Stop blaming the 4th Reich for the Crisis

, by Niklas Kramer

All the versions of this article: [English] [français]

Stop blaming the 4th Reich for the Crisis

Why the rising anti-German attitude in Europe is not only unfounded but also counterproductive.

There is a growing anti-German feeling in Europe. Sometimes that is latent or openly hostile. First and foremost these resentments are rising in those mainly South-European countries, which are under the pressure of either the financial markets or the Trojka and the need of austerity. The newest pictures being transported by the media are from Cyprus, where a the people are demonstrating among others also against Germany, which is held mainly responsible for the dramatic downstream of Cyprus banks and economy, because it insisted on participation of the rich capital, which was invested in the Cyprus banks. The whole mess of the banks is accredited to the new 4rth Reich and a German Chancellor being shown as Adolf Hitler. While the German government still reacts in a diplomatic way, the normal German citizen does not understand: “That is how they thank us”, the common man asks, who still cannot look at Hitler as a joke and reacts in anger to the utterly inappropriate comparisons.

There are several reasons, why other European leaders like Barroso, van Rompuy, but also finally Hollande should take a position against this one-sighted blame games. Not only because these accusation are unfair, but also because they are counterproductive.

First, it is unfair, because it is not only Germany alone, which insists on stringent bail-out policies. Also Finland, the Netherlands, Austria are supporters of the austerity-policies, not to mention East-Europen-Euro-countries, like Estonia, Slovakia and Slovenia, which also have difficulties in explaining to their citizens, the need of taxpayer´s money within the European Stability Mechanism. In the case of Cyprus, it was also France, supporting the idea of the participation of the rich men´s capital.

It is also unfair, because it ignores the existing solidarity. Germany is the largest depositor in the European Stability Mechanism with pure cash of 22 billion and accessible capital of 168 billion Euros. Germany also already agreed upon 750 million euro´s of actual less interest rates as a minus in the budget 2013, which was agreed on among the second rescue-plan for Greece. The pure risks within the Deutsche Bank due to the balancing scheme in the Eurosystem (Target 2) and the massive imbalanced trade is currently around 450 billion Euros. These complicated risks and payments are difficult to explain to the common citizen, generating the growing ground for eurosceptics, decrying the lost of financial sovereignty.

Of course it is true, that Germany is following these rescue-policies not because of only solidary reasons, but also because its very own interest lies in the stability of the Euro. As a matter of fact Germany is currently benefiting from low, even negative interest rates on national state bonds.

However, these are no arguments against the domestic policy constraints. Germany is also in debt to 81 % BIP and has demographic and social problems. The current low interest rates are bound to rise in the medium term. Also in Germany public goods are reduced and some municipals are in danger of bankruptcy. Another expulsive effect is given by a recent study of the ECB, according to which both the average and median German has less assets then the people in Spain or Greece. Even though this does not take into account the average pension rights in Germany, due to which the citizen can afford to rent a flat in the retirement-age, it is a controversial number. One can certainly discuss approaches to economic policies, but also not the arguments of Keynes can wipe out these German political tensions, maintaining the illusion of an eternal source of ESM and also German money. It would be political naïve to argue, the German Bundestag could simply agree on giving out massive guarantees for Cyprus banks, without looking at the conditions of economic sustainability and the need for accountability. This will also not change if the current Liberal and Christian democratic coalition would be replaced by a government of the Social democrats and the Green party.

Of course, Germany could still pay a higher price to promote growth: We federalists are thinking of limited Euro-bonds in terms of a sinking fund, a more perfect Banking Union or the ideas of an unemployment insurance scheme, in order to better balance out the asymmetric shocks.

But the question that arises however is: What happens when the Southern European countries then simply continue their rather less sustainable distribution and nepotistic policies and tackle reform less courageously? What are we doing, if in the end the current trade imbalances are rather being sustained because the productivity in those countries does not increase? The argument, that Germany is in the need of a healthy economies in the South is not valid then, because in the view of the German government the austerity measures are aiming precisely at this: having healthy economies, which can become independent from transfer schemes.

The crucial question then is moreover: Can Germany in the present imperfect institutional framework actually spent more money without the appropriate control at EU level (no taxation without participation). To put it further: Will other European countries still agree on a further institutional set up and a new convention, once you have already agreed on Euro-bonds and further redistribution schemes? This is a valid question, keeping in mind how tough it will be actually to get a European referendum on a new treaty passed. Looking at the current political crisis in Italy for example, there is a legitimate momentum, questioning other governments will to explain their people the need for reform and the need for “More Europe”.

With all European love, it is about hard-hitting interest. The Southern European countries want to have more money and more time for their reforms, while the Northern European governments do not want to sell more to their citizens and voters. If you want to unfold an argument of the “European added value” in this maze, then you have to stop blaming counterproductively Germany, but give good domestic and European answers to the questions. An isolation of Germany will not bring the European project any further.

Your comments
  • On 6 April 2013 at 09:09, by Protesilaos Stavrou Replying to: Stop blaming the 4th Reich for the Crisis

    Very well said. Coincidentally, on April 5, I also published an article of a similar spirit arguing that “Europe did not cause the crisis in Cyprus”:

    Just one minor correction to your article: On the part where you refer to the Target2 payment system, you mention “the Deutsche Bank”, when I believe you wished to write the Deutsche *Bundes*bank, i.e. the Central Bank of Germany and not the private bank by the name “Deutsche” (see official website


  • On 6 April 2013 at 18:29, by ? Replying to: Stop blaming the 4th Reich for the Crisis

    A very well written article, with some great points. One new aspect raised which I haven’t read before in other articles and strongly agree with is: “European leaders like Barroso, van Rompuy, but also finally Hollande should take a position against this one-sighted blame games.” We need more leadership and a stronger stance and involvement from the European elite. We currently have only national.elites with national interests, exactly because van Rompuy and Barroso are not showing leadership.

  • On 7 April 2013 at 11:38, by Charles_M Replying to: Stop blaming the 4th Reich for the Crisis

    I think the patience and tolerance of the Germans is exemplary. If the Germans’s sense of self preservation outweighed their sense of responsibility it would be THEY who dumped the Euro and possibly even the EU. They could easily do without southern europe, the French included. A smaller group of Noth Europeans would be the ideal solution for them.

  • On 9 April 2013 at 20:21, by Niklas Replying to: Stop blaming the 4th Reich for the Crisis

    Yes of course: It has to be the Deutsche Bundesbank. It is also not Greece, but Italy, who is in the list of private average and median amount of assets higher. Sorry for the mistake: Cyprus is by the way in terms of private income 2nd highest in private net assets. Greece is 14th and Germany on 10th position. See also for German speaking For English Speaking go the ECB

  • On 12 April 2013 at 02:24, by Greek Replying to: Stop blaming the 4th Reich for the Crisis

    First off i am a greek and i want to say some things that might move the eurocrisis debate forward in a constructive manner:

    . A younger greek generation that is still not in control of the country yet, it is infinitely more modern and thoughful and pro european. We want greece to be a normal country like denmark, not like a european Syria. Hopefully the big changes happening now may allow some of us to exert a bigger influence over a clientelistic political life that has been partly responsible for the ever rising debt and mismanagement.

    . The greeks that you see burning flags and accusing Merkel of being a nazi etc, are mostly misinformed and paranoid individuals with a big attachment to the church and some nationalistic dinosaurs. They are mostly pensioners, and like elsewhere they vote the most but they understand the least about the modern world they live in. Like in other places much of the anger is about the effects of globalisation rather than for germany. This is present in other countries too like the UKIP in UK, and neonazis in Austria.

    . We are grateful for attempts by Ms. Merkel and the Troika to try to root out some corrupt practices in the greek state. It is true that the current government is fighting these reforms tooth and nail. Please persist in demanding a cleaning up of party financing and corruption.

    . I am far less impressed with Ms. Merkel’s vision for the whole continent. She is very good at saying what she doesn’t like but it feels that she lets things get out of hand all the time and only intervenes in the last minute. That leads people to question the motives of the german government. If the german government came up with a positive agenda and showed commitment to the EU and the euro it would calm the jitters and people could resume investing and living their lives normally. Germany needs to get out of the role of the arbiter of what happens in europe asap, for that it needs to stop meddling in unimportant matters and europeanise its industrial policy.

    . The chicago economics/austrian liquidationist policies of the right have had poor results, it is time to try a new policy mix with people that get things done. A new smart protectionism at the eu level needs to work more like china’s aggressive and effective policies. The benefits of these policies need to flow to the whole of the EU not just Germany.

    . The euro has some design flaws that need to be corrected not only through austerity but also a practical program that will make all EU countries relevant in a globalised world where trade with Asia is main new development and will be for the next decade.

    . Some greeks tend to get very hysterical because in the country a protective coccoon of a national myth has been spun for a long time mainly by politicians trying to benefit from any development that happened since 1974. In this parallel universe globalisation had nothing to do with greece in practical terms, cushy state jobs can continue to be created etc.. Someone with authority needs to explain in practical terms that this was always funded by unsustainable loans and now it is over forever. This will convince northern european creditors that the country is abandoning the crazy ways of the past 20 years.

    . The press loves divisive photos that get a reaction. There is always some idiot burning flags and doing nazi salutes or being at the opposite extreme as a left wing fascist or nationalist. People like that are massively over-represented in the media. The silent majority just wants to fix things, however in europe we need to find a way this will be achieved that is realistic and not a bizarre set of policies that is pursued for ideological reasons. Now for 3 years right wing economists in germany and elsewhere promoted this idea that the markets will attack if austerity is not implemented everywhere. In reality this plan is not working very well and it is causing too much depreciation in the price of assets during the crisis, and will cause too much of a boom when things eventually get better.

    . Ms. Merkel seems to want to hold things together, but she needs to stop exploiting politically some stereotypes that have responsibly run economies like Spain and tar them as lazy when they had a public debt lower than that of germany at the start of the crisis.

    . Greece has been incredibly badly managed since 1980 and the current nightmare is the result of that only in part. Conservatives that argued for free consumer lending especially in the south of europe need to take the blame for such bad policies. Greece had state banks that did not give out stupid consumer loans that were used to buy german cars people could not afford. The reality is that bank lending needs to be directed to real-economy businesses by real banks that do not engage in financial engineering or investment banking. This will hurt but it is a necessary change. The economy throughout europe needs to be less about consumption and more about jobs and climate change. This will necessitate a plan like the marshall plan after the second world war and all need to chip in so we all have a better future nor for individualistic ends.

  • On 16 May 2013 at 00:12, by Haris Replying to: Stop blaming the 4th Reich for the Crisis

    In order to say something to one comment, I would like to mention: A seperation of the north-european states and the south-european states would be disastrous. Firstly, France and Germany are two more and more cooperating countries. They are getting more and more together though there are differences in opinions. Secondly, a seperation would damage the single market of the big EU would be much smaller and thereby not productive. And, for concluding, Europe stands in front of the idea of peace. We had two World Wars which were very brutal. Even if we say today, that that could not happen any more, it can still happen. No one believed that there will be a war in the Balcan, and today we know that there was a war. That is something that we have to keep in mind: EU is not just bureaucracy but also peace.

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