Germany is fast approaching decision day. It has two choices: to forge a new European transfer union with inexorable fiscal shifts from northern Europe to the south; or to allow some countries to leave the eurozone, to devalue, and possibly default. Both options are the political equivalent of jumping off a cliff for Chancellor Angela Merkel.
However, the current policy of short-term bail-outs and inadequate firewalls, coupled with crippling austerity, will not work. For decades, the foundations of the Greek economy have been sliding into the abyss. The building cannot be repaired with a lick of paint. German policy is greatly misguided if it believes it can turn Greeks into Germans overnight.
It is becoming increasingly clear that the European Commission, and the International Monetary Fund (IMF), want Germany to take the first option and put its money where its mouth is. But it is also increasingly clear that German taxpayers are not prepared to prop up countries that have failed to undertake the structural reforms that have seen German industry remain competitive. I have a great deal of sympathy for them.
For more: Germany must make its choice | European Voice
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