Does Germany need Europe?
Jim O’Neill, the new Goldman Sachs Asset Management chairman who is famous for coining the term BRICs for the world’s new emerging economic giants, reckons he knows why Germany might not be rushing to bail out all the euro zone debt that is under pressure. Europe is not as important to Berlin as it was.
Speaking at the Reuters 2011 Investment Outlook Summit being held in London and New York, O’Neill pointed out that in the not very distant future Germany will have more trade with China than it does with France.
“It’s a different global environment. That’s why maybe Germany (ties) itself to a rules-based game with the rest of Europe because economically it doesn’t mean so much to them now. What goes on in China is more important than what goes on in France and that’s puts a different economic (spin) on the situation for the Germans.”
O’ Neill also drew parallels between the current situation which sees Germany being asked to stump up for ill-disciplined southern euro zone economies and the problems faced in 1990 when West Germany had to do something similar for East Germany.
“Fast forward 20 years and this time (they are saying) it’s not even our own people. I think the Germans will stay pro-European , but it’s a different set of circumstances.”
The idea that Germany and others will eventually sort out the euro zone debt problem because of a desire for political unity underlies much of the long-term expectations for euro zone survival. But it is a new world, in many ways.