Mr Schaeuble, what a good idea a temporary exit from Euro…of Germany!
This post is written in English because it deals with the role of Germany, and its finance minister, in the current negotiations about Greece, and the astonishing proposal of a temporary exit of Greece from the Euro area. I have always refrained from discussing the role of Germany in the European project for two reasons. The first is that the debate about the problem called German dominance started years before the Euro project, and it is an endemic issue with which Europe has to live. The second is that it is useless, and also impolite, to discuss the stance of Germany in a debate in Italy and in Italian. The temporary Grexit proposal changed many rules, including these. I find that talking about Germany cannot be avoided any longer, but it should be done in English, since it regards Germany and the rest of Europe.
The proposal of a temporary exit of a country from the Euro area cannot be forgotten or forgiven, and it cannot remain without consequences. Even if it were due to insanity or if it were a mere “joke”, like Mr Schaeuble likes to define proposals that he personally finds unrealistic, it should have the immediate consequence of removing the author of the proposal from one of the most important chairs of the European project, that of finance minister of Germany. If it is not a joke, the consequences would be much worse, of course, and even only the leak of the proposal would represent a serious damage to Europe as a whole, and a giant leap back in the European project.
From a political point of view, the damage has already been done. Since today, throughout Europe we cannot dismiss as populist and uneducated the proposals of exit of a country from the Euro. Up to today, the Euro process was considered “irreversible” in the word often used by Mario Draghi, and the disagreement with this positions was limited to extreme wings of political movements and parties in Europe. Today we discover that not only the finance minister of Germany agrees with this extreme position, but he also provides a “valuable” contribution to it with the innovation of a “temporary” exit. The temporary nature now makes the project less hard to believe. So, today not only we have to apologize for the harsh words we used against the populists and anti-Euros across Europe, but we are forced to discuss the matter seriously.
Unfortunately, we do not have enough information on Mr Schaeuble’s project, because he is extremist also in this: he does not like to share his thoughts and his project with people that have the cultural endowment to enjoy it, either as serious or hilarious, and maybe discuss it. So, we do not know whether exit of country (because the rule cannot be written for Greece only, of course) should be triggered by a majority of the other countries, and which majority. We do not know whether the temporary exit option could be exercised by the exiting country itself, that would be welcome as a blessing from all anti-Euro parties in Europe. We do not even know if it could be applied to sub-sovereign entities, so that for example in the future it could find the backing of Mr. Salvini, the leader of the Northen League anti-Euro party in Italy, for a “temporary” exit of Southern Italy from the Eurozone.
Since now we are forced to accept a discussion about exit from the Eurozone, it cannot be denied that from a strictly economic point of view, the temporary exit could have positive effects. Using the same arguments of Mr. Schaeuble and his anti-Euro allies, if the devaluation tool is now considered available again, we cannot refrain from discussing if and when to use it. If it may be beneficial for Greece, it could also be beneficial for Italy. But there is an application of this rule that could be a real blessing for all the countries in the Eurozone, and it would be a temporary exit of Germany. In fact, a massive re-valuation of the German currency would restore the current account equilibrium within Europe. Of course, the German dominance problem would persist, since it was already present in the discussion in 1990, before the Euro. Nevertheless, even if it is a chronic disease of Europe, a “temporary exit” could provide a temporary relief. To understand how this remedy would work, one could go back to the seminal paper of Fratianni and Von Hagen, 1990 on the subject. One could object that at that time the discussion was about the European Monetary System, but this is the leap back that Mr Scaeuble has imposed on the debate.
To conclude, there is also a jurisdictional aspect that is disturbing in this story. Mr Schaeuble is a lawyer, and he is aware of the legal risks to which he is exposed by presenting a proposal like a temporary exit of a piece of Europe from the rest of it. If Europe were a country, Mr Schaeuble and his collaborators would have conspired against the integrity of that country. If Europe were a country, Mr Schaeuble would have been prosecuted and, if found guilty, sentenced to jail. One of the problem of Europe is that no such criminal law seems to exist. For this reason, Europe can only assert its being “irreversible” on political grounds: the pieces of the European society and the political parties in favour of the European project should require to immediately remove Mr Schaeuble and all those that now and in the future will conspire against the Euro. Otherwise, Europe would be sentenced to death. #fireSchaeuble
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