How to ensure a sustainable eurozone? The German inspired response to the Euro crisis re-examined

The response to the crisis in the European Monetary Union (EMU) was arguably largely dominated by the “reluctant hegemon” (W.E.Paterson) Germany. Were the emergency measures and “rules-of-the-game”-changes foremost driven by value-based (W.Schäuble) ideas or rather too pragmatist, as particularly many German experts contend, or foremost interest-driven, as is often assumed outside of Germany? A comparison of various assessments of progress towards a more sustainable eurozone by leading German institutions, international institutions and the European Commission with the actual measures adopted after five years of the crisis demonstrates some progress but also ongoing conflicts. While in Germany a consensus has developed among the leading advisory councils as well as institutions which states that national control over fiscal policy must not be combined with mutualisation of sovereign debt. Furthermore, an important focus is that foremost structural causes of the crisis need to be further foremost addressed. At the same time the European Commission as well as countries such as Italy ask for more leeway to reflate their economies. The open questions that the paper will address include whether we currently see – as a result especially of the refugee crisis – the “end of German hegemony” (Daniel Gros) and the inevitable acceptance of a “more Latin EMU” (Lüder Gerken) as the leverage of some debtor nations has increased as a result of chancellor Merkel’s decision to give up the Dublin agreement for humanitarian reasons. The open question to be discussed is whether this will de-stabilise or stabilise E(M)U in the medium to longer-tern. Obviously, the Brexit-debate on a potential exit of the UK from the EU may also be contagious, on the one hand, or may contribute, in contrast to pessimistic views, help to strengthen again ideas of more “subsidiarity” rather than “ever closer union”.