The Eurozone faced competition among actors regarding who can explain the reasons concerning the crises and the means to resolve the challenges facing the Euro (Apak, & Atay 2012). Germany is always suffering due to its economy strength and Chancellor Angela Merkel’s ability to negotiate the response to the crisis (EuroApak, & Atay 2012). According to EuroApak, & Atay (2012), Merkel worked to promote the budgetary rigor and austerity, hence portrays the overwhelming national debt as the cause of the crisis. Merkel also disputes the structural weaknesses or imbalances in the Euro area as a cause of the crisis as asserted by Feldstein (2010). Her aim is to dominate the narrative of the Eurozone crisis to discourage any policy alternatives, which are likely to impact on Germany (Feldstein 2010). She has a longer service as compared to her colleagues as a German chancellor, added some weight to her voice despite some of the inconsistencies. The handling of her Eurozone crisis influenced her success in the September 2013 elections as Feldstein (2010) observes. In this essay, the main items will be the analysis of the aftermath of the Eurozone crisis and why Germany does not intend to abandon the Euro and reintroduce the Deutschmark.

Why Germany cannot abandon the Euro and Reintroduced the Deutsche Mark

There are difficulties in presenting a strategic narrative that can offer a resolution to the crisis that Eurozone members can accept. The issues are

Strategic Narratives and the Eurozone Crisis

Crises are social constructions forged by the government officials while producing and reproducing the state identity (Feldstein 2010). The German narrative seeks to between reinforcing its pro-integrationists credentials and their wish to influence the EU’s response according to the preferences and approaches of Berlin (Angelopoulou Balfoussia & Gibson 2014). The EU member states cannot agree on a uniform explanation and a viable solution that will overcome the Euros problems (Feldstein 2010). Communication is vital to understanding the Euro crisis, in which the narrative analysis of public policy emphasizes the processes of identifying the nature of the problem, outlining a solution, and indicating the outcome (Feldstein 2010). The Euro crisis reinforced the interconnectivity of European economies, leading to greater public awareness of the impact of European issues on national policies (Fratzscher 2015). For example, in the Eurozone crisis, narratives legitimate policy responses reinforce domestic and international support and challenge the counter-narratives as Fratzscher (2015). Narratives are strategic anthems to the future of the state in which the German government engages in influencing domestic and international opinion of the merits of their approach to the crisis (Fratzscher 2015). The German actors employ and deploy narratives to shape the expectations of the third parties in Germany, but are unable to impose its powerful economic actors in the EU, despite Germany’s powerful economic actors in the EU. Demands from France and the US for Germany to contribute more to the Euro “bazooka” to defend the currency from the market placed Merkel in an intense pressure (Fratzscher 2015). Merkel’s narrative seeks to minimize Germany’s exposure and explain inevitable compromises emanating from negotiations of the narrative sought to minimize Germany’s exposure.

Germany’s Narratives of the European Union

There are three stages of the narrative of Germany’s European vocation. After the World War II stage, European integration offered the Federal Republic an opportunity to reinvent itself as peaceful, stable, and democratic Partners in Western Europe (Fratzscher 2015). The second stage, under Chancellor Helmut Schmidt (1974-1982) and intensified under the chancellorship of Helmut Kohl (1982-1998), there were closer political cooperation within the emerging European Union (Fratzscher 2015). Chancellor Kohl’s phrase that German and European unification were “two sides of the same coin”, is one illustration of a strategic narrative that tied the fate of Europe to Germany and vice versa, as a means to reintegrate West Germany and the unified Germany into a peaceful and stable continent (Angelopoulou, Balfoussia & Gibson 2014). Any disruption of this relatively stable EU narrative creates uncertainty, and if protracted can call into question the fundamental assumptions underpinning a narrative, resulting in uncertainty. Germany’s pro-EU integrationist narrative has been decisive in the development of Economic and Monetary Union (EMU), but raises questions now in the heat of the Eurozone crisis (Angelopoulou, Balfoussia & Gibson 2014). Yet, as economic and political integration have progressed, particularly since the Treaty on European Union (TEU) in 1993, we have witnessed a greater challenge to presenting a coherent strategic narrative as asserted by Angelopoulou, Balfoussia and Gibson (2014).

In the context of the economic difficulties, Germany experienced during the late 1990s and early 2000s and a generational change in the political leadership, Germany’s European policy has become more contingent as Angelopoulou, Balfoussia, and Gibson (2014) observe. By contrast, Germany has moved center stage due to its strong economy and membership of the single currency, but displays a more Contingent, approach to further integration. European integration, coupled with the burden of unification and the emergence of international pressures, have affected Germany’s relationship with the EU, leading to greater German efforts to shape the EU to German preferences as observed by Angelopoulou, Balfoussia & Gibson (2014). .

The CDU/CSU–FDP Coalition’s Strategic Narrative of the Eurozone Crisis

The analysis of the Merkel government’s Eurozone crisis narrative shows the shaping of their narrative by historical memory (Bulmer & Paterson 2011). This narrative had its roots in (West) Germany’s postwar guilt and epitomized in a speech in which Angela Merkel urged the Bundestag to ratify the first bailout package for Greece in May 2010 as Bulmer & Paterson (2011) notes. The happy history of Germany after World War II, the development of a free, unified, and strong country, is inseparable from European history (Bulmer & Paterson 2011). Foreign Minister Westerwelle picked up the notion of the EU as a peace-promoting “union of destiny” two days later when he addressed the (Bundestag & Paterson 2011). Here the political leaders follow the narrative of German postwar governments by stressing the EU’s merits as a promoter of peace and prosperity. German government’s effort to link the Euro to political stability, peace, and prosperity, rested on shoring up Germany’s contribution to the bailout package, rather than a clear commitment to maintaining Greece’s membership of the Euro (Bulmer & Paterson 2011). Another leitmotif in the German government’s Euro crisis narrative is the idea that the fates of the Euro and the European Union have a link as Camisão (2015) observes.

This narrative was continued and even strengthened when a year later Chancellor Merkel was under immense international pressure to act (Fratzscher 2015). Merkel’s linking the fate of the Euro with the future of European integration is not surprising because, alongside France, Germany was the architect of the Euro, and as the EU’s number one exporter (Camisão 2015). The country’s economy has benefitted by using the common exchange currency in the single market (Camisão 2015). The government, therefore, has a keen interest in keeping the Euro and expresses this repeatedly (Camisão 2015). Merkel faced a major challenge to communicate a “keeping the Euro at all cost” story that would satisfy both German and international opinion (Camisão 2015). Germany received an enormous amount of public funding to get the economy going. The Eurozone’s cohesion and the success of its necessary structural reforms and thus its very survival now depend on whether it can overcome its growth deficit (Adams, Heirbaut & Hoecke n.d). Modern Europe has an economic and political resilience, as well as bedrock of wealth that was simply not there in the 1930s (Adams, Heirbaut & Hoecke n.d).

Germany gets some benefits by using the Euro

Politicians and business people argue that the euro is beneficial to the economy of Germany and its citizens. In this case, Germany should try to rescue the currency and collaborate with the other countries, and not go back to the D-Mark (Cohen & Loisel 2001). Germany used to save with all its assets with European Monetary Union, meaning the currency is not very weak for the economy (Cohen & Loisel 2001). The numerous billionaires in Germany helped to finance the economy of Germany through exports of capital leading to the growth of the economy (De Grauwe Ji 2013).

The value for the D-Mark is weaker than the euroThe Euro

According to some politicians, the D-mark seems weaker than the euro considering the high inflation in the older days the way it is now (De Grauwe Ji 2013). Before Germany introduced the euro into its economy, there was a rise in prices of commodities by about 3.3% annually. Inflation reports of 1999 and 2011 showed that the rise in prices was about 1.7% showing a decrease in inflation (De Grauwe & Ji 2013). German Central Bank tries to stabilize the euro currency through its monetary policies and regulation of export and import countries, such as The Sweden, Switzerland, and Denmark, experienced inflation for a long time, which is higher than that of EMU, therefore the euro should remain (De Grauwe & Ji 2013).

The high budget deficits by member countries are the main cause o the euro crises and not the uniform currency used by various member countries (European Economic Association Institutional Members 2005). According to (Feldstein 2010) in the economy, the cheap money triggered a credit-financed economic boom. In the year 2007, there was a lot of borrowing by the banks to finance the construction of houses, in which many borrowers did not pay the banks (Feldstein 2010). The countries, which had high debts, were Spain and Ireland and some of the financial institutions had to chip in and provide some funding to investors as Feldstein (2010) asserts. The debts contributed to the financial crises making it very difficult for many citizens to survive the hard economic times (Feldstein 2010).

The euro is not the problem: the banks are

The politicians blamed the speculators and the banks for the euro crises arguing that as financial institutions and money dealers, they were responsible for the current difficulties with the euro (Feldstein 2010). However, the arguments do not address the problem but hide the actual causes of the euro crises in Germany. The politicians and the media reports do not identify the challenges facing the currency, which makes things difficult for the economy (Feldstein 2010). The groups say that the banks and the financial institutions failed in their confections of lending money and concentrated on transactions that are speculative and cannot assist the economy (Feldstein 2010). According to some findings, Germany debts were high before the beginning of the 2007 US subprime crises, and in Greece where the deficit was about 70% (German Government Statement 2010). Other countries like Portugal the deficit was as high as 88%, indicating that the claim that speculators were to blame was false (German Government Statement 2010). The financial policies of the government are the main causes of the rising bond yields, as investors distrust the government’s ability to control their economy (Jessop 2014). The other blame by the speculators is the countries with huge debts are to blame for not controlling their budgets leading to the crises (Jessop 2014). The sanction rating agencies are also to blame, as they tend to manipulate the European market by purchasing of government bonds (Stracca 2015). Some causes of the crisis are the increased savings for making investments especially between 2000 and 2007, when several people invested in housing and commercial properties (Stracca 2015). Some people believe that some of the countries like the UK and the US are attacking the euro so that they will have funds for their internal investments (Stracca 2015). According to Stracca (2015), some politicians argue that the public sector was corrupt, and there was the need to save the country from bankruptcy. The biggest blame for the crisis is the speculators according to the German Chancellor Merkel, who argued that the some institutions’ interest is to exploit the budget crises (Bengoetxea 2014). Some economists, such as the Martin Feldstein of the US termed the Euro as a failed experiment and advocated the banning of the Eurozone (Bengoetxea 2014). Some leaders advised Germany to abandon the Eurozone for D-Mark to salvage its currency by depreciating it as (Bengoetxea 2014) argues.

The fear of Europe failure, if the euro fails

Proponents of the single European currency often argue that a breakup of the euro would also terminate the reconciliation process in Europe (Bengoetxea 2014) According to Bengoetxea (2014), the statement “If the euro fails, then Europe fails” indicates that Europe values its currency so much, and nothing can make the government change its mind on changing to D-Mark (Bengoetxea 2014). There is a strong belief that the euro will be the savior of the European Union into a super state and not the D-Mark currency.

According to Bengoetxea (2014), for a common currency to work, there must be good economic integration and better political ties with the countries planning to use a common currency (Bengoetxea 2014). Germany has the option of adopting D-Mark of change to another valuable currency union, but its reluctant and defends the Euro (Fratzscher 2015). If some nations break away from the common currency, insolvency will occur in several eurozone countries, which is a disturbance to the politicians and the media. Germany is not going to allow the eurozone to break up as proclaimed by Chancellor Merkel (Fratzscher 2015).

High cost of introducing D-Mark in Germany

Changing from the euro to the D-Mark might cost Germany a staggering figure of about 719 billion Euros, which is more costly than maintaining the euro (Bengoetxea 2014). The government feels that instead of introducing the D-Mark currency, which is more costly, it is better to have the euro as the main currency (Fratzscher 2015).according to Fratzscher (2015), the taxpayers will suffer if Germany changes to the D-Mark due to the currency conversion costs. The World Bank will also face challenges, as it will have to offset some of the costs to rescue the taxpayers from the impact of the changes as Feldstein (2010) notes. The German Central Bank will also lose a lot of money in the European Central Bank if there is the change in the unit of exchange (Fratzscher 2015). Withdrawal of the Germany from the Euro will be more expensive than sticking to using the euro as their exchange currency as Fratzscher (2015) argues. Long-term structural changes are necessary to save the Euro, such as more integration of the European Union by other economies and transform the EU financial stability fund to a European Treasury (Feldstein 2010). Leaving the eurozone by countries does not solve the crises but worsens it, as Germany politicians strongly believe (Feldstein 2010). The commentators and politicians believe that there was manipulation of statistical figures concerning the eurozone crises as asserted by Feldstein (2010). Some of the politicians suggest internal currency devaluation instead of completely abandoning the euro (Fratzscher 2015). The country can do this by cutting down the wages and prices of goods to prevent inflation, which in turn regulate the amount of currency in circulation (Fratzscher 2015). Fiscal devaluation can also help in increase the competitiveness of an economy by lowering the corporate tax and offsetting the government revenues (Fratzscher 2015). Germany increased its value added tax VAT by 3% as one of the measures to address the euro crises and avoid adopting the D-Mark currency (Fratzscher 2015).

Conclusion

The Eurozone faced competition among actors regarding who can explain the reasons behind the emergence of the crises and the best way to resolve the challenges facing the Euro (Feldstein 2010). Germany is always on the centre stage in the Euro-zone crisis due to its economy strength and Chancellor Angela Merkel’s ability to negotiate the response to the crisis (Feldstein 2010). Representatives from politics and business always emphasize that the Euro has supposedly great economic importance for Germany (Feldstein 2010). According to the constantly updated calculations of the Munich Ifo Institute, the liability risk of Ger-many from the euro rescue, currently amounts to 719 billion Euro (as of 01/02/2013) (Feldstein 2010). To cause distraction of attention from the actual causes of the failure of the euro project, the politicians, media, and the scientists blame banks and speculators for the current crisis (Fratzscher 2015). However, researchers have a big role to play in finding out the challenges and the facts about the Eurozone crises. Their findings will be important for the Germany’s economy, the EU, and other countries of the world.

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