Magazine article The Spectator

Herr Kohl Is in Trouble-Good News for Messrs Clarke, Blair and Brown

Magazine article The Spectator

Herr Kohl Is in Trouble-Good News for Messrs Clarke, Blair and Brown

Article excerpt

Chancellor Kohl has been compared to Alberich, the malevolent dwarf who steals the Rhinemaidens' gold at the beginning of the Ring cycle; for Rheingold, read Bundesbank gold. But this is unfair, morally and physically. Herr Kohl is much more like Fafner and Fasolt, the giants who demand the gold due to them for building Valhalla. Though they eventually extort it from an unwilling Wotan, this leads to their destruction - and to almost everyone else's.

Herr Kohl's mistakes were not economic but political. He was proposing neither embezzlement nor the abandonment of fiscal and monetary restraint. There was nothing wrong with using the gold profits to reduce Germany's indebtedness, but the idea would have had to be sold to the German people and, above all, to the Bundesbank itself. As it is, by the abrupt manner of his announcement, the Chancellor sounded like the shifty chairman of a troubled firm who had suddenly discovered some wheeze that enabled him to declare record profits. The Germans do not believe in wheezy national finance, and though Herr Kohl has now executed a deft retreat worthy of Loge, there will be lasting damage to his political standing, which had already been undermined by Germany's economic problems.

Great historical forces often appear at their strongest when, in reality, they are well past their meridian and incapable of resisting the dagger-thrusts of change; the Spanish empire, the British empire and the British trade union movement are obvious examples. But it would be premature to conclude from Herr Kohl's embarrassments that the project for European monetary union leading onwards to political union is another such.

There are problems. Now that the French have changed government, while the Germans, deservedly or not, have forfeited much of their moral authority, it is impossible to believe that a hard Eurocurrency will come into existence on 1 January 1999. M. Jospin will no doubt reiterate his enthusiasm for the euro. He does not want a breach with Germany, which would be the end of the great illusion of post-war French diplomacy that Europe means a French jockey on a German horse. But the new French Premier has no intention of pushing ahead with the supply-side reforms and fiscal tightening that would be necessary if France were to meet the Maastricht criteria. On the contrary: we can expect much less talk of stability packages and a lot more about growth packages. There will be Franco-Italian deals; those will be shameless wheezes. It will be very difficult now for the Germans to keep the Italians or the Spanish out, or to impose discipline on the French.

This will create problems for Chancellor Kohl. The French always assume that, like their own president, the German chancellor has quasi-dictatorial powers over foreign policy, and Herr Kohl's manner tends to confirm that impression. But it is not true; he faces considerable obstacles.

Chancellor Kohl has never been in the habit of deferring to German public opinion. If I had done so in the early Eighties, he will say, I would not have deployed Cruise and Pershing; the Wall might still be standing. But his position is not impregnable in the Bundestag, and much weaker in the Bundesrat (senate). Then there is the Bundesbank, the keeper of the national monetary conscience. There is a parallel with the Tory party, which reacted with such hostility to Maastricht because it had allowed itself to be bulldozed into the Single Act. Some senior Bundesbank figures still regret their defeat over parity for the ostmark; this strengthens their resolve to defend the deutschmark, or at least to ensure that any euro will be a hard currency. …

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