06/15/2012 03:31 pm ET Updated Aug 15, 2012

The European German Crisis

The German story about Europe's crisis is an illusion. Teutonic austerity has not helped to feed those who starve and struggle. Time to reconsider.

Europe has been standing at the edge of the abyss for so long that our memories of how we arrived there are already beginning to fade. Crisis has become a feature of everyday life. Joschka Fischer, the former German foreign secretary, has now published an impassionate appeal in the newspaper Süddeutsche Zeitung. Europe is burning, he writes, and Angela Merkel is trying to extinguish the blaze with kerosene.

Within the German government, the view that austerity has not produced the desired results is gaining new adherents as well. Last week, a group of politicians from the government and the opposition parties convened in Berlin to discuss the European fiscal pact. One thing is clear: Chancellor Merkel must get ready to make concessions.

Yet this is surely no cause for celebration. For years, the crisis merry-go-round has been in motion, sometimes faster, sometimes slower, but never grinding to a halt. In recent days, it has picked up speed again as new states (think Spain) are in danger of losing their balance and threaten the integrity of the whole rotating structure. I am presumably in the same position as most others: Neither do I fully understand what is happening, nor do I believe that those in power have a better grasp of it.

What do we know about international finance, we simpletons?

Thus far, Germany has been able to escape the worst of it. While the fire is burning all around us, we are sitting on a little patch of green grass and still cling to the hope that "German industriousness" will save us, and that a triumph of "Southern laziness" will make us tumble over the edge and into the abyss. But even we have started to smell the smoke from the fire that burns in the distance, and our economic prospects have dimmed significantly.

"But what is wrong with austerity?" we might ask. To us, the need for debt and spending reductions was more than a simple slogan. It was the expression of a fundamental principle of economics: We should only spend money that we have. We look at the debt levels around the world (and at German debt levels, too) and emerge with a severely battered faith: Nobody will be able to repay trillions of dollars of debt. But what do we know about international finance, we simpletons?

It is a tragic twist of history that the German commitment to handle our finances responsibly has resulted in a fatally flawed set of policies. When the first fires began to spark up at the periphery of Europe, we often reacted with a mix of pride and arrogance: "Look at the mess that the Southern states have created for themselves!" We were told that all eyes were on us, the land of Teutonic frugality and economic might, and we eagerly believed it and relished the admiration and attention. Merkel's austerity program would have been impossible without strong domestic support.

Our future is burning

But we easily forgot that the European periphery is a part of the German story. Our green patch is not surrounded by a wide ditch that protects us from the blaze in Greece or Italy or Spain. And even our economic success would have been impossible without the countries that surround us.

Until recently, debates about Europe focused on the challenge of turning the artificial union of nation-states into a coherent and real European community. Then, "rescue" became the order of the day. We turned into surgeons who performed non-stop operations to stop the bleeding and maintain the heartbeat of the eurozone. Nobody bothered to sit down next to the patient and hold his hand as he fought for survival.

The thing that is burning today can also be called by a different name: Our future. Youth unemployment in many countries is more than a sad statistic. It affects precisely the people who are tasked with filling Europe with life for the next generation. Instead, they sit at home, well educated and without work. They studied abroad, learned to speak foreign languages, forged friendships that transcended cultural boundaries. They did not cause this crisis, but their future is consumed by the flames. And when their future disappears, ours withers away as well.

Maybe things would have been different if we had succeeded at telling that story from the beginning. The European story is not about Greeks that enjoy too many vacation days, an early retirement age, and bathe in German money. The story is about solidarity with a future generation that is eagerly looking to work and contribute. It would be good if we buried the illusion that austerity will provide an avenue out of this crisis.

We don't necessarily have to share Joschka Fischer's dark analogy: "It would be tragic and ironic if Germany, reunited, peaceful, and with good intentions in the early 21st century, would cause Europe to perish for a third time." But it is possible that Fischer is right, and that the time has come for Germany to show a bit of sacrifice and accept greater risks. If Chancellor Merkel is now reconsidering her course, this is also an opportunity for the rest of us to embark on a new path -- whatever the costs might be.

Sebastian Pfeffer, The European Magazine