At last there is a sort of agreement to give Greece a kind of helping hand. It will get that besieged country past the next hurdle in the crisis strewn road its membership of the single currency demands, but it is no final answer nor, is it enough. Yet it is potentially the most important step forward in the history of the euro crisis. Germany has softened its approach just a tiny little bit.
Thus far we have watched a triumphal and self righteous Germany demand fiscal rigour from everyone, to match its own. Differences in culture, economic structure and history were of no account. It had to be done the German way. As this blog pointed out time and again, such an approach would have three possible outcomes; the southern debtor countries would crash out leaving a smaller northern euro zone, Germany herself would leave and go back to the D-Mark, or Greeks, Italians, Spaniards and Portuguese would abandon their way of life and accept any suffering to become like Germans. There is now a new possibility. It is that the euro zone survives intact, with a far less stringent economic model than Germany has thus far demanded.
The reason for this blog’s change of heart is not fiscal, or even political; it is psychological. Germans have been enjoying their rise to become the super-power of Europe, a project in which over two wars they invested millions of lives and unspeakable suffering to no avail, but which at last came their way through sixty years of peace and cooperation with neighbours and former enemies. Life was good. Germany was good. It was good to be German.
Recently old words have been heard to revive across the squares and corridors of Europe, in the cafes and in the media; words like intransigent, demanding, domination, even Nazi and jackboot. Suddenly people have started to wonder whether they like Germans after all. Fiscal discipline strikes a positive chord in the German character, but being hated for being German strikes a note of horror in every German heart. To repair the euro zone will require writing off lots of debt and printing a good deal of money. Germany has set itself against each. Bit by bit it will sanction both. Slowly over twenty years or so, the countries in the euro will find a consensus over how they can operate their linked economies and run a common currency. Germany will have a big input, but the outcomes will not be on its terms alone. Even the Germans no longer want that.