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How Germany changed its mind about Europe
When German chancellor Angela Merkel announced one of the biggest U-turns of her career this week, the declaration was both emphatic and unexpected.

On Monday, she and French president Emmanuel Macron unveiled a proposal for a €500 billion EU "recovery fund" to help the European economy back on its feet after the havoc wrought by the coronavirus pandemic.

Politicians and analysts say the plan, under which the European Commission would borrow money to support the budgets of stricken member states, could mark a turning point in the history of the EU.

The two leaders and commission president Ursula von der Leyen will now have their work cut out convincing the so-called Frugal Four - Austria, Denmark, the Netherlands and Sweden - to support the proposal. But the previously faltering Franco-German partnership, revived by the need to avert an economic depression, could be a powerful persuader.

According to one senior German official, the "moment of reckoning" for Berlin had come almost two weeks earlier, on May 5th, when Germany's constitutional court in Karlsruhe had cast doubt on the legality of the European Central Bank's bond-buying programme.

For years, the EU has relied on the ECB to do the heavy lifting in a crisis. "The idea was, member states didn't need to do any fiscal stuff because the ECB would always save the day," the official said. "The bank was also a useful scapegoat to have around to blame for anything that went wrong."

The court ruling underscored the need for budgetary as well as monetary support for vulnerable EU members.

Nevertheless, Ms Merkel's championing of the proposed recovery fund with Mr Macron seemed to come out of the blue. Even her closest allies were stunned. Berlin had always opposed the idea that money from such a fund would be distributed in the form of non-refundable grants rather than loans. For Germany, that smacked too much of fiscal transfers from richer to poorer EU states - taboo in Berlin.



Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri May 22nd, 2020 at 02:26:24 PM EST

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