Aida 204 Germany ………


IT is thought only Britain is the spoiler in regard to the European monetary union. But Germany
- at 26%, the biggest contributor to European financing - is also now demonstrating how national interests supersede European interests in times of crisis. Biggest blow to the EMU reaching its target date of January 1999 is that Germany will almost certainly fail to meet the Maastricht criteria required for EMU membership.

There have long since been signs that the country's famed economic miracle was fading. Today it is all too clear that Germany's wirtschaftswunder has become a wirtschaftsworry, a mirage, a fact which by itself could scupper the Maastricht timetable.

Most worrying is unemployment, rising at a staggering rate. Now standing at 4,7 million or 13%, with a surge of 500 000 in January alone, it is today as high as when Adolf Hitler came to power in 1933. That's bad enough, but in the former East Germany the figure is nearly 16%.

Chancellor Helmit Kohl still rigorously enforces the pro-EU, pro-single currency line, repeatedly warning that if the EU does not continue on its course of ever-closer political and economic integration, most particularly the single currency by 1999, then the continent would be "plunged into war once again." He ignores the reality of the world economic downturn: and how German labour, with government concurrence, has priced itself out of the market.

Financial commentators say that "the Kohl vision is in its death throes," with an economy "being destroyed by decades of welfare mentality." Members of Kohl's own party expect to see him gone by September.

At the root of Germany's soaring joblessness is the high cost of employing workers. The extensive unionisation, the overly generous cradle-to-grave social guarantees, the numerous holidays, all add up to more than 50% of labour costs. German labour costs have become the highest on earth, during Kohl's term of office. The cost of jobless support alone makes it unlikely the country would qualify for monetary union under the Maastricht terms. Nearly one in 8 of Germany's working population is on the dole.

All this obviously throws the focus on the country's legions of gastarbeitars, (guest workers) many of whom are now feeling the jitters as political tensions rise amid fears of trouble with jobless Germans. Reunified Germany today plays host to 2 million Turks, and untold thousands of Poles, Yugoslavs, Italians, Greeks, Rumanians, Brits and Irish, usually employed in preference to Germany's own over-priced labour.

The fact that Germany labour costs have risen three times faster than productivity, together with the fact that German industry is taxed at twice the British rate, has encouraged companies to move production abroad. Kohl may be a strong man: but he is no Bismark. Nor does he have Bismark's economy or his army.

1997 was supposed to be the year of German recovery. But this winter proved particularly severe in Germany, leading to heavy lay-offs in industry. Even that problem has been intensified by Government action. The state stopped "bad weather money" for building workers, instead requiring employers to pay 75% of each worker's wages for the first 20 days of any lay-off.

Rather than accept this expense, employers sacked their workers. It is calculated that the state saved UK£260 million in bad weather payments, but had to spend three times that on benefits for building workers sacked as a result of the burden on employers. Between them, companies have dumped millions of workers.

All this, needless to point out, is causing considerable alarm across Europe. A sick Germany is in no one's interest. It's economy accounts for 25% of Europe's GDP, 40% of its manufacturing output and 35% of its exports.

Now a new factor has entered the stage: an open revolt against the EU and particularly EMU is building rapidly among the German population. The Germans are concerned that they will have to pay for the excesses of high-deficit countries such as Italy, even France, if the new single currency is to be stable.

Although Kohl has specifically instructed his officials and political associates not to criticise the EU in any shape or form, such criticism is being expressed more and more at high levels. In several interviews Saxony Economics Minister Kajo Schommer has lashed out against "Euro-dictatorship" which "wants to rule all Europe by decree, but which is not subject to any parliamentary control, is not elected, but merely appointed." He has threatened to launch a full-scale boycott of the EU.

In an interview with Der Spiegel, the State Governor of Saxony, Kurt Biedenkopf, urged that, to introduce a more democratic influence in the EU, the European Parliament should be granted control of the EU Commission. That statement has to be taken seriously because Biedenkopf, a leading figure in Kohl's Christian Democratic Party, has often been named as a potential successor to Kohl.

Further hardening German public opposition to the single currency is growing doubt whether the German government itself could survive the sacrifice of the Deutschmark. The rising economic ferment and dissatisfaction could impact heavily on the outcome of the German Republic's 1998 general election.

The resurgence of "ex" communists in the East, together with the hard left Greens and others, could utterly transform the political orientation of the next government. All of which suggests that the Euro-planners and Kohl have seriously overplayed their hand. It certainly throws the whole Maastricht debate wide open.

Cycad Web Works Thu Jun 1 11:25:16 EDT 2023 : # 1 : last modified 8/4/97
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