Tuesday, 31 January 2012
THE WEST IS FACING A SEVERE RECESSION ctd
THE WEST IS FACING A SEVERE RECESSION ctd
In my earlier blog of 04 OCT 2011, I have referred in footnote  to Helmut Schmidt : The Responsibility of Research in the 21st Century, the former German Chancellor’s address to the Max Planck Society on its Centenary Ceremony on 11 January 2011 Berlin: (please see http://www.mpg.de/1057970/research_responsibility for the full text), from which I would like to quote two excerpts:
“5. In addition to all the above-mentioned problems caused by humans, we are simultaneously disturbed by the phenomenon of global warming and its consequences. We know that ice ages and warm periods have always been natural events; but we do not know how great a contribution humans will make, now and in the future, to the present-day global warming. The "climate policies" propagated internationally by many governments are still in early stages. The documents so far delivered by an international group of scientists (Intergovernmental Panel on Climate Change, IPCC) are encountering scepticism. In any case, the goals publicly announced by some governments have so far been based less on scientific than on merely political arguments.
I think it is time for one of our top scientific organisations to put the work of the IPCC critically and realistically under the lens, and then to explain the conclusions drawn from this examination to the general public of our country, in an understandable way...”
“8. ….Despite the grand tradition of French, English, American or Dutch scientific political intellectuals, nowadays they have fallen silent, at least since the major turning point in about 1990. There is no longer a concept of checks and balances. German science seems to think about the EU only in two categories: either confederation or federal state. There is no recognition that the EU must necessarily be a construct unlike any that has previously existed in the history of the world. Now there is no Montesquieu, no Hugo de Groot; the wisdom of the American "Federalist Papers" has disappeared.
The general opinion — and the published opinion! — is considered by the political talk shows on TV as more important than the debate in their national parliaments, and much more important than the debate in the European parliament. It is high time for the European parliament to act for itself in making space for its own initiatives and decisions. The political scientists could help by showing the way — but in fact, only an occasional one does so.”
Reason for these quotes here is that there is an ‘update’ on the European situation referred to above, given in Helmut Schmidt’s address to the party conference of the German Social Democratic Party on 04 December 2011 (German YouTube video at http://www.youtube.com/watch?feature=player_embedded&v=OYQxYuU6GwI, full text from which I quote an excerpt here, is from the official English translation obtainable from firstname.lastname@example.org , and unlike the Max Planck address not directly downloadable from their website).
My quotation omits only the general introduction, and is then the full text to the end of Helmut Schmidt’s speech. Why do I quote it here? Simply because in it he gives an encapsulated overview of European history not found elsewhere, together with showing more recent European history also as an energy issue – coal/coke to make steel unification leading to what is now the EU. And energy issues remain some of the core EU policies.
“….As a man grown old, I naturally think in terms of long time periods - both backwards into the past as well as forwards towards the desired and strived for future. Nevertheless, a few days ago, I was unable to provide a straightforward answer to a very simple question. Wolfgang Thierse asked me, 'When will Germany become a normal country?' I answered, 'In the foreseeable future, Germany will not become a 'normal' country.' For our immense, but also unique, historical burden is against that. What also stands against that is our demographically and economically dominant central position in the middle of our very small continent that despite its small size is divided into a multitude of nations. However, I now find myself in the middle of my speech's complex topic: Germany in and with and for Europe
Motives and origins of European integration
Even if in a few of the around 40 European countries their current national consciousness was late to develop - as was the case in Italy, Greece and Germany - there have always been bloody wars all over the continent. One can - when looking out from central Europe - summarise this European history as an endless series of struggles between the periphery and the centre and, vice versa, between the centre and the periphery. During all of which, the centre always remained the decisive battlefield.
When the rulers, the states or the people of Central Europe were weak then their neighbours from the periphery thrust into the weak centre. The greatest destruction and the relatively greatest losses of human life took place in the first Thirty-Years War between 1618 and 1648, which essentially played itself out on German soil. Germany was at that time nothing more than a geographical expression, unclearly defined and used only in German-speaking territories. Later, came the French under Louis XIV and subsequently under Napoleon. The Swedish did not come a second time; but, the English and the Russians came many times, the last time for the Russians under Stalin.
When the dynasties or the states in Central Europe were strong - or when they felt themselves to be strong - then they in their turn thrust out towards the periphery. That was true of the Crusades, which were simultaneously crusades of invasion, not only towards Asia Minor and Jerusalem, but also towards eastern Prussia and all three current Baltic states. In the modern period, it was true of the war against Napoleon, and it was true of Bismarck's wars of 1864, 1866 and 1870/71.
The same is true especially for the second ‘Thirty-Years’ war of 1914 to 1945. It is especially true of Hitler's thrusts to the North Cape, to the Caucasus, to Grecian Crete, to southern France and even to Tobruk, near the Libyan-Egyptian border. Europe's disaster, incited by Germany, included the disaster of the European Jews and the disaster of the German state.
Previously, the Poles, the Baltic nations, the Czechs, the Slovaks, the Hungarians, the Slovenians and Croats had shared the German fate insofar as they had all for centuries suffered because of their geopolitical central position in this small continent of Europe. Or in other words: Many have been the times when we Germans have made others suffer because of our central position of power.
Nowadays, the conflicting territorial claims, the language and border conflicts, which in the first half of the twentieth century still played such a large role in the consciousness of each nation, have become de facto largely meaningless, at least for us Germans.
Whereas in the consciousness of the people and the press of these European nations, knowledge and memories of medieval wars have largely faded away; nevertheless, memories of both World Wars of the twentieth century and German occupation still play a latently dominant role in their psyche.
For us Germans, what seems to me to be key is that almost all Germany's neighbours - and above all Jews from around the world - remember the Holocaust and the atrocities which took place at the time of German occupation in the peripheral countries. We Germans do not fully understand that amongst almost all our neighbours, and probably for many generations, a latent distrust has endured.
Even the German generations born after the Wars must live with this historical burden. And the present generation cannot forget: It was suspicion about future German development that led to the beginning of European integration in 1950.
Churchill had two motives in 1946 when he called upon the French in his great speech at Zurich to live in harmony with the Germans and to found with them the United States of Europe: the first motive was indeed a common defence against the supposed threat of the Soviet Union - but the second was the inclusion of Germany in a greater Western union. For Churchill predicted with great foresight that Germany would again be strong.
When in 1950, four years after Churchill's speech, Robert Schuman and Jean Monnet came forward with the Schuman Plan proposing the integration of Western Europe's heavy industry; they were driven by the same motivation, the same motivation of German inclusion. Charles de Gaulle, who ten years later extended the hand of reconciliation to Konrad Adenauer, acted out of the same motivation.
All this was driven by a realistic insight into the development of German strength viewed both as possible and feared. Not the idealism of Victor Hugo, who in 1849 called for the unification of Europe, nor any form of idealism existed in 1950/52 at the beginning of a European integration limited to Western Europe. The leading statesmen of the time in Europe and in America (I name George Marshall, Eisenhower, also Kennedy, but above all Churchill, Jean Monnet, Adenauer and de Gaulle or also de Gasperi and Henri Spaak) acted by no means out of European idealism, but rather out of the knowledge of what had happened up to that point in Europe. They acted out of a realistic insight into what was necessary to avoid the continuation of conflict between the periphery and the German centre. Whoever has not understood this original motivation, which is still a fundamental influence, has failed to understand an indispensable prerequisite for solving today's highly precarious European crisis.
The more the German Federal Republic of the Sixties, Seventies and Eighties grew economically, militarily and politically, the more European integration was viewed by Western European state leaders as counter-insurance against a perennially possible corruption of German power and politics. The initial resistance, for example, of Margaret Thatcher or of Mitterrand or of Andreotti in 1989/90 against a reunification of the two German post-war states was clearly founded on concern about a strong Germany in the centre of this small continent of Europe.
I allow myself at this point a short, personal digression. I listened to Jean Monnet when I was part of Monnet's committee 'Pour les États-Unis d'Europe' (For the United States of Europe). That was in 1955. For me, Jean Monnet has remained one of the most farseeing Frenchman whom I have ever known. This is true particularly in matters of integration because of his belief in a gradual approach to European integration.
I have since that time been and remained, from an insight into the German nation's strategic interests and not from idealism, a supporter of European integration, a supporter of German inclusion. (That led me then to what was for Kurt Schumacher a negligible controversy, but for me at that time, as a 30-year-old returning soldier, it was a very serious controversy with a party leader whom I greatly respected). It led me in the 1950s to support the plans of the then Polish Foreign Minister, Rapacki. At the beginning of the Sixties, I wrote a book against the official Western strategy of nuclear retaliation that was used by NATO to threaten the powerful Soviet Union, with which we were then as now greatly involved.
The European Union is necessary
De Gaulle and Pompidou pursued European integration in the Sixties and early Seventies, in order to tie in Germany - not because they wanted their own country to tie the knot with Europe. Afterwards, the good relationship between Giscard d'Estaing and me led to a period of French-German cooperation and to the continuation of European integration, a period which after the spring of 1990 was successfully resumed by Mitterrand and Kohl. Simultaneously, from 1950/52 until 1991, the European Community grew gradually from six to twelve member states.
Thanks to the extensive preparatory work of Jacques Delors (then President of the European Commission), Mitterrand and Kohl, in 1991 in Maastricht, brought into being the common European currency which ten years later in 2001 became physically tangible. At the heart of this lay the constant French concern about an overly powerful Germany - more precisely: about an overly powerful Deutsche Mark.
Subsequently, the Euro has become the second most important currency of the world economy. This European currency has since become inwardly and externally more stable than the American dollar - and more stable than the Deutsche Mark in its last ten years of existence. So much talk and writing about an apparent 'Euro crisis' is reckless gossip from the media, from journalists and from politicians.
Since Maastricht in 1991/92, the world has however changed dramatically. We have witnessed the liberation of Eastern European nations and the implosion of the Soviet Union. We witness the phenomenal rise of China, India, Brazil and other 'emerging countries' which we earlier sweepingly referred to as the 'Third World'. At the same time, the real national economies of the greater part of the world have become 'globalised', in plain English: almost all the countries of the world are dependent on each other. Moreover, the major players of the globalised financial market appropriated for themselves in the meantime a wholly uncontrolled power.
But at the same time - and almost unnoticed - humanity's population has exploded to 7 billion people. When I was born, there were only 2 billion people. All these enormous changes have dramatic effects on the European people, on their countries and on their well-being.
In contrast to this increase, all European nations are ageing; their populations are shrinking. In the middle of this twenty-first century, an enormous 9 billion people are expected to be living on Earth; the European nations will then total only seven per cent of the entire world population. Seven per cent of 9 billion! Until 1950, Europeans had represented for more than two centuries over 20 per cent of the world population. However, for 50 years we European have been dwindling - not only in absolute numbers, but also in comparison with Asia, Africa and Latin America. Likewise, the European proportion of global economic output is dwindling, that is our proportion of everything produced by humanity. It will have sunk by 2050 to around 10 per cent; in 1950 it was still 30 per cent.
Each individual European nation will by 2050 represent only a fraction of a per cent of the world's population. That is to say: If we want to hope that we Europeans have any significance for the world, then it can only be achieved together. For as individual states - whether it be France, Italy, Germany or Poland, Holland, Denmark or Greece - we will in the end no longer be measured in percentages, but rather in fractions of percentages.
Out of this arises the long-term strategic interest of the European nations in their integration. This strategic interest in European integration will become increasingly significant. This has up to now mostly not been realised by the people of these nations. It has not been made known to them by their governments.
If however the European Union in the course of the coming decades does not achieve a common, albeit limited, ability to act together, then a self-engendered marginalisation of individual European states and of European civilisation cannot be ruled out. Likewise, in such a case, the revival of competition and struggles for prestige between European countries cannot be ruled out. In such a case, the integration of Germany could barely continue. The old game between the centre and the periphery could once more become a reality.
The process of worldwide enlightenment, of the expansion of human rights and dignity, of constitutional and democratic government would no longer receive any effective impetus from Europe. In this context, the European Community becomes a life necessity for the countries of our old continent. This necessity goes beyond the motives of Churchill and de Gaulle. It also goes beyond the motives of Monnet and beyond the motives of Adenauer. Today, it overarches the motives of Ernst Reuter, Fritz Erler, Willy Brandt and also those of Helmut Kohl.
I would add: What is certain is that Germany's involvement still plays a role in this. Therefore, we Germans must be clear about our own duties, our own role in the framework of European integration.
Germany needs stability and reliability
When we at the end of 2011 view Germany from the outside through the eyes of our immediate and more distant neighbours, then Germany has for a decade prompted unease - latterly also political concern. In very recent years, significant doubts about the stability of German politics have arisen. The trust in the reliability of German politics has been damaged.
These doubts and concerns are also based on the foreign policy failures of our German politicians and governments. They are based also in part on the world-surprising economic strength of the reunified German Federal Republic. Our economy - initially still split in two in the Seventies - has become the largest in Europe. It is technologically, it is financially and it is socio-politically one of the most productive economies in the world. Our economic strength and our social peace, relatively stable for decades, have also engendered envy - particularly as our unemployment rates and also our debt levels remain in the region of international normality.
However, we are not sufficiently aware that our economy is highly integrated in the common European market as well as highly globalised and, as such, it is dependent on the global economy. We will therefore in the coming year witness that German exports no longer increase exponentially.
Simultaneously, a seriously undesirable development has taken place: prolonged and enormous surpluses in our trade and current-account balances. The surpluses have for five years accounted for around five per cent of our national product. They are equally as large as China's surpluses. We are not aware of this because they are no longer represented in Deutsche Marks, but rather in Euros. It is however necessary for our politicians to be aware of this occurrence.
For all our surpluses in reality constitute the deficits of the other nations. The claims that we have on others are their debts. It is a case of undesirable damage being done to what was once elevated by us to a statutory ideal: 'external balance'. This damage must unnerve our partners. And when foreign, mostly American, voices - then they came from all quarters - have been heard to call for Germany to take the leading role, all this together causes further unease in our neighbours. And it revives bad memories.
This economic development and the simultaneous crisis in the ability of the organs of the European Union have continued to force Germany into a central role. Together with the French president, the Chancellor has accepted this role willingly. However, there has appeared in many European capitals and likewise in the media of many of our neighbours a growing concern about German dominance. This time it is not a question of an overly strong military and political central power, but rather of an overly powerful economic centre.
At this point, it is necessary for a serious and carefully considered warning for our politicians, our media and our public opinion to be issued.
If we Germans allow ourselves to be seduced into claiming a political leading role in Europe or at least playing first among equals, based on our economic strength, an increasing majority of our neighbours will effectively resist this. The concern of the periphery about an all too powerful European centre would soon come racing back. The possible consequences of such a development would be crippling. And Germany would fall into isolation.
The very great and very able German Federal Republic needs - if only to protect us from ourselves - to be embedded in European integration. For this reason, ever since 1992 and the times of Helmut Kohl, article 23 of our constitution obligates us to cooperate 'with the development of the European Union'. Article 23 obligates us as part of this cooperation to the 'principle of subsidiarity'. The present crisis regarding the ability of EU organs does not change these principles.
Our geopolitically central location and, in addition, our unfortunate role in European history in the first half of the twentieth century and our current capacity, all these things together demand from every German government a very large measure of sympathy towards the interests of our EU partners. And our willingness to help is essential.
We Germans have indeed not achieved our great reconstruction of the last sixty years alone and through our own might. Rather it would not have been possible without the aid of the Western victorious powers, without our involvement in the European Community and the Atlantic Alliance, without the aid of our neighbours, without the political break up of eastern Central Europe and without the end of the communist dictatorship. We Germans have reason to be grateful. And likewise we have the duty to show ourselves worthy of the solidarity we received through providing our own solidarity towards our neighbours.
In contrast, a struggle for our own role in world politics and a struggle for prestige on the international stage would be rather unhelpful, probably even harmful. In any case, our close cooperation with France and the Polish, and with all our neighbours and partners in Europe remains essential.
I am convinced that it is of cardinal importance to Germany's long-term strategic interests not to become isolated and not to allow ourselves to become isolated. Isolation in the West would be dangerous. Isolation in the European Union or the eurozone would be extremely dangerous. For me, this German interest ranks without a doubt higher than any possible tactical interest of an individual political party.
The German politicians and the German media have the damned duty and obligation to continue to represent this point of view to the public.
If, however, someone claims that German will be spoken now and forever in Europe; if a German foreign minister believes that promotional visits to Tripoli, Cairo or Kabul are more important than political contact with Lisbon, with Madrid, with Warsaw or Prague, with Dublin, the Hague, Copenhagen or Helsinki; if another politician believes we must avert a European 'Transfer Union' - then all that is simply harmful power play.
Germany has indeed been a net contributor for many long decades. We were able to achieve that and have been doing it since the days of Adenauer. And naturally countries like Greece, Portugal and Ireland have always been net recipients.
This solidarity may nowadays be foreign to the German political class. But up until now it was evident. Just as evident - and more so since the Lisbon Treaty - is the Principle of Subsidiarity: What a state cannot regulate or manage itself must be taken on by the European Union.
Since the Schuman Plan, Konrad Adenauer has, based on correct political instinct and despite resistance from both Kurt Schumacher and later also from Ludwig Erhard, accepted the French offers. Adenauer judged the long-term German strategic interest correctly - despite the continued division of Germany. All his successors - including Brandt, Schmidt, Kohl and Schröder - have continued to pursue his integration policy.
No short-term, internal or foreign political tactics have challenged the long-term strategic interest of the German people. Therefore, all our neighbours and partners could for decades rely on the stability of German European policy - even during changes of government. This continuity remains on offer for the future.
The current EU situation demands a willingness to act
Conceptual German contributions were always present. This should remain the same in future. At the same time, we should not try to predict the distant future. Besides, treaty amendments could only correct in part the deeds, the omissions and the mistakes committed twenty years ago at Maastricht. The current suggestions to amend the present Lisbon Treaty appear to me to be less than helpful when you remember the earlier difficulties of universal national ratification - or the negative results of referenda.
I therefore supported the Italian president, Napolitano, when he demanded in his speech at the end of October that we now concentrate on what must be done now. And that we must also exploit the possibilities which the current EU Treaty offers - particularly for strengthening budget regulations and economic policy in the eurozone.
The present crisis about the capacity to act of the EU organs created in Lisbon cannot be allowed to last for years. With the exception of the European Central Bank, the organs - the European Parliament, the European Council, the Brussels Commission and the Ministerial Councils - have all only provided limited effective aid since overcoming the acute banking crisis of 2008 and particularly the state debt crisis connected to it.
For overcoming the current EU leadership crisis, there is no patent remedy. We will require more steps, some simultaneous, some consecutive. We will not only need our ability to judge and act, but also we will need patience. In this way, conceptual German contributions may not be limited to catchphrases. These contributions do not belong on the television marketplace, rather they should instead be presented privately in the committees framework of the EU organs. While doing this, we Germans cannot project our economic or social order, our federal system, our budget or our financial system as models or benchmarks for our European partners, but rather we must present them gradually as examples among many possible alternatives.
Whatever Germany does or does not do today, we all bear the responsibility for the future effects on Europe. We need European sense for this. But we do not need sense alone, we also need a sympathetic heart towards our neighbours and partners.
On one important point, I agree with Jürgen Habermas, who recently said that - and I quote - '...we are indeed seeing for the first time in the history of the EU a deconstruction of democracy!!' In fact, not only the European Council including its president, but also the European Commission including its president, and the various Ministerial Councils and the entire Brussels bureaucracy have together sidelined the democratic principle. When we introduced popular elections for the European Parliament, I succumbed to the delusion that the Parliament would gain some political weight. However, it has so far had no recognisable influence on the management of the crisis, as its guidance and resolutions continue to have no widespread effect. [my italics]
Therefore, I would like to appeal to Martin Schulz: It is high time that you and your Christian Democratic, your socialist, liberal and Green colleagues act in union, and with urgency, to make your voices heard. In reality, the failure of the G20 in 2008 to establish a completely satisfactory regulatory system of the banks, stock exchanges and their financial instruments would be the best field for such an intervention of the European Parliament.
In fact, trillions of financial traders in the USA and Europe, along with some ratings agencies, have taken the politically responsible governments of Europe hostage. It is hardly to be expected that Barack Obama would object a great deal to this. The same goes for the British government. Indeed, the governments of the entire world in 2008/2009 saved the banks with guarantees and taxpayers' money. Ever since 2010, however, this flock of highly intelligent (but also prone to psychoses) financial managers have continued to play their old game of profit and bonification. A game of risk to the detriment of all non-players that Marion Dönhoff and I in the Nineties criticised for being life-threatening.
When no one else wants to act, then the members of the eurozone must act. This is where the route via article 20 of the current Lisbon Treaty can lead. There it is expressly stated that individual or several EU member states may '...establish enhanced cooperation between themselves'. In any event, the countries that participate in the common European currency should join together to put into practice far-reaching regulations of their common financial markets. Regulations to separate normal commercial banks from investment and shadow banks, to ban the short selling of securities at a future date, to ban trade in derivatives, provided they are not approved by the official stock exchange supervisory body, and regulations for the effective restriction of transactions that affect the Euro area and are carried out by the currently unsupervised ratings agencies. I will not, Ladies and Gentlemen, burden you with any further details.
Naturally, the globalised banking lobby would continue to pull out all the stops to prevent this. To date, it has impeded all far-reaching regulations. It has organised things in such a way that its crowd of traders have forced European governments into the position of having to invent new bail outs - and extend them through leverage. It is high time to do something about this. When Europeans apply the necessary courage and strength to the creation of a far-reaching regulatory system of financial markets, then we can become in the medium term a zone of stability. If we fail here however, then the importance of Europe will further reduce - and the world will develop towards a duumvirate between Washington and Peking.
For the immediate future of the eurozone, all the steps mentioned up to here remain unavoidably necessary. These include the bailout fund, upper debt limits and their monitoring, a common economic and fiscal policy, with the addition of a range of country-specific tax policy, spending policy, social policy and labour market reforms. But by necessity a common debt will become inevitable. We Germans cannot refuse this, thinking only of our own country.
We can by no means either propagate an extreme deflation policy for all of Europe. Jacques Delors is very right when he demands the introduction of measures to balance budgets along with the financing of growth-generating projects. Without growth, without new jobs no country can balance its budget. Whoever believes that Europe can become healthy through austerity measures alone might like to study the fateful effect of Heinrich Brüning's deflation policy of 1930/32. It created a depression and an unbearable amount of unemployment and thereby brought about the demise of the first German democracy.
To my friends
In conclusion, my dear friends. You do not really need to preach international solidarity to the Social Democrats. For the German social democracy has been internationally minded for a century and a half - to a much greater extent than generations of liberals, of conservatives or of German nationalists. We Social Democrats have at the same time held firm to freedom and the dignity of every individual person. We have also held firm to representative, to democratic democracy. These core values bind us today to European solidarity.
It is more than certain that in the 21st century Europe will continue to consist of national states, each with its own language and with its own history. Therefore, Europe will never become a federal state. But the European Union cannot deteriorate to a mere confederation of states. The European Union must remain a dynamic and self-developing alliance. There is no example of this at any time in the whole of human history. We Social Democrats must contribute to the gradual unfolding of this alliance. [my italics]
The older you are, the more you think in terms of long periods of time. Even as an old man, I hold fast to the three core values of the Godesberg Programme: freedom, justice, solidarity. By this I mean, by the way, that nowadays justice more than anything must comprise equal opportunities for children, for pupils and for young people as a whole.
When I look back at 1945 or look back at 1933 - I had just turned 14 that year - the progress we have achieved to date seems almost unbelievable to me. The progress which Europeans since the Marshall Plan of 1948, since the Schuman Plan of 1950, the progress which we have achieved today thanks to Lech Walesa and Solidarnosc, to Vaclav Havel and Charta 77 and thanks to every German in Leipzig and East Berlin since German reunification in 1989/91.
Whereas today the greater part of Europe enjoys human rights and peace, we could never have imagined that in 1918, or in 1933, or in 1945. Let us therefore work and strive so that the historically unique European Union emerges from its present weakness stable and self-confident!”
And here is the link to Churchill's speech at the University of Zurich in 1946: