Shock and awe at the position of one of the two heads of the Institute for International Economics (IfW), an influential and highly respected institution in Germany. This is because it brings back an issue that seemed to have been put on the shelf for good: The country's withdrawal from the eurozone.
The new government must make it clear to its European partners that "the euro is not irreplaceable for Germany, which has other options," Stephan Koeths told Handelsblatt. He also harshly attacked the over-indebted and at the same time undisciplined member states, and criticized the government of Olaf Scholz for lack of determination and excessive laxity.
The necessary... bogeyman
And although Cotes then tried to soften the initial impression by claiming that "we ought to refer to certain options so as to make them less likely", he clearly sent the message he wanted, to specific recipients. In practice, he presented the scenario of a Germanexit as a... bogeyman for the others, stressing that without Germany they will not be able to cope and the euro will not survive - therefore, therefore, they have to do what he tells them.
"When the indebted countries know that a state like Germany is not willing to ensure that the central bank is constantly playing the role of the one who cleans up the mess, then they will be forced to discipline themselves from a fiscal point of view," he says, among other things.
"Loose" in the eurozone
He refers to an explosive mix that has been created in Europe, consisting of the demographic problem, the effort to decarbonise and move to a green economy and, of course, high public debt. He claims that no one is respecting the existing rules on debt.
"If confidence in the eurozone central bank is eroded because of the existence of more and more indebted countries, then it will be too late," he says. He adds that "without fiscal stability, monetary policy will always be forced to do things it should not do, based on monetary stability" - practically lambasting support programmes, low interest rates and "laxity" in the eurozone.
ECB and the Stability Pact
He also calls on the German government not to "hide" behind the ECB's independence and to use all its influence to tackle the major problems of debt and inflation.
Although it is clear that the positions of the various institutes are not binding on Scholz and Christian Lindner, the new finance minister, they reveal the contradictions that exist in Berlin. And at the same time, the difficulties that will be encountered in the attempt to reform the Stability and Growth Pact.
Besides, one does not need to know everything to understand that what Cotes - and those who support him - says is in direct opposition to the proposal of the Commissioner for Economic Affairs, Paolo Gentiloni, but also to the positions jointly supported by Paris and Rome.
Source: ot.gr
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