Tuesday, September 26, 2017

A Faint Glimmer of Hope

Is it possible that my initial reaction was too pessimistic? Might the German election results actually facilitate rather than hinder EU reform? Not if you believe that Christian Lindner of the FDP will be a strong voice in the "Jamaica coalition":

The party’s leader, Christian Lindner, was blunt on Sunday night, repeating his opposition to Mr. Macron’s ideas. Without ruling out all reform, he said that a eurozone budget that could be used to send money to France and Italy “would be unthinkable and a red line for us.”

Mr. Lindner told journalists before the election that he would push for the finance ministry in a coalition. If he succeeds, it may produce little change from the similarly tough-minded Wolfgang Schäuble, who has been Ms. Merkel’s finance minister.
“Will Lindner be tougher than Schäuble?” asked Hans Kundnani of the German Marshall Fund. “Unlikely.”
But consider an alternative scenario: The SDP now goes into opposition and will try to revive its leftish voice, muted throughout the years of the Grand Coalition, a malady that induced leftist laryngitis.

One way to do that would be to call for solidarity among the social democratic parties of Europe. Job creation could be a first priority in such a call, and increased spending on infrastructure--much needed in Germany--could be made a prime policy goal. A European infrastructure fund could be created, to be financed by bonds jointly backed by the member states. These would not be "Eurobonds" per se, since Merkel has already declared her opposition to Eurobonds and Lindner would be even more opposed, but "infrastructure bonds," a modest subterfuge of the sort for which Eurocrats are deservedly famous.

Lindner would still be opposed, but with the backing of the SDP and the Greens, Merkel could finesse his opposition, and it remains to be seen if he would break the coalition over such a difference. Such stimulus spending could be placed under the joint authority of an infrastructure czar, French, and a new EU finance minister (German), thus effecting the kind of structural reform for which Macron is calling. A German fin min would mollify German conservatives and liberals by insisting on rules, while a French czar would be granted a certain discretion in doling out the euros.

Thus the founding tension within the EU would be perpetuated in yet another grand structural compromise of the sort for which the EU is (in)famous. Et voilà: progress snatched from the jaws of reaction. Am I dreaming? Who knows what Merkel really wants? But surely she does not want to see the AfD making further advances, and this will require some creative thinking to accommodate both the diehard advocates of the Schwarze Null and those who believe that something must be done for those deprived of the benefits of Modell Deutschland, the growing ranks of Germany's poor (the poverty rate has increased sharply in recent years despite the growing trade surplus, a sign of the woefully unequal distribution of the rewards of wage restraint).

So there is hope, if Lindner is not feeling too big for his breeches, if Merkel is alert to the opportunity, if Macron does not overplay his hand, and if the social-democratic left rises to the occasion in Germany and elsewhere. A lot of ifs, adding up to a faint maybe.

But it is a hope echoed by the green stripe in the Jamaica coalitiion: Green Party leader Cem Ozdemir, said: “The next government, which we want to join, must support France. There is no other way,” adding that austerity alone was no recipe for Europe.