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Economic Dispute in Europe(1)

by Annika Walkenhorst (1996), Marc Wenigmann (1994), Henning Lütje (1993), HPS Buxtehude/Germany

Every single day we are confronted with floods of newspaper articles treating the topic of the Euro-crisis especially focussing on Greece. This Southern European state has recently become a symbol of the misfortune and the sorrow caused by the world economic crisis of 2008. But meanwhile Greece has also developed into an endurance test for the whole European Union. The crucial questions of the day are: Is there any possibility of keeping Greece in the European Union? How long can we carry on with this burden that endangers our intra-European community? Which degree of financial support will be tolerated by the donor states until Greece is forced to leave the EU?

 

The following facts are at the same time the main conflict potential which has to be alleviated very soon in order to maintain our European peace. Most of the Southern European states like Portugal, Spain, Italy and Greece are heavily indebted and not capable of amortizing their credits. Every state has a national debt because the idea is to borrow money, invest it, gain a surplus and then to pay back the debts plus the interest rate. The credit-worthiness is crucial for a nation because it indicates how trustworthy these countries are considered to be and how likely it is that they will be able to pay back their debts. Also, the better the credit-worthiness, the smaller the interest rates. The Scandinavian countries for instance can borrow money with relatively low interest rates because investors know that they will get their money back because of the strong Scandinavian economies. This means in consequence that if your economy is already ruined, investors are going to lose their confidence in your ability to pay them back and getting money becomes a whole lot harder for you. The financial market is all about expectations and assumptions which make it terribly difficult to predict anything.

 

Economic background

 

All European economic powers (or at least those who have introduced the Euro as a currency) depend on each other, which makes it a question of economic sanity to solve the Greek problem with European money. As a consequence of the massive financial power and a strong, stable economy, Germany is being asked to act as guarantor for South-European debtors. A few months ago, the German people stopped being in agreement with further financial assurances anymore which German politicians had given to support Greece and Spain so far. In turn, the German government demands rapid reforms of the debtor‘s financial and economic system. Because of these demands and as nobody wants to invest in Greece, the government is forced to impose rigorous austerity measures which imply huge cuts in the welfare system and a tremendous tax increase. Consequently, there are many protests and a growing animosity towards the donor countries like Germany. The lack of insight into this complex economic situation as well as old national prejudices and the blind desire for a scapegoat result in Nazi-comparisons by some Greek demonstrators as well as dim-witted and undifferentiated utterances by parts of the German population. This in itself is a danger to the European spirit and harmony.

 

Consequences for the Greek people

 

The crisis has severe consequences for the Greek people. More than a quarter of the Greek population working in the public sector is directly affected by the austerity plan. The cuts in social and public spending lead to dismissals and insufficient providing in important sectors like health care and social security. There are even difficulties of financing vitally important therapies e.g. chemotherapy. Furthermore, the budget’s deficit is supposed to be corrected by economizing on retirements and family benefits. Right now, statistics show an unemployment rate of about 20 % that contributes to the desperate discontent among Greek citizens. It is especially the younger generations that are affected by this problem. 50% of them are incapable of finding a new job.

What renders the situation of these people even worse is that they receive a pension for only one year. This is why voluntary services like soup kitchens supported by institutions like the Greek Orthodox Church have recently appeared all over the country. Since the state alone is not able to create a social net of benefits for its citizens anymore it is no big surprise the frustrated population uses Germany as a punching bag. The lack of prospects causes a spirit of anger aimed at Germany which is expressed by touching its sore spots.

German resentments

As mentioned before, the current crisis reveals the resentments that some Germans hold against the Greek nation which they themselves, of course, perceive to be perfectly justified. The media generally try to depict the situation as objectively as possible but some populist papers articulate what quite a considerable number of Germans seem to think in secret: Some suggest that the Greek crisis has been caused entirely and exclusively by the lack of economic pragmatism that they believe to be inherent in the Greek mentality. Utterances such as “And now we have to pay with our hard-earned money for the incompetence of these lazy southern Europeans! They should simply be kicked out of the EU!” and other indignant exclamations of the kind can be heard all too often in not so formal debates. This is of course an example of grave oversimplification by those who possess neither the time nor the necessary motivation to inform themselves about all the complex economic interdependencies that play a role in this crisis but who, nevertheless, will not let themselves be deprived of the right to hold and defend their own opinion just because they do not have a clue of what they are talking about.

 

German ignorance

 

What these people tend to ignore is that the German economy would not be as strong as it is today if it had not been for the allied forces who supported the nation financially and later militarily in order to erect a strong buffer zone for the Soviet Union and to have another country to trade with. The famous German „economic miracle“, which the German people are so proud of, could happen not only thanks to the willingness of the Germans but also because of the effort of millions of foreign workers and, most importantly, due to foreign capital. It is also often forgotten that Germany actually profits from her status as a relatively strong economy in Europe. The value of a country’s currency always depends on the strength of its economy (or rather how strong everybody assumes it to be) so one could get the false impression that the other European nations detain the development of the German economy. However, this is not the case. Germany‘s exports are higher than her imports so foreign countries can buy German goods more cheaply because her currency is weaker than it would be if she were the only one to have it. This is a massive advantage which many are ignorant of. Some demand Germany to leave the Euro zone but if she did, the value of her new currency would adjust to the strength of her economy plus there would be a high demand for this currency on the Foreign Exchange Market (which is where you can speculate with the value of currencies) which would go up as the her economy stays stable throughout the crisis. Consequently, Germany would lose her important competition advantage which would harm her economy so the German people have a vital interest in keeping the EU alive and healthy!

 

How do you perceive the role of nowadays’ Germany? Is she obliged to return the favours that were received after WWII? Is she profiting wrongfully from the Euro’s low value? Does the German commitment intensify the national divergence?

What do you think?

posted on 15th January 2013

 

The Effects of Historical Events on European Identity

by Marc Wenigmann (1994) & Henning Lütje (1993), HPS Buxtehude/Germany

Several different historical events concerning Europe have shaped our European identity. This progress has been going on for hundreds of years and nowadays we, as Europeans, perceive ourselves in a very particular way.

Intra-European cooperation as well as military conflicts and political quarrels have influenced the different relations between the nations in Europe. In the past for example Germany and Great Britain fought each other in both World Wars, but as a result of the European process of integration, both now share important economic and diplomatic bonds. Their relation is no longer defined by a feeling of competition or distrust but rather by a general attitude of cooperation and goodwill. This is not the only case in which one can remark the transformation process that takes place in the international relations of European countries. Europe has witnessed rises and declines of whole empires through the millennia, it has seen kingdoms appear and perish and the European culture is correspondingly diverse and complex.

The relation between Germany and France has been problematic as well. Especially the Franco-German war of 1870/71 was a decisive reason for the so-called hereditary enmity which was an essential part of French and German mentality for decades. Today the two nations perceive each other as friends but some resentment still remains.

This can be observed especially in very emotional domains like soccer. During the World Championship in 2010 a German man shot two Italian soccer fans because of a dispute how many times the German team had already won the World Championship in the past.

It occurs quite frequently that media strengthen national prejudices and potential conflicts by using historically influenced terms such as “tanks” when referring to the German team. The media create an atmosphere of competition that separates the European citizens and prevents them from becoming a sustainable unit. Thus there are many mental borders and obstacles which have to be overcome in order to be able to feel a European identity and to escape from a nationally restricted way of thinking.

What do you think: do the wounds caused by the big wars that separated the European nations in the past still exist? Or is there no such influence on the national mentalities at all?

Please share your thoughts about this topic with us and comment on this article.

posted on Sunday, May 6th, 2012

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