There was a time when even the merest hint of a breakup of the Eurozone was considered a taboo topic in Europe. Who can forget Mario Draghi’s response to a question from Zero Hedge readers who wondered if there is a “plan in place if a nation is forced to step out of the Eurozone” to which Draghi’s response was that “if the Euro breaks down, and if a country leaves the Euro, it’s not like a sliding door. It’s a very important thing. It’s a project in the European Union. That’s why you have a very hard time asking people like me “what would happened if.” No Plan B.”
In short: to demonstrate just how “cohesive” Europe was, even the mere possibility of a break-up was unthinkable, i.e., “no plan B“.
Fast forward three years later, when things in Europe have changed dramatically, and unfortunately for the worse as many warned, because as Reuters reports citing Germany’s second in command, Vice Chancellor Sigmar Gabriel, “a break up of the Eurozone is no longer unthinkable.”
In an interview with Der Spiegel, Gabriel said that “Germany’s insistence on austerity in the euro zone has left Europe more divided than ever and a break-up of the European Union is no longer inconceivable.” Gabriel, whose Social Democrats (SPD) are junior partner to Chancellor Angela Merkel’s conservatives in her ruling grand coalition, said strenuous efforts by countries like France and Italy to reduce their fiscal deficits came with political risks.
In an attempt to once again politicize the touchy, for German, topic of excessive spending and debt-issuance, Gabriel said that “I once asked the chancellor, what would be more costly for Germany: for France to be allowed to have half a percentage point more deficit, or for Marine Le Pen to become president?” he said, referring to the leader of the far-right National Front.
“Until today, she still owes me an answer,” added Gabriel, whose SPD favors a greater focus on investment while Merkel’s conservatives put more emphasis on fiscal discipline as a foundation for economic prosperity.
The ideological divergence will lead to a political showdown in nine months: the SPD is expected to choose Gabriel, their long-standing chairman who is also economy minister, to run against Merkel for chancellor in September’s federal election, according to Reuters.
On the other hand, he himself admits that running on a platform of excessive spending may not be the smartest thing in Germany asked if he really believed he could win more votes by transferring more German money to other EU countries, Gabriel replied: “I know that this discussion is extremely unpopular.”
“But I also know about the state of the EU. It is no longer unthinkable that it breaks apart,” he said in the interview, published on Saturday. “Should that happen, our children and grandchildren would curse us,” he added. “Because Germany is the biggest beneficiary of the European community – economically and politically.”
His last comment is spot on, which then begs the question: why do other, non-German countries, and especially Greece which has gone through 7 years of depression hell just to stay in the Euro, demand so vociferously to remain in a “community” in which the biggest beneficiary is Germany, as its vice chancellor himself now admits.
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