Berlin allies set to steamroller EU members into United States of Europe.

Blurred vision at the centre of a storm

New article in Der Spiegel vindicates Slog sources, highlights Berlin game-plan

In a major Spiegel scoop yesterday, the influential German magazine/paper/site revealed that German Finance Minister Wolfgang Schauble is a driving force behind the acceleration in German Chancellor Angela Merkel’s plans to run towards EU fiscal and political union. As The Slog has maintained for some time, the two political allies see this as the best way to ensure the EU’s survival. But the evidence suggests that the plan is fraught with danger for everyone.

One thing above all Angela Merkel has proved over the last few days is just how much you can get done when everyone in the boat is rowing the same way. Goforit Geli kicked off on Monday with a rousing speech about how the cure for a failed idea is more of it, and by 4 pm Tuesday she’d persuaded her loyal CDU doubters to arrange for other people’s countries to leave the eurozone….but no pressure on them to do so, mind: it would be sort of like, you know – voluntary euthanasia. Strictly not obligatory…not like new Prime Ministers and cancelled referendums and the like.

Now – if you go to Spiegel online (thanks yet again to a Slog threader for pointing this out – I’d missed it) – you’ll read a fascinating piece about how Merkel the Magician has her beady eye on the German constitution. “We have one of the best constitutions in the world,” German Chancellor Angela Merkel once said. Mind you, in 2009 she also said the euro was one of the world’s most stable currencies – but rhetoric is everything in contemporary politics.

Except of course that, as always, Wolfgang Schauble – the man sometimes called ‘the ether’ by BundesRepublik politicians – is the eminence grise steering the Chancellor towards his long-held goal.

Cast your minds back now to March 2010, when the Slog first revealed via a Berlin source that ‘Schauble supported the idea of an ‘EMF’ to aid members in especially dire straits. The conditions for help, however, would effectively be a dictation of financial terms to that Sovereign State….’. This was the first time that source had said to me, “Herr Schauble is a man with very big ideas for the EU”. It was not a compliment.

Move on then to February this year, when the same insider told The Slog, “Wolfgang Schauble was reported to have been ‘shocked’ ealier in the week when he debriefed the CDU on increasing German guarantees to the ESM, and received a wave of howls and hostile questions for his pains…”

That was the point at which Wolfie realised democratic politics were going to get in the way of his master plan. This ‘projekt’ has never varied: he is and always was an integrationist hawk. Ever since that mauling, Wolfgang Schauble has remained a quiet persuader of the people who count. Within six months, he had won an initially reluctant Merkel over to fast-tracking the fiscal union as he only way of avoiding the EU’s complete collapse. “He is the most slippery man in German politics” said my Frankfurt Mole last weekend.

By August, the German finance minister had secretly convinced Merkel that Greece would default – and might even be able to do so in an EU being strongly run from one central point. But as The Slog again revealed last September, ‘front-of-house’ he was busy reassuring CDU bigwigs that Germany “would cut the rope” on Greece if it fell behind further. It fell behind twice (including one review that became an unreview in classic Orwellian fashion) but Athens still got the 8bn euro tranche Schauble had promised everyone it wouldn’t. At the time I concluded, ‘it has been clear to most observers for nearly a year now that this is a game for 27 players in a talking shop, and then the Germans win’.

September 11th saw Germany’s financial boss driving the EFSF fund to keep ezone members from collapsing…..once again, in direct contradiction of what he was telling CDU leaders. The Slog revealed that ‘At the emergency crisis summit in late July, the European Financial Stability Facility (EFSF) was lined up to be given further power and more imaginative approaches to the supply of emergency credit lines to debtors in distress. The Schäuble plan would keep credit coming from the fund (for Italy and Spain) assuming those and other countries were unable to borrow following a Greek collapse….’

In the days before Zen bazookas were invented, this was big news. Most of the mainstream media ignored it. But from this quiet Schauble initiative grew the EFSF leverage plan using Tim Geithner as the salesman. (See America bets the farm on Germany). Geithner played this role to a tee in Wroclaw, but his refusal to stump any money up also taught German’s finance minister a harsh lesson about hard-headed Americans. The Slog’s Bankfurt mole confirmed this at the time,  and I reported – ‘I don’t think it’s an exaggeration to say that the overwhelming eurocrat and media expectation was that the Federal Treasury Secretary was going to bring a bag of dosh with him. Certainly, Wolfgang Schauble thought so: afterwards, bewildered Austrian delegate Maria Fekter said that Herr Schauble had called openly for the US to participate in the bail-out fund, but Tim Geithner had “ruled it out emphatically”….’

Just how reliable these two key German sources have been is supported by the Spiegel article from yesterday:

‘It was three quarters of a year ago that German Finance Minister Wolfgang Schäuble reportedly took the chancellor aside and explained to her that the euro crisis could not be resolved with spur-of-the-moment policies. He told the chancellor that he was in favour of using the crisis to advance Europe’s political unity….resolutions made [at the upcoming CDU Party conference] will not be empty words. Instead, Merkel and Schäuble want them to serve as a foundation of a two-stage plan to reform the EU. As a first step, they want to amend EU treaties to allow notorious debtors in the euro zone to be placed under mandatory supervision by Brussels…..The Chancellery wants this aspect of the EU reform approved as quickly as possible. Merkel wants to show the financial markets that Europe has the strength to push through sweeping changes. Internally, Merkel’s staff expect that the EU reform convention will complete its work by the end of next year, a view shared by CDU parliamentary floor leader Volker Kauder.

‘As a second step, Merkel and Schäuble want the EU to move towards becoming a political union. This entails transferring more sovereign rights to the EU — and it would mean amending Germany’s constitution….According to this scenario, the Germans would drop the ‘Basic Law’ [created after the Nazi collapse] and embrace a totally new constitution.’

Wolfgang Schauble’s strategy has been to wait patiently for things to get worse and worse, while all the time working behind the scenes to ensure everything would be in place. The result is that he and Chancellor Merkel are getting laws through the Bundestag they could never even have contemplated six months ago. The Spiegel article concludes as follows:

‘Schäuble believes that a national referendum on the German constitution would be an essential step in reforming the EU — and with good reason, since the constitutional judges in Karlsruhe have now made it clear on a number of occasions that the constitution leaves little leeway to relinquish more power to Brussels.’


The reality here is that this accelerating rush towards political and fiscal integration is madness on a number of levels.

First and foremost, there are divisions at every level of German culture about the idea – if there wasn’t, Schauble could’ve been far more open. The Bavarian sister Party to the CDU won’t go along with it…and without the referendum referred to above, neither would the judiciary.

In the banking community, the German central bank’s boss doesn’t trust Schauble. Some bankers agree with the plan, others are doubtful. I won’t be able to contact the Slog’s Bankfurt Maulwurf now until Friday, but it’ll be interesting to see where he sits on this.

Second, we have to ask, “Why is this being done?” And the short answer is ‘for all the wrong reasons’. It is a hasty, cobbled-together steamroller being used, not to logically further an end of a unified, content Europe, but to satisfy the neurotic lending markets and other financial interests who – as always – want stability and guarantees at all costs. A rule of life for me (and history supports it again and again) is that half-baked plans towards one end while focused on tactical means will always come to grief. The question of what to do with France, for instance – give it Division 2 to run? – remains unaddressed.

Third, and above all – as I tried to articulate yesterday – the German plan is rank bad science. Merkel is a physicist and Schauble is a bean-counting mathematician, but they don’t get people – and they don’t understand cultural anthropology. Technicians never do. As I have insisted over and over again, these are not power-mad Nazis creating GrossDeutscherReich II – even if my sarcasm at times would suggest that to a literal mind. They are intelligent, blinkered idiots unable to see that the inevitable result of this path will be a German-dominated Europe. (Which is, of course, exactly what the US desires).

Effectively, what Berlin – with Brussels’ willing help – has decided is that settled markets, the banking system, and a stable EU are more important than the rule of law, individual liberty, sovereign nation status, and a democratic voice for the citizens.

What a profoundly obscene irony that is, given recent German history. And what a victory for Money. We must all hope that opposition to it will be forthcoming from every quarter.

From last July: Why van Rompuy is Berlin’s Man in Brussels