- The “corona bond” debate is a proxy for a more fundamental question: If Europe’s weakest economies emerge from the pandemic even less competitive than they were going in — and burdened by even more debt — what’s the case for them to remain members of the euro? Conversely, can the euro survive without them?
If Germany is the key to resolving the problem, that’s largely because it is the problem. The country’s outsized economic clout has made Berlin Europe’s political fulcrum, a responsibility its leaders are both uncomfortable with and have been unwilling to take on.
Doing so would require them to confront the truth. In Germany’s popular imagination, the euro has been a success because it leveled the playing field in Europe. Countries that have underperformed like Italy and Spain have only themselves to blame. They failed, as Merkel never tired of pointing out during the Greek debt crisis, “to do their homework.” The implication was that Germany had done its homework.
In fact, as the fallout from the coronavirus is making clearer by the day, the odds were stacked in Germany’s favor from the outset.