Is Germany Finally Ready For A Real European Fiscal Union?

A wind of change is sweeping through Berlin, as Finance Minister Wolfgang Schäuble declares the need for stronger banking cooperation in Europe. Is this the big shift that can save the single currency?

Schäuble ready for the plunge? (WEF)
Schäuble ready for the plunge? (WEF)
Simon Schmid

BERLIN – German Finance Minister Wolfgang Schäuble has declared the need for a "real fiscal union" in Europe. Schäuble said the lack of coordination between currency and financial policies in Europe needs to be addressed before there can be any joint debt management. The idea of a banking union, with a pan-European deposit guarantee and supervisory authority, he said in an interview this week, would be the next step.

The remarks signal a major shift in Berlin in the face of recent news that Spain needs more money but that the markets are de facto closed to it at present interest rates (7% for 10-year bonds). And yet, Spain has to recapitalize its banks, and looks increasingly likely it will need a bailout. Meanwhile, in Brussels, Berlin and Paris don't seem to be giving much thought to what's going to happen in Greece after the elections.

Because Germany imposed such severe austerity measures on Europe, it is feeling less and less loved. Chancellor Angela Merkel has started to let up a little: according to media reports, her government has put a package together that will supposedly inject renewed energy into fledgling Europe. The concept, called Mehr Wachstum für Europa: Beschäftigung – Investitionen – Innovationen (More Growth for Europe: Jobs – Investment – Innovation), includes shoring up the European Investment Bank to the tune of 10 billion euros, state guarantees for private-sector bonds, and funding measures to help reduce unemployment rates among young jobseekers.

Political scientist Wichard Woyke of Germany's Münster University says, however, that all this signals a repeat of a known pattern. Bailout money for Greece was initially rejected in Berlin, for example, and then after some delay "Angela Merkel changed her position." Now she's surrendering on the growth issue, which Germany's European partners are pushing. Werner Weidenfeld, a political scientist at Munich's Ludwig Maximilian University (LMU), also believes that the time has come for more cooperation: "A currency union doesn't work without political union."

According to Weidenfeld, the German government is aware of this – and has been for a long time. But Merkel and Schäuble had been letting the issue lie so as not to break the will to reform in troubled countries. Weidenfeld stresses that "the Germans have kept a positive basic attitude towards Europe," despite discontent about debt-driven economies and bailout funds, as regular polls show. But since March the DAX has been heading south, and that might also be a reason why Schäuble and Co. are turning to more Europe-friendly rhetoric.

Different visions of fiscal unions

As far as Europe is concerned, the German finance minister sees himself as something of a visionary. He is driven by the basic belief that Europe needs a closer political union. Two weeks ago, when he was awarded the Charlemagne Prize -- given to those who have served the European Union's cause -- IMF head Christine Lagarde said: "There is no greater advocate of European integration than Wolfgang Schäuble." The fact remains that since the beginning of the financial crisis hardly anyone has fought harder against financial integration in Europe than Schäuble.

So whether Schäuble's present stand helps the situation remains to be seen. "There are many different ways to accommodate a ‘fiscal union" formula," Europe expert Wichard Woyke points out. And the German finance minister did give some clue as to what he understands by it in Tuesday's interview. He stressed that "high levels of debt cannot be fought with even higher deficits." This is a familiar tune. Translated, it means that for the time being, a status quo should remain. Germany wants long-term growth through structural reforms – and a worsening economic climate due to austerity measures is an uncomfortable but unavoidable side effect that has to be taken into account.

So is what's presently coming out of Berlin just rhetoric? Werner Weidenfeld doesn't think so. "With the fiscal pact, Europe will already be half-way there," he says. Wolfgang Schäuble sees it that way too. The Treaty on Stability, Coordination and Governance in the Economic and Monetary Union, which was signed last December after two months of negotiations, should be incorporated into EU law within five years. By then, according to Weidenfeld, the German government hopes to have paved the way for a functional Europe, which also means signing agreements on issues like banking and fiscal unions.

European ideas on the latter diverge -- to France and Italy "fiscal union" means pan-European revenue sharing, while to Germany it means having more say in national budgets. But one thing is clear: before Europe has anything even close to a fiscal union, there will be more meetings. The next Euro summit is on June 21.

Read the story in German in Tages Anzeiger.

Photo - WEF

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Chinese Students Now Required To Learn To Think Like Xi Jinping

'Xi Jinping Thought' ideas on socialism have been spreading across the country since 2017. But now, Beijing is going one step further by making them part of the curriculum, from the elementary level all the way up to university.

Children from Congtai Elementary School, Handan City, Hebei Province

Maximilian Kalkhof

BEIJING — It's important to strengthen the "determination to listen to and follow the party." Also, teaching materials should "cultivate patriotic feelings." So say the new guidelines issued by the Chinese Ministry of Education.

The goal is to help Chinese students develop more "Marxist beliefs," and for that, the government wants its national curriculum to include "Xi Jinping Thought," the ideas, namely, of China's current leader.

Xi Jinping has been the head of the Chinese Communist Party (CCP) for almost 10 years. In 2017, at a party convention, he presented a doctrine in the most riveting of party prose: "Xi Jinping's ideas of socialism with Chinese characteristics in the new age."

Behind this word jam is a plan to consolidate the power of the nation, the party and Xi himself. In other words, to make China great again!

Communist curriculum replaces global subjects

This doctrine has sent shockwaves through China since 2017. It's been echoed in newspapers, on TV, and screamed from posters and banners hung in many cities. But now, the People's Republic is going one step further: It's bringing "Xi Jinping Thought" into the schools.

Starting in September, the country's 300 million students have had to study the doctrine, from elementary school into university. And in some cities, even that doesn't seem to be enough. Shanghai announced that its students from third to fifth grade would only take final exams in mathematics and Chinese, de facto deleting English as an examination subject. Beijing, in the meantime, announced that it would ban the use of unauthorized foreign textbooks in elementary and middle schools.

But how does a country that enchants its youth with socialist ideology and personality cults rise to become a world power? Isn't giving up English as a global language the quickest way into isolation?

The educational reform comes at a time when Beijing is brutally disciplining many areas of public life, from tech giants to the entertainment industry. It has made it difficult for Chinese technology companies to go public abroad, and some media have reported that a blanket ban on IPOs in the United States is on the cards in the next few years.

photo of books on a book shelf

Books about Xi-Jinping at the 2021 Hong Kong Book Fair

Alex Chan Tsz Yuk/SOPA Images/ZUMA

— Photo:

Targeting pop culture

The regime is also taking massive action against the entertainment industry. Popstar Kris Wu was arrested on charges of rape. Movies and TV series starring actor Zhao Wei have started to disappear from Chinese streaming platforms. The reason is unclear.

What the developments do show is that China is attempting to decouple from the West with increasing insistence. Beijing wants to protect its youth from Western excesses, from celebrity worship, super wealth and moral decline.

A nationalist blogger recently called for a "profound change in the economy, finance, culture and politics," a "revolution" and a "return from the capitalists to the masses." Party media shared the text on their websites. It appears the analysis caused more than a few nods in the party headquarters.

Dictatorships are always afraid of pluralism.

Caspar Welbergen, managing director of the Education Network China, an initiative that aims to intensify school exchanges between Germany and China, says that against this background, the curriculum reform is not surprising.

"The emphasis on 'Xi Jinping Thought' is being used in all areas of society," he says. "It is almost logical that China is now also using it in the education system."

Needless to say, the doctrine doesn't make student exchanges with China any easier.

Dictatorships are always afraid of color, pluralism and independent thinking citizens. And yet, Kristin Kupfer, a Sinology professor at the University of Trier, suggests that ideologically charged school lessons should not be interpreted necessarily as a sign of weakness of the CCP.

From the point of view of a totalitarian regime, she explains, this can also be interpreted as a signal of strength. "It remains to be seen whether the Chinese leadership can implement this so thoroughly," Kupfer adds. "Initial reactions from teachers and parents on social media show that such a widespread attempt to control opinion has raised fears and discontent in the population."

Die Welt
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