28 June 2012

Germany at the Centre of Europe

Two world wars were fought in the past century to stop Germany from conquering Europe.

By 1945, Germany was defeated.  The country was split into two — German Democratic Republic (also known as East Germany) and Federal Republic of Germany (also known as West Germany).  German Democratic Republic fell under the dominion of Union of the Soviet Socialist Republics.  A wall was erected between East Berlin and West Berlin to prevent people from the former from crossing over to the latter.

The Berlin Wall fell in November 1989.

German Democratic Republic and Federal Republic of Germany were reunited as Germany in October 1990 and a German national goal was achieved.

It appeared that France consented to German reunification provided Germany gave up the deutschemark in favour of a unified currency.  Germany had to give up monetary sovereignty in exchange for regaining territorial and political sovereignty.

The euro was born on 1 January 2000.

By 2008, the weaker economies in the euro-zone started to wobble.

By June 2012, the writing was on the wall.  Ireland, Greece, Portugal, Italy, Spain and Cyprus had asked for assistance.

German Chancellor Angela Merkel declared that Europe needed not just a currency union.  Europe needed a fiscal union, with more common budget policies.  Above all, Europe needed a political union, which meant that individual European countries need to progressively give up more powers to Europe and allow Europe oversight possibilities.

European Commission President Jose Manuel Barroso called for a big leap forward in European integration that would see euro-zone countries building a banking, political and fiscal union that could include national budgets coming under the control of Brussels.

Germany, as the dominant economy in Europe, will no doubt call the shots.

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