Nuclear plants aren’t the only meltdown worry in Germany

June 13, 2011

Having just got back from a couple of days in Hannover, I couldn’t help but be struck by the dominance of the local news agenda by two topics – and the almost complete absence of a third. Taking the British media at face value, I might have expected a city in near-panic, with people nervously scanning menus for safe dishes to order and maybe antiseptic handwashing facilities being hurriedly installed in public places. In fact, the town looked exactly as I remembered it from my last visit a few years ago, with E.coli rarely mentioned either in conversation or on the 24-hour TV news channels.

In fact, apart from endless replays of the goals from Tuesday night’s football (Germany versus Azerbaijan, a real clash of the Titans that must have been!), the news was all about the remote risk of a meltdown in the country’s nuclear power plants, and the anything-but-remote risk of meltdown in what is left of the Greek economy.

As far as the first is concerned, it seems that the sight of one of the reactors at Fukushima succumbing to a tsunami generated by the second biggest earthquake ever recorded has convinced Germans that they are better off counting on their neighbours in France and Czechoslovakia for their nuclear power than on generating their own. As the Americans say: go figure.

If there were ever any doubt, Frau Merkel has made it clear that, after all the tough talk, Germany is going to cough up for Greece. The arguments are simply about how to package the donation so as to make it look as penny-pinching as possible, and accompanied by the maximum pain that can be inflicted on the recipients – after all, the Bundeskanzlerin is elected by Germans, not Greeks. But there are clearly limits to how much austerity can be imposed on a country where standards of governance have been sliding for 2,500 years, and when Greece’s debts are finally restructured/reprofiled/rolled over or whatever euphemism for default is finally chosen, German voters are bound to overestimate the cost to themselves and underestimate the pain for the Greeks.

(Question: why don’t they offer a cash prize for the best euphemism for default? What about Negative Asset Investment Value Elimination?)

How will it all play out? I have no idea, but so far I see no reason to change the forecast I made back in 1998, when this ship of fools was launched amid so much fanfare on an ocean of Euro-rhetoric. I thought then that the most likely outcome was that the “savers” – the Germans, Dutch and Austrians (I wasn’t aware then of the Finns) – would get tired of being taken for mugs and, realising their prudence was ultimately futile, would loosen their belts and join the party. After all, in the euro zone, they can’t beat ‘em, so they may as well join ‘em.

Although this still seems to me the most likely outcome, it is probably some way off yet, though I would not be surprised if this or the next German Government lost enthusiasm for its current campaign to rein in its relatively modest overspending.

What I did not foresee was that the Euro-drama would be played out against a backdrop of America, Britain and Japan all committing economic suicide at the same time. Historians will puzzle for decades over whether this was merely coincidence or whether there was a common factor driving them all to self-destruction simultaneously.

The Chinese no doubt cannot believe their luck. The question is whether they will know how to seize the opportunity. My guess is that they will not, because their instinctive judgment will be that global leadership, not to say domination, is theirs for the taking, if only they keep tight control – which may yet turn out to be their undoing. On the other hand, if they revert to their pre-Olympic policy of making steady progress, cautiously but persistently, towards more openness and accountability and less Party control, the future could well be theirs – literally, by default.

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