- The Washington Times - Thursday, December 15, 2011


On Dec. 9, the leaders of the European Union completed yet another “final” summit that was to definitively resolve the euro crisis. Like all the previous “final” summits over the last 18 months, the results of this one hardly address the acute and now immediate existential threat - the EU’s inability to fund itself in the short term due to the financial markets’ loss of confidence that the eurozone can and will deal with its sovereign and banking debt problems. Angela Merkel, Germany’s chancellor, the one holding the cash that can save the euro, has been compared to Nero, the mad Roman emperor who calmly watched as Rome burned. In fact, if any cliche is applicable, it’s that she is crazy like a fox.

In the face of the euro’s acute threat, Mrs. Merkel prevailed to focus the summit debate and results on long-term structural issues of the EU and the eurozone, prescribing solutions that will likely take several years of negotiations to even begin implementation. By contrast, in the days leading up to the summit, top U.S. officials, including President Obama and Treasury Secretary Timothy F. Geithner, were publicly and privately urging the Europeans to deliver a massive, immediate and direct response - “the bazooka” - to the financial markets’ concerns that are currently strangling the ability to fund EU sovereign and banking debt. To those who share the view articulated by the administration, Mrs. Merkel’s management of last week’s summit seemed like Nero watching Rome burn.

Of course, all possible designs of the bazooka require massive amounts of German taxpayer money to be transferred to the debtor eurozone countries, which go by the endearing acronym PIIGS (Portugal, Italy, Ireland, Greece and Spain), as well as debasing the currency that Germany uses, the euro, by printing massive amounts of currency. Clearly, in the coming weeks - several months at most - the euro will collapse unless Mrs. Merkel changes her tune or Mr. Obama loses his nerve and starts bankrolling the EU via the International Monetary Fund, something that the EU leadership has been openly inviting for months. Why not? It’s a solution that uses other people’s money (U.S. taxpayers as the largest contributors) and transfers European risk to others. Without a doubt, Mrs. Merkel would welcome any transfer of PIIGS debt and risk out of Europe. As Mr. Obama has pointed out, Europe has the resources to solve its crisis. What is not clear is Europe’s (read: Germany‘s) will and desire to resolve the crisis, and at what price.

Mrs. Merkel and the German leadership, while considering all options, certainly are quietly considering the scenario where the euro and EU collapse, and certainly some are arguing that it would be a long-term plus for Germany, rather than an absolute disaster that the mainstream media are making it out to be. This view has some compelling supporting arguments. If the euro and EU collapse, Germany will eventually emerge from the wreckage as an unshackled, leading world power that it naturally was, interrupted by World War I and its sequel, World War II.

Mrs. Merkel’s handling of the euro crisis until now suggests that at its core, the strategy is all about recognition that Chancellor Konrad Adenauer’s ingenious postwar strategy has finally reached the end of its usefulness and it’s time for a new direction. I am speaking, of course, of Adenauer’s strategy for recovering the defeated Germany’s sovereignty by being a humble, even passive, member of a community of nations. After 65-plus years of pretending that various midgets and eunuchs are its equal, Mrs. Merkel understands that the time has come when Germany now can call a spade a spade, France a pesky cocker spaniel and Great Britain a neutered poodle.

I am sure Otto von Bismarck is smiling as he watches Mrs. Merkel’s display of realpolitik. It will be interesting for all the world to see how this modern version ends up in the very short term (i.e., the euro crisis of the next weeks and months) and, equally as interesting, in the longer term of the next 65 years.

If Merkel-led Germany stays the course in the euro crisis, regardless of the outcome, it will be the winner in a geopolitical paradigm shift of its own making. Either the euro survives and the EU members, including the PIIGS, will be forced into much-needed fiscal discipline under implicit German dominance, or the euro, followed by EU, collapse and Germany emerges from its postwar shackles to assume its natural place among the world’s superpowers.

Through her handling of the euro crisis, Angela Merkel is bringing the postwar era to an end.

Mark Jurkevich is an international executive in the high-tech industry and splits his time between the Washington area and Europe.

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