.

Meanwhile, the next time you hear an economist demanding firmer and more determined actions, just remember that translates in higher taxes and higher charges for you and yours.

– Derek Mooney

How politicians helped redeem themselves by taking on the big guys

My Evening Herald article is online Here

Saturday July 23 2011

JUST by coincidence, I happened to be passing through Brussels this week.

From the window of my hotel room near the Schuman roundabout, I could both see the European Council building and hear the sirens roar as EU heads of government arrived for the emergency EU summit.

From the the TV in the background I could hear and see the continuing fallout on BBC World news from the hacking scandal, while on my laptop I read and listen to the deserved praise being heaped on the Taoiseach for his speech on the Cloyne scandal.

As these three separate news stories competed for my attention it began to dawn on me that these three very different events have a common thread: how politics can work and how politicians can make a difference when they reflect the public mood.

In the case of the News of the World hacking scandal we see the politicians finally recovering their sense of confidence and self worth and shedding their decades of deference to one media mogul.

In the European Council decision we see politicians taking bolder and coordinated actions to exert some meaningful control over Europe’s economic destiny and shunning the cautious advice of bankers or ratings agencies.

In the case of Enda Kenny’s Cloyne speech we see a political leader not just standing up to Rome, but finding his voice calmly and forcefully telling it some home truths and reminding it how much it has lost its way.

redeem

By their actions and words, across these three events, public representatives have helped redeem the profession of politics somewhat by taking on three of the most powerful interest groups: the Church, the banking sector and the media.

This is no renaissance for politics, but just a timely reminder that politics and politicians can rise above the cynical and do good.

While the common thread in the three events is the primacy of democratic politics, it is no harm to reflect on how much further Enda is along the road of telling the Church its role and place in modern society than David Cameron is in his attempt to break this news to Rupert Murdoch and News International.

Nonetheless, this should not stop us taking a leaf out of Westminster’s book and, just as the MPs did with the Murdochs, bringing senior churchmen before a public hearing of a Dail Committee to answer questions from the people’s chosen representatives.

Just over a year ago the Papal Nuncio refused to appear before a committee considering the report of the Murphy Commission.

Let us test the water now to see if the Vatican and the Nunciature think they can sustain this refusal to answer for their actions.

As Fergus Finlay said, the Taoiseach’s Cloyne speech has set the bar high.

It follows on from Brian Cowen’s hard hitting speech responding to the Ryan Report and Dermot Ahern’s declaration following the Report of the Murphy Commission that a “clerical collar will protect no criminal”.

To quote Brutus in Shakespeare’s Julius Caesar: “There is a tide in the affairs of men, Which taken at the flood, leads on to fortune.”

Enda has taken that tide and the Cloyne speech will help establish a political legacy.

However, while he is entitled to enjoy the coming few weeks as the speech continues to reverberate, he should make a quick call to a certain former Taoiseach in Drumcondra to discover how quickly the sheen on his real achievements in the Good Friday Agreement can be dulled by harsh economic realities.

opportunity

Enda needs to apply the same clarity of language and and certainty of approach to tackling the economy that he has found in tackling the Vatican and Catholic hierarchy.

The new measures agreed by euro leaders at the emergency EU Summit may just afford him such an opportunity — but he needs to take this particular tide soon and not squander the opportunities it affords.

Germany lectures us on debt — forgetting the lessons of its own history

Here is my column on Germany forgetting the lessons of its own history from the Herald (Tuesday June 28 2011)

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Signing the London Agreement on 27 Feb 1953 (Pic via: http://www.tlaxcala-int.org/article.asp?reference=8440)
Signing the London Agreement on 27 Feb 1953
(Pic via: http://www.tlaxcala-int.org/article.asp?reference=8440)

The media has been full of hourly reports of how the Greek debt crisis has the capacity to send the global economy back into the doldrums.

The Greeks, and by extension, the Portuguese, Irish and Spanish have had to endure tough lectures from France and Germany about the need for austerity.

The German government has been particularly forceful in delivering these lectures. Its leaders tell us their taxpayers do not want to subsidise bloated public sectors or unproductive workers across Europe.

And who could blame them? It is understandable that German workers do not want to pay extra taxes to send money across Europe, even if it is in the form of a loan with generous interest payments attached.

Understandable … but only if you have a short memory and disregard the history of the past century.

An economic historian at the LSE, Prof Albrecht Ritschl, has pointed out that the worst debtor nation of the past century is not Greece, it is Germany — and by a wide margin too. Worse still, Germany is denying to Greece, Portugal and Ireland the precise remedies it needed to rebuild itself. Twice in the last century, after WWI and WWII, Germany has ran up levels of debt that would make the Greek crisis look like a bad night at a mythical Tipperary Casino.

The cost of Germany’s 1930s debt default was as significant as the 2008 financial crisis. A default they were forced into as they could not repay the debts and war reparations set out in the Versailles Treaty following WWI.

This was the result of the rest of the world doing to Germany what Germany and others in the EU are now doing to us. Tons of new debt (in Germany’s case it was war reparations) were heaped on top of existing debt thereby draining the German economy of the ability to rebuild itself.

By the end of WWII, the rest of the world had learned a lesson. It recognised that lumbering a devastated and demoralised Germany with more debt was not a workable solution.

In the 1953 London Agreement on German External Debts, the Allied powers did the exact opposite of what the German and French governments are doing today. They wrote off half of Germany’s total mountain of debt and gave it additional time to repay the monies it owed.

It was thanks to the foresight and generosity of former enemies that West Germany was able to deliver the Wirtschaftswunder (economic miracle) of the 1950s.

This was a deal negotiated between leaders who had learned from the mistakes of the past and could see beyond the political demands of the next election, particularly Germany’s own Konrad Adenauer.

Remember, also, that one of the occupied countries owed money by Germany was Greece. Those protesting in Athens remember that their parents and grandparents had to forego the compensation owed to them.

How galling must it be for them to take lectures from the current German Chancellor on the virtues of paying your debts?

And, in case anyone thinks this is all reaching too far into the past, think again. According to Prof Ritschl, Germany defaulted on one of the conditions of the 1953 London Agreement as recently as 1990.

TOOLS

It is a sad indictment of the current German leadership that it cannot see that denying others the tools that it required to rebuild itself is only storing up trouble for the future.

It does not take a Konrad Adenauer or a Willy Brandt, however, to recognise that Germany’s economic fortunes are so closely intertwined with the other eurozone countries that if part of the eurozone falls, Germany could flounder.

So, even if heeding the lessons of history cannot bring Germany to realise the current policy is not working, self interest just might.

– Derek Mooney