Belfast Telegraph

Merkel may realise it's better to bend with the wind than break

By Angela McGowan

Anyone hoping to see fast solutions coming out of last week's EU Growth summit will have been disappointed.

Unfortunately agreeable solutions to the European crisis have not yet been found - if anything, the summit just highlighted the stark differences in economic and social ideologies held by EU leaders.

In particular, the German chancellor's myopic focus on austerity, regardless of its hugely detrimental impact on the quality of life for citizens in other member states, is extremely worrying.

The current dictatorial and unwavering demand by Germany for peripheral countries to commit to a fiscal treaty, regardless of the economic and social costs to some European countries, appears inconsistent with the original aims of creating the European Union.

After the Second World War, greater European integration was seen as desirable for three reasons.

Firstly, as the two world wars had initially started as internal European wars, the need for greater cohesion among European states was obvious.

Second, Europeans wanted a mechanism through which international relationships were developed in a framework of unity.

And finally, the European Community was initially set up in the post-war period as a vehicle to provide economic growth along with stability, low unemployment and equality of opportunity across member states.

Indeed, the concept of a social market economy was acknowledged by the EU constitution as the shared economic system for the European Union.

However, in the last couple of years it has been difficult to find any hint of that original social commitment to the citizens of Europe coming from the German chancellor.

We have seen no empathy from Merkel regarding the social costs that many citizens in peripheral countries have to endure in terms of poor employment opportunities and shrinking public services. How long one European leader can dictate the economic strategy regardless of its social implications, or the views of other democratically elected leaders, remains to be seen.

But there is definitely a hint of rebellion in the air since Francois Hollande came on the scene.

The new French president has been extremely vocal in his call for growth initiatives and has recently added the introduction of euro bonds to his demands.

The pooling of public debt so that peripheral countries could borrow at a cheaper rate in international markets, is gaining support from other EU leaders. However, Mrs Merkel last week made it clear that she is not a supporter of this path. The new French president appears to be rapidly gaining supporters for his ideas.

Perhaps with so much now at stake, Merkel should bear in mind the old proverb "it is better to bend with the wind than to break."

Angela McGowan is an economist at Northern Bank