Euro Perspective

   Here's a different perspective on the Euro problem from our correspondent across the pond. It's well done, and adds information that should be seriously considered.

   Your piece implies that the Euro Currency is used in all EU members. The EU is made up of 27 member states, but not all are in the Euro Zone and some still use their own currency.  Some of the strong economic states that are not in the Euro Zone are Sweden, Denmark, the Czech Republic, and the UK.  The European Central Bank is there for the Euro Zone countries but it must also consider the opinions of the non-Euro Zone countries when setting policies and interest rates.  The UK is particularly insistent that its opinion be considered; it has threatened to block other things if it does not get its way.

   Your opinion of Germany seems a bit harsh.  Here is a bit of background.  The German Constitution requires that each State (Germany is a federation of States) contributes to the German Federal Government based on its level of prosperity.
   The Federal Government will distribute to the various States based on their requirements.  Some States are net contributors while others are net receivers.  While there was some resentment in the wealthy states to this arrangement it was accepted as a good thing for the nation as a whole.  When East Germany was merged into the unified Germany, the old East German States became net receivers while some of the old West German States that were net receivers became net contributors, but it was accepted because most German people thought a reunited Germany was a good thing.

   For non-German commentators to suggest that somehow Germany should take on the responsibility for the Greek debt is something the German people simply do not understand and will not tolerate.  The German politicians may have a more tolerant view but they must still be re-elected at some time in the future.

   Comparisons to the formation of a Federal U.S. are simple to make but should not be made.  The several European nations have centuries of cultural and political history that cannot compare to the fledgling U.S. 
   By and large the original Colonies had a shared language and a similar social history which only went back less than 200 years.  The languages in Europe are diverse and while there may be linguistic similarities between some, each is cherished in its own right.  The French even go so far as to limit the entry of new foreign words into the language.  The social history of Europe shows that borders between nations were rather elastic and some regions were at one time or another a part of up to six different countries.  An example is Mario Andretti, the American racing car driver, who was born in Italy. The place where he was born is now part of Slovenia, but it used to be part of Yugoslavia. Before Italy had it the place was part of the Austro-Hungarian Empire.  All this is for one village in the last 100 years.  Before that it may have been in the Ottoman empire.

   The European Central Bank has a policy of setting interest rates based on the performance of the Euro Zone countries as a whole.  Because Germany is such a dynamo its requirements were different than those of, say Ireland.  Interest rates were low for the whole Euro Zone, when countries like Ireland  should have had higher interest rates.  To make matters worse for Ireland, German banks (and others) started lending money in/to Ireland without the due diligence most lenders would have taken.

   Progress towards a federal Europe is at a snail's pace.   Most EU countries realize that a federal Europe requires the loss of power at a nation-state level.  How many politicians can you think of who are prepared to give up power?  There was an attempt a few years ago to create an EU Constitution.  It got nowhere.  Some people saw this as a power grab by the EU, others simply wanted to avoid the formality of a Constitution.  The UK, for example, does not have a written Constitution; Churchill once said that he would find that kind of thing too restrictive.

   Germany made the final payment for War Reparations for WWI (yes the 1914-1918 event) only a few years ago.  Admittedly, there was a period when payments were not made because Herr Hitler would not make them, but the final payment was made in the last ten years.  A typical German might wonder what the world expects when the acts and deeds of great-grandfathers are such a burden.  They continued to make those payments without complaint, although I wonder if the victors of WWI would have considered their protests.