by Ambrose Evans-Pritchard
International Business Editor
05 May 2013
the German finance minister who launched the
has called for a break-up of the single currency
to let southern Europe recover,
warning that the current course is
"leading to disaster".
Mr Lafontaine said on the
parliamentary website of Germany's Left Party
that Chancellor Angela Merkel
will "awake from her self-righteous slumber"
once the countries in trouble
unite to force a change
in crisis policy at Germany's
"The economic situation is worsening from
month to month, and unemployment has reached a level that puts
democratic structures ever more in doubt," he said.
"The Germans have not yet realized that southern Europe, including
France, will be forced by their current misery to fight back against
German hegemony sooner or later," he said, blaming much of the crisis on
Germany's wage squeeze to gain export share.
Oskar Lafontaine said on the parliamentary
website of Germany's Left Party that Chancellor Angela Merkel will
"awake from her self-righteous slumber" once the countries in trouble unite
to force a change in crisis policy at Germany's expense.
His prediction appeared confirmed as French finance minister Pierre
Moscovici yesterday proclaimed the end of austerity and a triumph of
French policy, risking further damage to the tattered relations between
Paris and Berlin.
"Austerity is finished. This is a decisive
turn in the history of the EU project since the Euro," he told French
TV. "We're seeing the end of austerity dogma. It's a victory of the
French point of view."
Mr Moscovici's comments follow a deal with
Brussels to give France and Spain two extra years to meet a deficit target
of 3pc of GDP.
The triumphalist tone may enrage hard-liners in
Berlin and confirm fears that concessions will lead to a slippery slope
towards fiscal chaos.
German Vice-Chancellor Philipp Rösler lashed out at the European
Commission over the weekend, calling it "irresponsible" for undermining the
The Franco-German alliance that has driven EU politics for half a century is
in ruins after France's Socialist Party hit out at the "selfish
intransigence" of Mrs Merkel, accusing her thinking only of the,
"German savers, her trade balance, and her
It is unclear whether the EU retreat from
austerity goes much beyond rhetoric. Mr Moscovici conceded last week that
the budget delay merely avoids extra austerity cuts to close the shortfall
in tax revenues caused by the recession.
The new policy allows automatic fiscal stabilizers to kick in, but France
will stay the course on the original austerity.
"It is not about relaxing the effort to cut
spending. There will be no extra adjustment just to satisfy a number,"
Mr. Lafontaine said he backed
EMU but no longer believes it is
"Hopes that the creation of the Euro would
force rational economic behavior on all sides were in vain," he said,
adding that the policy of forcing Spain, Portugal, and Greece to carry
out internal devaluations was a "catastrophe".
Mr. Lafontaine was labeled "Europe's
Most Dangerous Man" by The Sun after he called for a "united
Europe" and the "end of the nation state" in 1998.
The Euro was launched on January 1, 1999, with
bank notes following three years later.
He later left the Social Democrats to found the