[Today’s German elections mark the effective end of Angela
Merkel’s 16-year rule. Yanis Varoufakis writes for Jacobin about how
she became Europe’s most dominant peacetime leader — at the
expense of Europe itself.] [[link removed]]

ANGELA MERKEL WAS BAD FOR EUROPE AND THE WORLD  
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Yanis Varoufakis
September 26, 2021
Jacobin
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_ Today’s German elections mark the effective end of Angela
Merkel’s 16-year rule. Yanis Varoufakis writes for Jacobin about how
she became Europe’s most dominant peacetime leader — at the
expense of Europe itself. _

Angela Merkel's long tenure as German chancellor comes to an end as
federal elections take place in Germany, JOHN MACDOUGALL/AFP via Getty
Images

 

Angela Merkel’s tenure will be remembered as Germany’s, and
Europe’s, cruelest paradox. On the one hand, she dominated the
continent’s politics like no other peacetime leader — and is
leaving the German chancellery considerably more powerful than she had
found it. But the way she built up this power condemned Germany to
secular decline and the European Union to stagnation.

Wealth-Fueled Decline

There is no doubt that Germany is today stronger politically and
economically than it was when Merkel became chancellor back in 2005.
However, the very reasons Germany is stronger are the same reasons why
her decline is assured within a stagnating Europe.

Germany’s power is the result of three massive surpluses: its trade
surplus, the structural surplus of its federal government, and the
inflows of other people’s money into the Frankfurt banks, as a
result of the slow-burning, never-ending euro crisis.

While Germany is swimming in cash, courtesy of these three surpluses,
this cash is mostly wasted. Instead of being pumped into the
infrastructure of the future, public or private, it is either exported
(e.g., invested abroad) or used to buy unproductive assets within
Germany (e.g., Berlin apartments or Siemens shares).

Why can’t German companies, or the federal government, invest these
rivers of money productively within Germany? Because — and here lies
part of the cruel paradox — the reason these surpluses exist is that
they are not invested! Put differently, under Mrs Merkel’s reign,
Germany made a Faustian bargain: by restricting investments, it
acquired surpluses from the rest of Europe, and the world, that it
could then not invest without forfeiting its future capacity to
extract more surpluses.

Looking deeper into their origin, the massive surpluses that empowered
Germany under Mrs Merkel are the result of forcing German and, later,
European taxpayers to bail out Frankfurt’s inane bankers on
condition of engineering a humanitarian crisis in Europe’s periphery
(Greece in particular) — a means by which Merkel’s government
imposed unprecedented austerity upon both German and non-German
workers (disproportionately, of course).

In short, low domestic investment, universal austerity, and turning
proud European peoples against each other were the means by which
successive Merkel governments transferred wealth and power to the
German oligarchy. Alas, these means also led to a divided Germany that
is now missing out on the next industrial revolution within a
fragmenting European Union.

Three episodes offer insights into how Merkel exercised her power
across Europe to build up, step by step, the cruel paradox that will
be her legacy.

Episode 1: Pan-European Socialism for Germany’s Bankers

In 2008, as banks on Wall Street and in the City of London crumbled,
Angela Merkel was still fostering her image as the tightfisted,
financially prudent Iron Chancellor. Pointing a moralizing finger at
the Anglosphere’s profligate bankers, she made headlines in a speech
in Stuttgart where she suggested that America’s bankers should have
consulted a Swabian housewife, who would have taught them a thing or
two about managing their finances. Imagine her horror when, shortly
afterwards, she received a barrage of anxious phone calls from her
finance ministry, her central bank, and her own economic advisers, all
of them conveying an unfathomable message: Chancellor, our banks are
bust too! To keep the ATMs going, we need an injection of €406
billion of those Swabian housewives’ money — by yesterday!

It was _the_ definition of political poison. As world capitalism was
having its spasm, Merkel and Peer Steinbrück, her Social Democrat
finance minister, were ushering in austerity for the German working
class, advocating the standard, self-defeating mantra of
belt-tightening in the middle of an almighty recession. How could she
now appear in front of her own members of parliament — whom she had
for years lectured on the virtues of penny-pinching when it came to
hospitals, schools, infrastructure, social security, and the
environment — to implore them to write such a colossal check to
bankers who until seconds before had been swimming in rivers of cash?
Necessity being the mother of enforced humbleness, Chancellor Merkel
took a deep breath, entered the splendid Norman Foster–designed
federal Bundestag, conveyed the bad news to her dumbfounded
parliamentarians, and left with the requested check.

At least it’s done, she must have thought. Except that it wasn’t.
A few months later another barrage of phone calls demanded a similar
number of billions for the same banks. Why? The Greek government was
about to go bust. If it did, the €102 billion it owed German banks
would disappear and, soon after, the governments of Italy, Greece, and
Ireland would probably default on around half a trillion euros worth
of loans to German banks. Between them, the leaders of France and
Germany had a stake of around €1 trillion in not allowing the Greek
government to tell the truth; that is, to confess to its bankruptcy.

That’s when Angela Merkel’s team came into their own, finding a
way to bail out Germany’s bankers a second time without telling the
Bundestag that this was what they were doing: They would portray the
second bailout of their banks as an act of solidarity with Europe’s
grasshoppers, the people of Greece. And make other Europeans, even the
much poorer Slovaks and Portuguese, pay for a loan that would go
momentarily into the coffers of the Greek government before ending up
with the German and the French bankers.

Unaware of the fact that they were actually paying for the mistakes of
French and German bankers, the Slovaks and the Finns, like the Germans
and the French, believed they were having to shoulder another
country’s debts. Thus, in the name of solidarity with the
insufferable Greeks, Mrs Merkel had planted the seeds of loathing
between proud peoples.

Episode 2: Pan-European Austerity

When Lehman Brothers went bust in September 2008, its last CEO begged
the US government for a gigantic credit line to keep his bank afloat.
Suppose that, in response, the US president had replied: “No bailout
and, also, I am not allowing you to file for bankruptcy!” It would
be utterly absurd. And yet that was precisely what Angela Merkel told
the Greek prime minister in January 2010 when he desperately begged
for help to avoid declaring the Greek state bankrupt. It was like
telling a falling person: I am not going to catch you, but you are not
allowed to hit the floor either.

What was the point of such an absurd double _nein_? Given that Merkel
was always going to insist that Greece take the largest loan in
history — as part of the hidden second bailout of the German banks
(see above) — the most plausible explanation is also the saddest:
Her double _nein_, which lasted a few months, succeeded in infusing
such desperation in the Greek prime minister that, eventually, he
agreed to the most crushing austerity program in history. Two birds
were thus killed with one bailout: Merkel surreptitiously bailed out
the German banks for a second time. And universal austerity began to
spread out across the continent, like a bushfire that began in Greece
before spreading everywhere, including in France and Germany.

Episode 3: To the Bitter End

The pandemic offered Angela Merkel a final chance to bring Germany and
Europe together.

Great new public debt was inevitable, even in Germany, as governments
sought to replace incomes lost during the lockdown. If there was ever
a moment for a break with the past, this was it. The moment was crying
out for German surpluses to be invested across a Europe that,
simultaneously, democratizes its decision-making processes. But Angela
Merkel’s final act was to ensure that this moment would be missed,
too.

In March 2020, in a fit of harmonized panicking following our EU-wide
lockdowns, thirteen heads of EU governments, including France’s
president, Emmanuel Macron, demanded from the EU the issue of common
debt (a so-called eurobond) that would help shift burgeoning national
debt from the weak shoulders of member states to the EU as a whole, so
as to avert massive Greek-style austerity in the post-pandemic years.
Chancellor Merkel, unsurprisingly, said _nein_ and offered them a
consolation prize in the form of a recovery fund that does precisely
nothing to help shoulder the rising national public debts — or to
help press German accumulated surpluses into the long-term interests
of German society.

In typical Merkel style, the recovery fund’s purpose was to _seem_
to do the minimum necessary of that which is in the interests of a
majority of Europeans (including a majority of Germans) — without
actually doing it! Mrs Merkel’s final act of sabotage had two
dimensions.

First, the recovery fund’s size is, intentionally, macroeconomically
insignificant; that is, too small to defend the EU’s weakest people
and communities from the austerity that will eventually come once
Berlin gives the green light for “fiscal consolidation” in order
to rein in the burgeoning national debts.

Second, the recovery fund will, in reality, transfer wealth from the
poorer Northerners (e.g., the German and Dutch) to Southern Europe’s
oligarchs (e.g., Greek and Italian contractors) or to German
corporations running the South’s public utilities (e.g., Fraport,
which now runs Greece’s airports). Nothing could more efficiently
guarantee the further toxification of Europe’s class war and
North-South divide than Mrs Merkel’s recovery fund — the final act
of sabotaging European economic and political unity.

A Concluding Lament

She casually engineered a humanitarian crisis in my country to
camouflage the bailout of quasi-criminal German bankers, while turning
proud European nations against one another.

She intentionally sabotaged every opportunity to bring Europeans
together.

She skillfully connived to undermine any genuine green transition in
Germany or across Europe.

She worked tirelessly to emasculate democracy and to prevent the
democratization of a hopelessly antidemocratic Europe.

And yet watching the pack of faceless, banal politicians jostling to
replace her, I very much fear that I shall miss Angela Merkel. Even if
my assessment of her tenure remains analytically the same, I suspect
that, before too long, I shall be thinking of her tenure more fondly.

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