Steven Diver: Despite the Eurosceptics, Germany showing way ahead

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Chancellor Angela Merkel's visit to Greece showed Germany's commitment. Photo / AP
Chancellor Angela Merkel's visit to Greece showed Germany's commitment. Photo / AP

For the past two years a gleeful band of Eurosceptics in the Anglo-US political establishment have been arguing that the euro cannot survive - at least not in its present form.

Urged on by the Economist, these doomsayers have exposed their schadenfreude as the eurozone leaders have thrashed about to put stronger, structural supports under their common currency.

Yet they have been broadly successful with new agreements on fiscal control of national budgets, the establishment of the European Stability Mechanism and a eurozone-wide banking authority.

Still the Chicken Littles cry that the sky is about to fall.

What is difficult to grasp from this distance is the absolutely unshakeable commitment Germany and its continental partners have to the euro.

At each stage of the euro crisis, Berlin's political elite have reiterated that the euro cannot and will not fail.

Chancellor Angela Merkel has been prepared to expose the German taxpayer to huge liabilities - its share of the ESM is €190 billion ($300 billion) - to provide a liquidity safety net for the struggling Pigs (Portugal, Ireland, Greece and Spain) as they undertake the reforms necessary to stay within the eurozone.

Sure, the newspapers are full of the furious demonstrations and strikes against the required austerity but there is also a wider popular recognition that an exit from the euro would bring incalculable mayhem.

They know that leaving the euro is not just shooting yourself in the foot - more like firing a shotgun into a nation's belly.

Moreover, since the president of the European Central Bank unambiguously confirmed in July this year that it would "do whatever it takes" to prevent a collapse of the euro, sovereign bond yields for Spain and Italy have fallen steadily.

Greece especially remains a problem child, but Merkel's visit in October illustrates that Germany will do its utmost to keep these countries within the euro.

Geopolitics also figures. There is no upside for the EU in having Greece become a failed state, bordering Turkey and close to the firestorms surrounding Syria, Israel and Egypt.

So is the euro really at risk? Are Germany and France going to surrender the single most valuable tool for the integration of a Europe that even today carries vivid memories of last century's cataclysmic wars? Not a chance.

The euro development is more likely to be in the opposite direction to the eurosceptics as both Latvia and Poland may join in 2014.

They wish to accelerate their economic integration with the EU as super-insurance against Putin's Russia. In my mind the existential threats to the common currency are vastly overplayed.

In contrast, the British media's view is almost uniformly negative, for example Larry Elliott, economics editor of the Guardian: "Failure of the European Monetary Union is abject. The best thing would be if the euro was smashed."

It is hard go past Martin Wolf's assessment in the Financial Times that UK views its EU membership as part of "a club whose rules it rejects and norms it despises".

There is antipathy towards the euro because it could fail and even more if it succeeds.

Sadly for the many friends of Britain, the current UK kitchen-fight on its membership of the EU appears captured by purveyors of the politics of nostalgia and 19th century memories of splendid isolation.

Fortunately for New Zealand, we seem to have been rather clear-headed in our political and commercial relationships with Germany and the EU.

On a governmental level, we shifted our European regional trade office from London to Hamburg more than 20 years ago.

Our diplomatic relationship with Berlin appears robust and broad-based, enhanced this year with the wildly successful exhibition of New Zealand as Country of Honour at the Frankfurt Bookfair.

On the commercial front, Air NZ code-shares with Lufthansa, our shipping containers carry German names, Siemens technology runs our wind-farms, Heidelberg provides our printing presses, and there are more than one or two teutonic cars on our roads.

There are around 140 German subsidiaries in New Zealand, twice the number from the UK.

Our politicians go to London for the same reason we all do - fun at weddings and anniversaries with the older generation.

But the place to grasp the future of Europe, tap its capital and standard-setting industry has long since gone Deutsch. Let others be nostalgic. Hold euros, sell sterling.

*Steven Diver is a former trade commissioner for New Zealand in Germany and now runs a business advisory firm in Auckland.

- NZ Herald

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