The blindside came from Germany’s closest ally. "Did Christine Lagarde, the French minister of the economy, break a taboo by saying on Monday in the Financial Times that Germany’s trade surplus might not be ‘bearable’ in the long run, particularly for its eurozone neighbours?” wonders La Tribune. Her statement, explains Le Figaro, “takes up the much-mooted Anglo-American refrain that Germany set its own house in order first”.
Ever since the Greek crisis set in, “Berlin, under the pressure of public hostility to fiscal laxity, has been balking at the idea of bailing out Greece”, explains the French daily. “This intractability has now become irksome.” For all intents and purposes, Berlin is pursuing an “uncooperative economic strategy”, observes Jean-Paul Fitoussi, head of the OFCE, a leading French economic research institute, in La Tribune. “Germany’s economic strategy based on boosting exports can’t be replicated by other European countries. For a country to export, you need others to import. If all the European countries sought to grow their exports at the same time, that would be a disaster.”
Nobody loves the kid who’s top of his class
"Germany’s export power has been a constant” since the 19th century, adds the French business daily. And nowadays, “by optimising value for money, German companies have been snatching up one market after another – and the country became world export champion in 2004.” “The Greek crisis has triggered a debate over the need to rebalance the national economy.[…] But the export-driven model is sacrosanct over in Germany. And that is precisely what Berlin is holding up as an example for Europe and Greece to follow.”
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The export economy is a hallowed paradigm that Germans don’t look ready to give up even in the face of their neighbours’ invective. "Nobody loves the kid who’s top of his class. Especially when he admonishes his classmates who haven’t done their homework,” observes Handelsblatt. “One day or another, a clash is bound to come. That’s what’s happening now.” However, the business daily does admit Germany is partly to blame. “Given our trade surplus, aren’t we as much to blame for the imbalances in the eurozone as the Greeks, Spanish and Portuguese? And aren’t we acting the same way by investing in our industrial capacities to export our crisis elsewhere?”
Lowest common denominator makes us weaker
But coming from Paris, this call to order goes down like a ton of bricks. "It just had to be France!” exclaims Die Welt. "The very country which, with its traditional notion of industrial policy, distorts international competition, is now calling on the [German] government to reduce its trade surplus.[...] That line of reasoning is something Germany has, fortunately, cast aside over the past few decades.”
At the present juncture, adds Handelsblatt, making more debts and consuming more to get out of the rut would be tantamount to a “levelling down”. “It’s true Germany can’t confine itself to cutting costs. Raising wages would take some of the competitive pressure off our European partners, but it would weaken Europe vis-à-vis the US and China. [...] The lowest common denominator makes us all weaker.”
Buy yourself something nice
“The imbalances inside the EU are becoming a problem,” observes the Süddeutsche Zeitung. “But the south and other Europeans in a tight spot would be better off taking a leaf out of Germany’s book. The EU as a whole will only shape up if each state carries out its own reforms.”
Behind this Franco-German exchange of pleasantries, a struggle is brewing for the economic leadership of Europe. And if it comes to that, the Financial Times is siding with Christine Lagarde. The City daily seconds the French minister’s opposition to the "sadistic" plan put forward by her German counterpart, Wolfgang Schäuble, to dole out “a variety of gruesome new punishments for countries that break the eurozone’s fiscal rules”.
“The eurozone needs surplus nations to spend more than it needs new ways to punish debtors,” argues the FT. With Greece, Ireland, Portugal and Spain compelled to “embark on large fiscal consolidations to bring their crisis-inflated deficits back under control”, the financial paper fears that “less competitive Eurozone countries will be forced to deflate and shrink their economies to match Europe’s diminished and diminishing circumstances”. The solution is to encourage Germany to “spend away”: after all, “‘buy yourself something nice’ is not an onerous prescription.”
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