Poland to Germany: We Need You to Act!

November 28th, 2011 at 7:50 pm David Frum | 39 Comments |

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In an important speech in Berlin, Poland’s Foreign Minister Radek Sikorski expressed a thought maybe has never been heard before on German soil from a Polish leader:

What, as Poland’s foreign minister, do I regard as the biggest threat to the security and prosperity of Poland today, on 28th November 2011? It’s not terrorism, it’s not the Taliban, it’s certainly not German tanks. It’s not even Russian missiles which President Medvedev has just threatened to deploy on our border. The biggest threat to the security of Poland would be the collapse of the Eurozone.

And I demand of Germany that, for your own sake and for ours, you help it survive and prosper. You know full well that nobody else can do it. I will probably be first Polish foreign minister in history to say so, but here it is: I fear German power less than I am beginning to fear German inactivity.

You have become Europe’s indispensable nation.

You may not fail to lead.

Poland is not in the euro. And Sikorski’s own background–as a Polish refugee in the 1980s who became a British subject–is as a Thatcherite free-marketeer. Yet neither he nor Poland can regard the risk to the euro as anything but a catastrophe–and neither can the Americans, nor British, nor anyone else.

The break up would be a crisis of apocalyptic proportions beyond our financial system. Once the logic of ‘each man for himself’ takes hold, can we really trust everyone to act communitarian and resist the temptation to settle scores in other areas, such as trade?

Would you really bet the house on the proposition that if the Eurozone breaks up, the single market, the cornerstone of the European Union, will definitely survive? After all, messy divorces are more frequent than amicable ones. My wife’s sister, once a divorce lawyer in California, told us of a case in which a couple spent $100,000 disputing custody of the family cat.

If we are not willing to risk a partial dismantling of the EU, then the choice becomes as stark as can be in the lives of federations: deeper integration, or collapse.

To avert this end, Sikorski unveils a solution as detailed and workable as anything yet heard. The speech demands to be read and studied in full, but the plan has three main elements:

1) The European Central Bank would assume ultimate responsibility for providing every member state of the EU the liquidity it needs to meet its obligations. Sikorski goes lightly here, because this is the “dessert” portion of the plan – and a dessert distinctly uncongenial to his German audience, who will end up shouldering more responsibility for other people’s past mistakes. To overcome this objection, Sikorski reminds the Germans that they are the biggest winners from the Euro currency:

We ask, first of all, that Germany admits that she is the biggest beneficiary of the current arrangements and therefore that she has the biggest obligation to make them sustainable.

Second, that you are not an innocent victims of others’ profligacy. You, who should have known better, have also broken the Growth and Stability Pact and your banks also recklessly bought risky bonds.

Third, that you have benefitted not just from the Single Market and the Eurozone, but from the crisis itself. Because investors have been selling the bonds of exposed countries and flying to safety, your borrowing costs have been lower than they would have been in normal times.

Fourth, that if your neighbours’ economies stall or implode, you will suffer too.

Fifth, that because of your size and your history you have a special responsibility to preserve peace and democracy on the continent. Jurgen Habermas has wisely said that “If the European project fails, then there is the question of how long it will take to reach the status quo again. Remember the German Revolution of 1848: When it failed, it took us 100 years to regain the same level of democracy as before.”

2) Now comes the spinach. If the surplus countries like Germany are to accept responsibility for the debts of others, they are entitled to demand in return tighter control over the wayward finances of others. On this subject, Sikorski offers more detail.

Financial discipline would be strengthened by giving access to rescue funds only to members abiding by macro fiscal rules, by making sanctions automatic and giving the Commission, the Council and the Court of Justice powers to enforce the 3% ceiling on deficit and 60% ceiling on debt. Countries in excess deficit procedure would have to present their national budgets for approval by the Commission. The Commission would get powers to intervene in the policies of countries that could not fulfil their obligations. Countries persistently violating rules would have their voting rights suspended.

3) Joining idea 1 & idea 2 is the most controversial but also most fundamental idea. If the EU is to enforce greater discipline upon member nations, the enforcers of that discipline must be held democratically accountable. Only elected federal politicians – not unelected commissioners – can accountably supervise elected national politicians.

The more power we give to European institutions, the more democratic legitimacy they need to have. The draconian powers to supervise national budgets should be wielded only by agreement of the European Parliament.

The Parliament needs to stand up for its role and tasks. Eurosceptics are right when they say that Europe will only work if it becomes a polity, a community in which people place a part of their identity and loyalty. Italy is made, we still have to make Italians, Massimo D’Azeglio said in the first meeting of the parliament of the newly united Italian kingdom in 19th century. For us in the EU it’s easier: we have a united Europe. We have Europeans. What we need to do is to give political expression to the European public opinion. To help it along I support the British idea of electing some seats in the European Parliament from a pan-European list of candidates.

We could also combine the posts of the President of the European Council and that of the European Commission. To make such a person a true leader of Europe he or she should not be selected behind closed doors but be elected directly by the European demos.

The increased power of elected officeholders at the Euro level need not lead to centralization and homogenization of all European laws and institutions.

The more power and legitimacy we give to federal institutions, the more secure member states should feel that certain prerogatives, everything to do with national identity, culture, religion, lifestyle, public morals, income and sales taxes, should forever remain in the purview of states. Our unity can survive different working hours in different countries, or gay marriages being possible in some member states and not in others.

American conservatives may disapprove of this call for a tighter European Union but they should note that this argument comes from an eminent Polish conservative. The ironic fact is that the most forceful exponent of the euro currency idea in this country was and is the Wall Street Journal editorial page, the lodestar of conservative economic opinion. They did not foresee the crisis inherent in a supra-national currency and the late Bob Bartley wrote against the very possibility of a crisis like Europe is now experiencing.

The euro’s recent recovery against the dollar almost certainly establishes its credibility as a permanent currency. While major eurozone economies remain troubled, practically no one so far is blaming the European Central Bank. This suggests success for the grandest reform of all, a supra-national central bank.

So wrote America’s leading conservative economic newspaper, over the objections from conservative monetarists and liberal Keynesians alike.

And also this:

With the advent of the euro, the world has evolved a system of currency blocs. The dollar and euro zones are perhaps each large enough not to be overwhelmed by currency changes.

Now the danger that was once deemed unthinkable has arrived, threatening to capsize European economies into a new depression, and if so, the US economy after them. Rescue from disaster has to be the first priority. Radek Sikorski has not laid out the plan that anybody would have chosen in advance, but a plan that can work now as both economics and democratic politics. The plan deserves the closest hearing in Europe and in this country too.

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39 Comments so far ↓

  • dugfromthearth

    Ultimately states like the EU survive or fail based on whether or not people want them to exist. It seems that the governments of Europe do want the EU to exist – although there remains some question as to whether the people do.

    Things are bad in the Europe, but not 1943 bad. And that is what the EU is to prevent – not minor recessions and squabbles but costly and deadly wars.

  • Bingham

    He has the clout to make this demand. And I stand with him in acknowledging that German tanks are not a threat to central Europe. But I do not agree that Germany needs to spend its treasure and something akin to its lifes blood just because someone who can claim lineage from a victim group requires it. Poland does not need the Euro (it isn’t in the Euro). Poland needs a stable Deutschamark anchored within a Western/Atlantic framework. And on that point I don’t think we have much doubt.

    • matt81

      I don’t think Sikorski ever plays the victim card in this speech. He specifically lays out why this is in Germany’s interests. Yes, he says, “because of your size and your history you have a special responsibility to preserve peace and democracy on the continent,” but that is one among many points. Neither do I take it as solely a reference to WWII, but as an allusion to Germany’s undoubted importance on the continent today, and therefore to its leadership role.

  • Emma

    The structural problem is not the currency or debts, but national sovereignty. Will the nations of Europe cede their independent authority to govern and make laws? Those who imagine that this sort of concession lies within the German character never spent a lot time in Germany. Both Kant and Hegel saw the impossibility of a successful supra-national institution owing to centuries of ethnic-based nationalism.

    • Bingham

      I don’t support small -e- european political and cultural suicide. Just maybe, money might not be everything.

    • Bingham

      Read John Bolton’s piece in today’s Washington Times.

    • Bingham

      Emmma, at the risk of sounding like an idiot, could you provide the above-referenced Hegel-Kant refs? I’d like to read them.

    • ottovbvs

      “Both Kant and Hegel saw the impossibility of a successful supra-national institution owing to centuries of ethnic-based nationalism.”

      Kant died in 1804 and Hegel in 1830 (I think). That is just at the very birth of nationalism in the modern sense. Is is just possible that 200 years later their views might have evolved?

  • nhthinker

    The only reason that the Euro is in trouble is they have overspent and do not have the political will to do what is necessary to pay off their debts in a timely manner.
    Europe and the US have been on a debt induced “high” for many years- which means the target GDPs are inflated much greater that a non-debt induced economy. All one has to look at is the balance of imports/exports- the internal “capital gains” of real estate values are meaningless for economies that have structure trade imbalances such exports are never on a trajectory to come into balance with imports. In such an environment, the real estate market bubble will always burst and the economy will stagnant.

    Having the political will to overspend is easy- Having the political will to get back in balance is almost impossible because of the global competition for capital investment is now practically borderless and apatriotic.

  • matt81

    I tend to agree with Sikorski’s ideas. But I’m not holding my breath for them to be implemented any time soon. The timidity of this generation of leaders to make any bold changes is depressing. With Lisbon they were supposed to be getting a strong leader, and they deliberately picked the weakest they could find. You think national leaders will ever allow an elected head for the EU who could call them on their BS? Not happening any time soon. And without that the rest of this idea falls apart. We’re stuck with a badly designed currency union, and the political will to lurch from half measure to compromise and back. I am very pessimistic about our short to medium term prospects.

  • Fart Carbuncle

    I’m waiting for the Obots to blame Bush for the EU catastrophe…

    • Reflection Ephemeral

      It was actually Barney Frank and Jimmy Carter’s fault. They made those German banks make loans to Greece.

      As to this speech, thanks for highlighting it. It looks like a pretty clear-eyed, shockingly honest view of the the situation. (It’s important to note that debt & spending aren’t the sole cause of this crisis, which he might or might not be suggesting):

      Pure cultural commentary: it’s somewhat jarring to see a reference to his sister-in-law’s divorce practice in California in this historic-seeming speech. Not that there’s anything wrong with that, but it’s strange to be reading this Churchillian prose, then come across something you’d expect to see on The View. It’s just where mass elite culture is these days, I think, running the gamut from quoting Habermas to anecdotes of tragicomic legal battles.

      • ottovbvs

        “but it’s strange to be reading this Churchillian prose,”

        Churchillian? I think not but as you say a fairly candid statement of the situation.

        • Reflection Ephemeral

          Yeah, I struggled with the adjective, there. “Statesmanlike” seemed off, didn’t convey the “tough truth” aspect, but probably would’ve been better.

          “Sober & statesmanlike”: there, that would’ve worked.

        • ottovbvs

          How about “manly and statesmanlike” that would assuage Frum’s desire for Daddy figures.

  • D Furlano

    Ok, not a direct correlation but pretty damn close. Videos about Australia. The depression and 30% employment, their lack of monetary sovereignty and how they dealt with it, austerity, and finally after 10 years of failed policies the return to full employment.

    h/t to Clonal Antibody on Traders Crucible

    Parts 1-4

    http://www.youtube.com/watch?v=h7xRdMsrnzU&feature=related

    http://www.youtube.com/watch?v=E808kNxv4sc&feature=related

    http://www.youtube.com/watch?v=jnOcSmqe9PI&feature=related

    http://www.youtube.com/watch?v=hIYw_W-b1pk&feature=related

    • ottovbvs

      “Ok, not a direct correlation but pretty damn close.”

      There’s no correlation whatsoever. Where do you find this crackpot stuff from?

      • D Furlano

        WTF is your problem?

        • ottovbvs

          “WTF is your problem?”

          Low tolerance for nonsense.

        • D Furlano

          Typical teabagger… knows everything.

        • Fart Carbuncle

          Hear that otto? You’re now officially a Tea Party member. No wonder you seem crazed. :D

        • ottovbvs

          “Typical teabagger… knows everything.”

          Furlano: if you think I’m a teabagger you obviously know nothing (honorary teabagger only Fart!). However, I do know that the circumstances surrounding the pegging of the Australian pound (and then briefly the dollar in the mid sixties with decimalisation) to sterling bore no resemblance whatever to the inflexibility inherent in the adoption of a single currency by the 17 Eurozone members. The Australian govt not London decided where the peg was fixed. No doubt in the thirties they were as conventional as govt’s everywhere and disdained Keynesian economic solutions but that’s a different issue.

  • ottovbvs

    Sikorski is stating the obvious. The collapse of the Eurozone would be a disaster for it’s wealthiest Northern members and it’s southern peripheral members, and would have a dire effect on other non Euro using members of the EU. This is why it’s very unlikely to happen and even traditionally Eurosceptic countries like Britain are going to assist in supporting it. Sikorski is also recognizing firstly that the inevitable price for its survival is the creation of a Eurozone with much greater harmonisation of fiscal and monetary policy and the disciplinary teeth to ensure its members abide by the rules; and secondly that any such bloc is going to be dominated by Germany (Poland’s hereditary enemy or at least one of them). Thus perhaps we’re seeing the final working out of The German Question.

    • Demosthenes

      Thus perhaps we’re seeing the final working out of The German Question.

      It struck me some time ago that the Euro may well accomplish what the Second and Third Reichs never could.

      • ottovbvs

        Historic inevitability.

        • Demosthenes

          Probably, although my question now is where the UK fits into the “new EU”. I don’t see another Blitz on the horizon but the German-English rivalry doesn’t look like it’s going away anytime soon (this may be another case of historic inevitability).

      • matt81

        It struck me some time ago that the Euro may well accomplish what the Second and Third Reichs never could. How very clever and insightful. To what exactly are you referring?

        • ottovbvs

          “How very clever and insightful.”

          Not really that insightful. Right wing, anti EU newspapers have been full of ranting articles about the 4th Reich for months.

        • matt81

          Well, I’m glad to see we’re amplifying the deluded ravings of the sensational press. :P

        • ottovbvs

          “the deluded ravings of the sensational press.”

          Only if you think German leadership in the present situation equates to some kind of Wilhelminian hegemony. In our own polity CA is more important than MS but doesn’t exercise suzerainty over the Delta.

        • Demosthenes

          otto is right, what I said was neither totally original nor particularly insightful.

          FWIW, what I mean is that the Euro, or more precisely the monetary (and increasingly fiscal/political) union that it represents on the global currency market, is poised to consolidate Germany’s power — especially within Europe — in a way that military conquest has repeatedly failed to accomplish. I don’t think this is a bad thing, just something worth noting.

  • zaybu

    Sikorski: I fear German power less than I am beginning to fear German inactivity.

    Great quote for posterity.

  • Fart Carbuncle

    Left alone, Europeans always get into deep trouble.

    Unfortunately America can’t save their asses anymore.

    Good luck.

  • Carney

    So where’s the speech? Link?

  • zaybu

    European budgets must be brought into balance over the long term, and the euro zone will need much more fiscal coordination to survive. But right now, the only way to stem the crisis is to give weak countries more cash and more room to recover. Time is running out.