Germany must rethink its strategy as it cannot remain healthy amid a sick Europe

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

It would be naive to believe that Germany's economy can stay healthy while much of the rest of the continent is "sick". So, as Peer Steinbrück and the SPD demanded repeatedly, it is in Germany's interest to finally rethink its strategy and boost growth writes Jo Leinen MEP.

Jo Leinen is a German MEP, elected on the SPD ticket and acts as a representative within the Party of European Socialists group. 

Across Europe, the elections to the German Bundestag on September 22nd are eagerly awaited. Due to its economic strength Germany has a decisive voice in formulating the EU's answers to the economic crisis.

The result of the election will thus determine the political orientation of the Union:  a more balanced and just policy for Europe and Germany, or if Angela Merkel is allowed to continue with her strategy, a one-sided focus on austerity. The Eurosceptics, however, have no realistic chance, since Europe plays only a minor role in the election campaigns.

Chancellor Merkel has good reasons to avoid talking about Europe in her campaign.  Firstly, because the conservatives (CDU/CSU) might lose votes to the new eurosceptic party, the "Alternative für Deutschland" (AFD).

Secondly,  the current government has become used to tell the truth only in small bits. Now again it tries to fool the people into believing the crisis is solved and Germany is not affected. It keeps quiet about the liability risks that Germany has already taken over through the ECB's purchase of bonds. Discussions about the need for additional emergency packages are nipped in the bud. Mantra-like the Chancellor repeats that Germany is well off. But in the long term, Germany can only be successful within a strong Europe – and to that regard Merkel lacks a strategy and ambition.

A vision for Europe

The current German government doesn't have any recognizable vision for the future of Europe.

Whenever some indicators point towards an easing of the crisis, any ambition for reform ends abruptly. The government only reacts to external pressure, especially by the financial markets. To the disadvantage of the citizens it blocks or delays important measures to complete the Economic and Monetary Union, e.g. the banking union.

But without a banking single supervisor and especially a banking resolution mechanism and fund, financed by the industry itself, tax-payers will continue to be forced to pay for recuing bankrut banks – the vicious circle between the solvency of banks and states is kept alive. Profits keep being privatized while the European citizens have to bear the losses.

In contrast, the SPD has a clear idea on what has to be done in Europe. The intergovernmental instruments and agreements like the ESM and the fiscal compact must be incorporated in the supranational EU framework as soon as possible.

The European Commission should be transformed into a European government that is fully accountable to the European Parliament representing the 500 million European citizens.

By upgrading the Common Foreign and Security Policy, the Social Democrats want to enable the EU to effectively defend its values and interests in international politics, making use of the power stemming from Europe's economic  strength.

After the European elections in May 2014 changes to the Treaties should be discussed in a new Convention, which provides an open and transparent forum.

Furthermore the completion of the banking union would be one of the top-priorities of a SPD-led government. The message is clear: No European or German tax money for the rescue of banks!

Fiscal consolidation and investments are not contradictory In Germany Merkel somehow managed to create a widespread feeling of self-satisfaction.

In Europe, however, she is the face of austerity, solely concentrating on fiscal consolidation without giving any impetus to economic growth and jobs in the crisis countries. In return for the urgently needed loans almost unbearable measures are imposed on the indebted countries, stalling growth and leaving millions of mostly young people unemployed. Although even the International Monetary Fund (IMF) and the European Commission increasingly admit, that this policy has forced the countries into a downward spiral, the German Chancellor keeps being stubborn.

It would be naive to believe that Germany's economy can stay healthy in the middle of a "sick" Europe. So it is in Germany's interest, to finally rethink its strategy and boost growth, as Peer Steinbrück and the SPD demanded repeatedly.

 There would be enough things to do, since Europe's infrastructure is outdated: Dilapidated roads and rail networks, overstretched and inadequate power grids, underfunded educational institutions and the slow expansion of broadband internet connections impede economic growth and cause unnecessary costs.

There are alternatives to Merkel's policy

Recent history shows that there are alternatives to this policy. It is largely thanks to the SPD and the then Finance Minister Peer Steinbrueck, that in 2009 one of the largest stimulus programs in German post-war history was launched, allowing Germany to quickly recover from the recession. Angela Merkel, however, denies our European partners today what helped the Germans after 1945 with the Marshall Plan and the East Germans after 1990 with the giant "Aufbau Ost" program: Investments for a better future.

Without doubt, the governments' debts in Europe must be reduced to a bearable level – but in a way that is balanced and socially acceptable. Even under difficult circumstances it must be possible to make sustainable investments, which pay off in the medium term. There is a difference between a rigorous and counter-productive austerity and smart fiscal consolidation. Unnecessary expenses can be saved and people brought into work, thereby increasing tax revenues and reduce social spending.

No matter how the election turns out, no one in Europe has to worry about an anti-European German government. The newly established Euro-sceptic AFD has little chance to enter the Parliament, let alone to influence Germany's European policy.

But in contrast to the conservative-liberal government, the SPD understood that it is socially imperative, economically reasonable and in the best interest of Germany to work and fight for a better Europe, characterized by democracy, solidarity and efficiency. A change of government would therefore be good news – for Germany and Europe.

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