Might Germany “Annex” Greece and “Breakthrough to a New Europe”?
Posted by Larry Doyle on January 31, 2012 6:37 AM |
You do not need me to tell you that it can get mighty cold in Germany during the winter months.
Don’t you think many Germans would like a nice warm vacation in the Greek Isles when those winds are whipping through the cold, dark forests and industrial cities of Deutschland? Sounds nice, heh??
Think the Germans may bargain for discount vacations in Greece if not outright ownership of some prime beachfront real estate in the Greek Isles as potential compensation for bailing Greece out of its current fiscal mess?
I am speaking largely in jest…but not totally. Why so? Let’s navigate.
How might those holding real power and leverage within the EU try to structure a way out of the financial stranglehold encompassing this all important economic region?
Recall that back in mid-November I asked, Is Germany Preparing a European Power Play?
With contagion clearly spreading throughout the EU and by extension the global economy, the stakes within the EU are raised almost on a daily basis. Where will this end up?
Who knows but what we do know is that the “road to perdition” or some form of “extended purgatory” will ultimately run not through Brussels, nor London, nor Paris, nor Athens, nor Rome but through the German capital of Berlin.
What are the Germans thinking? What might they have in store?
To give credit where it is due, I thank a fellow Seeking Alpha contributing writer James Kostohryz for unearthing a recent article in the Spanish press which addresses the behind the scenes work ongoing within Berlin which would seem to indicate that German Prime Minister Angela Merkel and her colleagues are poised to make a major power play within the governance of the European Central Bank.
Might this power play unfold? How might it impact the immediate economic situation within the EU and by extension the world at large? Let’s navigate and get Kostohryz’ take as he writes,
A good friend of mine who works at the finance ministry of one of Europe’s major economies sent me an article in the Spanish press over the weekend that sent shivers down my spine. According to confidential sources – and given credence by my friend – Germany is preparing a radical assault on ECB governance.
If the sources are accurate, it is my view that this assault on ECB governance is merely one step in a German grand strategy to radically restructure the euro and/or pave the way for a German exit from it.
This story published on Saturday gains a great deal of credence after Merkel ratcheted up the pressure today at her party (CDU) conference for a “breakthrough to a New Europe” characterized by closer political ties, tighter budget rules and less individual sovereignty for member states. Merkel said that the European Union needs to develop new structures – and that would mean more Europe, not less.
According to the cited article from the Spanish press, at the next EU summit on December 9, Germany will propose a series of reforms to the “Treaty of Berlin” aimed at creating a much more unified governance of European economies. According to the article, the CDU is preparing a resolution that calls for a reform of EU laws to make the vote of each member state proportionate to its GDP. This would guarantee German supremacy within the ECB and would allow it to dictate policy to all 17 eurozone nations.
Fast forward and now we learn what Merkel and her German colleagues mean by dictating policy as Reuters recently reported, Germany Wants Greece to Give Up Budget Control:
Germany is pushing for Greece to relinquish control over its budget policy to European institutions as part of discussions over a second rescue package, a European source told Reuters on Friday.
“There are internal discussions within the Euro group and proposals, one of which comes from Germany, on how to constructively treat country aid programs that are continuously off track, whether this can simply be ignored or whether we say that’s enough,” the source said.
The source added that under the proposals European institutions already operating in Greece should be given “certain decision-making powers” over fiscal policy.
“This could be carried out even more stringently through external expertise,” the source said.
The Financial Times said it had obtained a copy of the proposal showing Germany wants a new euro zone “budget commissioner” to have the power to veto budget decisions taken by the Greek government if they are not in line with targets set by international lenders.
Today’s Wall Street Journal massively downplays what is really going on within the EU by writing a rather benign and placid commentary entitled, Europe Tightens Fiscal Ties. Make no mistake, what is really unfolding is that Germany is exercising real leverage over Greece and the weaker nations within the EU. Talk about leverage!!
Can’t you picture Ms. Merkel and her lieutenants dictating budget terms, and in the midst of that telling the crowd in Athens, “You know, you better play ball or we may just take a few of your nice Greek Isles and eventually annex your entire nation while we’re at it.”
Do your friends, family, and colleagues a favor and get them to do the same. Thanks!!
I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets, our economy, and our political realm so that meaningful investor confidence and investor protection can be achieved.