Dear Chancellor Merkel,
I am writing to ask you to rethink your insistence upon extreme austerity as the cure for the Euro-zone’s economic problems. If you do not change your mind, and if you do not work to make such a shift politically possible in your country, you risk deepening the crisis to such an extent that it will engulf the global economy.
I do not write this in the spirit of the UK Prime Minister, David Cameron. He calls upon you to do what he says, not what he does, and does not have the grace to see that his approach to the European Union and yours are radically different. You have authorised enormous bail-out funds and played a key part – perhaps the key part – in shaping the EU’s response to the crisis. Mr Cameron merely exhorts from the sidelines. You also have a track record of contributing to the resolution of the EU’s big dilemmas, such as over the Constitutional Treaty.
However, it is part of a leader’s task to acknowledge when a policy is not working, and when it is actively making the problem that it is supposed to address worse. This is the case for the current approach to the Euro-zone’s problems.
Sehr geehrte Frau Merkel, austerity isn’t working. The Greek economy cannot grow while the cuts continue to slash away at Greek citizens’ ability to spend money, and whileGreececannot afford to feed and care for itself properly. The same is true ofIreland, and will doubtless be so inSpainand any other country that receives a bail-out. The money is not targeted correctly. And it can never be enough, since without radical change the markets continue to look for opportunities to make more money from speculation.
I wonder if your own history as a woman who grew up under a Communist regime makes it difficult to acknowledge the problems of neoliberal economics. But neoliberalism is not the only alternative to Soviet-style planned economies, and neither is autarky. There are greener, social market based alternatives which could offer the EU as a whole andGermanyin particular the way to address both the Euro-zone problems and the ecological crisis.
In the immediate term, I urge you to begin explaining to German citizens why it is in their interests for the EU to move to a fiscal and political union, but one which does not lock the states on which they primarily depend in economic terms into long-term penury. You can’t sell if no-one can buy. And in the immediate term, I urge you to work with President Hollande and all those in the EU institutions or member state governments who are trying to create a European Union that is fit for purpose – socially just, ecologically sustainable, and prosperous.
It is time to bury neoliberalism. There is no point being a big spender if you are wasting your money!
Prof Alex Warleigh-Lack
Professor of EU Politics,UniversityofSurrey