Angela Merkel and Nicolas Sarkozy must be getting sick of each other’s company. Certainly, the familiar sight of them sharing a joint press conference is starting to breed, if not quite contempt, then acute frustration. For despite their near-constant summiteering, the two leaders seem no closer to accepting the reality of what is happening in the eurozone, or taking the actions necessary to save it.
A recent meeting between the German chancellor and the French president was designed to firm up the details of the “fiscal compact” agreed at the most recent European summit, and to ensure that the two largest states in Europe remain united in their attempt to ram the deal through, against any objections their neighbors might make. Yet as we have argued before, the collective austerity measures that the compact imposes will do nothing to save the euro — they merely guarantee recession.
Instead of addressing this issue, Merkel and Sarkozy prefer to focus on pushing through a tax on financial transactions, as punishment for the irresponsible, deregulated speculators whom they blame for the eurozone’s travails. This might gratify voters in Germany and France ahead of their respective elections, but it is economically illiterate. Such a tax would devastate Europe’s financial services industry, while raising only a fraction of the total that will be needed to rescue the euro. What Europe needs is fewer summits, and more clear thinking.
The Telegraph, London