Germany, Netherlands and Finland in reverse gear

Published on 27 September 2012 at 13:14

“Back to the vicious circle”, announces a worriedSüddeutsche Zeitung which reports that a new Northern European alliance is attempting to block direct aid to Eurozone banks — a measure endorsed in the wake of hard-fought negotiations between European heads of state on 28 June in Brussels. The daily reports that on 25 September, German Minister for Finance Wolfgang Schäuble —

… executed what amounts to a dramatic u-turn in euro bailout policy. In a joint declaration with his Finnish and Dutch counterparts [Jutta Urpilainen and Jan Kees de Jager], he could not have been more clear. Any hope or belief that financially weakened Spanish banks could, as early as next year, directly access the ESM [European Stability Mechanism] euro bailout fund without going through the government in Madrid has now been dashed. All existing liabilities will be the responsibility of national governments. What, at first glance, appears to be a reassuring message for European, and especially German citizens — that we will not pay for other people’s mistakes — quite simply means that with a stroke of a pen, the ministers are attempting to correct and even hijack their government leaders’ decision [...] If the Northern European ministers succeed in imposing their about-turn at the next Eurogroup meeting on 8 October — and it is quite likely that they will, given that Germany, the Netherlands and Finland are among the Eurozone’s best financial backers — Spain will have to get by alone.

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