Madsen Pirie

Oskar Lafontaine, despite his French-sounding name, was the German finance minister who launched the euro 14 years ago.  Now he has publicly called for the currency to be dismantled to avoid a political catastrophe.  The occasion was a deal by the EU to give France and Spain an extra 2 years to meet a deficit target of 3 percent of GDP.  This has been hailed by the French finance minister Pierre Moscovici as the end of the policy of austerity and the triumph of the French approach over the German one.  Indeed, from the opposite side of that divide, German Vice-Chancellor Philipp Rösler has attacked that decision by the European Commission, thinking it “irresponsible” to make concessions to the austerity programme.

Lafontaine fears the backlash from Spain, Portugal and Greece against what they regard as German hegemony, and warns that political disunity will follow unless the euro is dismantled, allowing countries to deal with their debts without having misery forced onto their populations.  He thinks the anti-German feeling and rhetoric which is already evident in the Southern countries will increase yet further, to the detriment of harmonious relations within the EU.  He warns of an impending crisis to come, bigger than any yet seen.

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