Germany: EU's Reluctant Pilot? by Malvika Tripathi

Europe faces testing times since the creation of European Union back in 1950s, amidst protests against austerity measures primarily in Southern Europe. As Germany’s Vice Chancellor Angela Merkel declared, “Europe is at crossroads again. If the Euro fails, Europe fails." Economists believe financial stability and more crises are inevitable, courtesy -irresponsible economic policies, a shrinking and rapidly aging population. The Greek crisis exemplifies this volatility since several other economies mainly Portugal, Spain and Ireland deal with the worst unemployment rates and poor banking. A bailout package did help out Greece and Germany (out of responsibility as Europe’s largest economy growing annualized rate close at 9 percent, as per eurostat, since reunification two decades ago) was the largest contributor at an unprecedented 22.2 billion Euros out of the 900 billion Euros aid scheme.

The Euro currency has had its fault in rigidity because of the central problem that EU didn't create the right institutional machinery when it created a unified currency. Once states give up their own currencies, they cannot deal with financial or fiscal crises by devaluation by debt ridden countries dreading years of deflation and stagnancy ahead. As Greece's credit worsened, Merkel nonetheless fueled the perception that she would rather kick indebted countries out of the currency zone than offer hard-earned German money to spendthrift southern Europeans.

For their part, the Germans have made it clear that they are tired of supporting their dubious partners. Even though, demand for exports would rise as euro weakens, France and Germany are torn between protectionism and idealism-whether to protect their own industries and workers or save Europe as a whole. Euroskeptics believe that the effort to salvage Greece was more for justifying Germany’s vision of a collective Union than its actual willingness.

At having to bail out the rest of the EU combined with frustration at being the single biggest contributor to the EU project while at the same time having the smallest amount of influence (in proportion to both economic might) stoked resentment from German taxpayers. Germany has invested more in the EU than any other member state, yet has had comparatively little say in how the project has evolved.

Germany most trusted to lead the European Union out of its turmoil even as economic nationalism has appealed more to the general public. The Greeks, on the other hand, have not gone down well with the help received, so much so comparing the crisis to the Nazi invasion of Greece. It is hard to see how the EU could make progress on market liberalization or deal with a financial crisis with a reluctant and inward-looking Germany leading way.