BERLIN, Germany — Europe is plunging to new depths of instability.
Over the past 24 hours, the euro has sunk to a two-year low. European markets on Wednesday suffered their worst one day slump in a month.
The fear appears justified this time. It emerged that on Monday, euro zone finance ministries participated in a conference call to discuss contingency planning for a Greek departure — an event that, according to UBS, could cost taxpayers 225 billion euros. Meanwhile, leaders set low expectations for an EU summit, with German Chancellor Angela Merkel confirming that "nothing would happen."
Back in Germany, some are questioning whether it's all worth the effort.
In particular, Thilo Sarrazin, a maverick former politician and central banker, has penned a tome titled "Europe Doesn't Need the Euro."
Two years ago, the 67-year-old former Bundesbank member caused a storm of controversy with a best-selling book accusing Germany’s Muslim immigrants of dumbing down the country.
The uproar surrounding the new book, launched Tuesday in Berlin, looks likely to match that which greeted his previous work. Even before the book went on sale, Sarrazin had been slammed for suggesting German efforts to solve the euro crisis were based on guilt about the country’s Nazi past.
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In the book he argues that the euro has brought Germany too many financial risks and not enough benefits. He says that German trade with countries outside the euro zone is growing faster than with euro-zone members. And that creating a currency union without a political union was a mistake.
While some of these are views that many respectable euroskeptics in Germany might share, one passage in particular has provoked sharp criticism. He says those in Germany who support euro bonds are “driven by that very German reflex that we can only finally atone for the Holocaust and World War II when we have put all our interests and money into European hands.”
Politicians from across the spectrum have been quick to condemn this linking of the Holocaust with the euro crisis.
“Either he is speaking and writing this appalling nonsense out of conviction or he is doing it with despicable calculation,” Finance Minister Wolfgang Schaeuble told the Bild am Sonntag newspaper.
Leading opposition figure, Peer Steinbrueck of the Social Democrats, locked horns with Sarrazin during a TV talk show on Sunday night. He said the Holocaust claims constituted “historical amnesia.” And when it came to Sarrazin’s objections to the currency union, the former finance minister called Sarrazin’s arguments “bullshit” and said he was overlooking the many advantages the euro had brought to Germany.
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Many economists argue that Germany has actually benefited enormously from euro zone membership. If it had kept the deutschmark, its currency would have likely appreciated rapidly which would have in turn undermined its competitiveness.
Carsten Schneider, budget spokesman for the SPD, added to the condemnation from the party’s top brass. He called Sarrazin’s criticism of the euro “nationalist and reactionary.”
The fact that Sarrazin is a member of the SPD, and previously served as the party’s finance minister in Berlin, has made things awkward for the party. An attempt to have him expelled last year ended in fiasco when a tribunal found that he had not violated the SPD’s principles.
The Green Party has also weighed in on the new book. “It is pathetic that he is using the Holocaust to secure as much attention as possible for his euro bond theses,” floor leader Juergen Trittin told Die Welt, accusing Sarrazin of “deutsche mark chauvinism.” He said spending money to protect the euro was a “worthwhile investment for Germany.”
Sarrazin will undoubtedly have known that his Holocaust references would ensure maximum publicity for his book. He also wrote that Germany was turning into a “hostage of all those in the euro zone who may in the future, for whatever reason, need help.”
While the Sarrazin book has been greeted with the predictable outcry, some commentators have called for a more nuanced reaction to the book.
While disputing his arguments about the benefits of the euro, and condemning his many nationalist comments, they say that he is on much steadier ground here than in his previous work.
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As a financial expert and former central banker, Sarrazin is seen as having an excellent grasp of the central arguments that surround the debate. “Sarrazin’s economic expertise is indisputable,” commented Deutchlandfunk radio. “The questions he poses are evident. What he is saying is not banal.”
Even the left-leaning Die Tageszeitung argues that “In this book, the experienced finance politician brings his life-long expertise to bear when asking questions that are not easy to answer.” However, the paper comments that Sarrazin’s arguments are also informed by “resentments, prejudices and a considerable amount of nationalism.”
In particular, it points to passages where Sarrazin seems to say that different countries’ economic problems are rooted in national characteristics and cultures. For Sarrazin, such ideas are hardly new. His previous book was roundly condemned for basing his arguments about migrants on eugenics and xenophobic ideas of race.
In “Germany Abolishes Itself” he argued that Turkish and Arab immigrants were exploiting the welfare state, refusing to integrate and were lowering the country’s average intelligence.
As a result of the furor, he was forced to step down from the board of the Bundesbank. Despite the fierce media criticism, his ideas went down well with some sections of the public. Supporters said he had broken a taboo in German society — one that, so the argument went, had failed to successfully integrate its minority communities. The book became a best-seller, with 1.3 million sales, something that lead representatives of the migrant communities to decry the underlying racism in German society.
The worry among Germany’s political elite is that the populist euroskeptism in this new book could also fall on fertile ground.
After all Sarrazin’s arguments could chime with those Germans who are resentful of both the euro and the bailouts.
The far-right National Democratic Party has gleefully welcomed Sarrazin’s Holocaust argument. In a statement the party criticized Germany’s “psychopathological guilt complex that makes it fulfil almost every wish of self-interested foreign countries even 67 years after the end of the war.”
Yet, it remains unlikely that any popular support for his book will translate into votes for either the NPD or the Islamphobic and deeply euroskeptic groups like Pro NRW or the Freedom Party, which was founded in 2010 and modelled on Dutch right-wing populist Geert Wilders’ Party for Freedom.
In fact Germans have failed to support right-wing populists at the polls in anything like the numbers seen in many other European countries.
Instead protest or political disillusionment is channelled into much more benign directions. The biggest political sensation in Germany is, after all, the Pirate Party, an upstart group of internet activists who want to shake up how politics is done but are still working on shaping their party program.
And when it comes to the question of euro bonds and the euro crisis in general, as with so much else, they have no policies at all.