Schäuble calls for the continuation of austerity policies in Germany and Europe

By Peter Schwarz
12 October 2017

German Finance Minister Wolfgang Schäuble is using his last days in office to call for his austerity policies to be made permanent. The 75-year-old Christian Democratic Union (CDU) politician is set to resign in the next few days because he will be elected as president of the Bundestag (federal parliament) on October 24. This week, however, Schäuble will be meeting all those who have a say in international monetary and financial policy.

Schäuble, who, like no other politician, stands for German arrogance and a ruthless cuts policy in the interest of the rich, and who has ruined the lives of millions, wants to ensure that this course continues after his departure as finance minister. And he is finding much support for this.

On Monday, Schäuble met with the finance ministers of the euro zone in Luxembourg, and on Wednesday he attended the anniversary of the International Monetary Fund in Washington, where, alongside ministers and central bank officials from 189 member states, many powerful figures from the banking and financial sectors meet. Two press conferences, as well as numerous bilateral meetings are planned.

In Luxembourg, Schäuble was praised in the highest tones by his 18 colleagues. “We will miss him,” said Eurogroup chief Jeroen Dijsselbloem. “He was a great colleague for each of us, he gave advice, sometimes asked for, sometimes unasked for. He has always put the long-term interests of a stable Eurozone in first place.”

Italian Finance Minister Pier Carlo Padoan described Schäuble as a “great finance minister”. French Finance Minister Bruno Le Maire called him “a great European”, who had “played a major role in the development of the European community.”

Amidst the exuberant praise, the fact that Schäuble, who is considered arrogant and cynical, finally resigned after eight years in office met with some relief, even though the admiration for his harsh attitude in enforcing unpopular austerity measures is genuine in ruling class circles. The brutal attacks on the working class with which Schäuble’s name is synonymous, especially in Greece, will determine the European agenda even after his resignation.

Schäuble, who was born in southern Germany in 1942, joined the reactionary Young Union in 1961, at a time when most young people were moving to the left. In 1972, he was elected to the Bundestag for the CDU. In 1984, he became a minister and headed Helmut Kohl’s chancellery.

In 1990, as interior minister, Schäuble negotiated the agreement on the dissolution of the German Democratic Republic (GDR, former East Germany), or rather, he dictated it, as the CDU’s puppets were sitting at the negotiating table on the GDR side. The devastating consequences of reunification—the decommissioning of East German industry or selling it off for a pittance, the resulting mass unemployment—were largely due to Schäuble.

As interior minister—an office he held under Helmut Kohl from 1989 to 1991 and under Angela Merkel from 2005 to 2009—Schäuble advocated a repressive policy of the strong state. He wanted to deploy the Bundeswehr (armed forces) at home, and demanded a corresponding amendment to the constitution; among other things, the Bundeswehr should be given the authority to shoot down civilian aircraft in terrorist cases. He opposed parliamentary scrutiny of the secret services and advocated the abolition of fundamental rights for “terrorists.” He also proposed the use of statements obtained under torture in the investigatory work of the security authorities.

Legal professional associations accuse him of sacrificing fundamental rights on the altar of supposed security interests; of leading a “frontal attack on the constitution,” and arousing fears among the population in order “to create acceptance for far reaching powers for the security authorities.”

Schäuble found his real calling when he became finance minister in 2009. The previous year, the criminal speculation of the banks had driven the world financial system to the brink of collapse, and his predecessor, Social Democrat Peer Steinbrück, had “rescued” them with billions from the public purse. Schäuble then began to recoup these billions from the working class. Above all in Greece, Portugal, Spain and other heavily indebted countries, he imposed a policy of social devastation such as Europe had only previously experienced in wartime.

Schäuble seemed to derive an almost sadistic pleasure in dictating one austerity package after another to the Greek government in night after night of negotiations, which decimated the livelihoods of the population, deprived millions of older people of their hard-earned pensions, and destroyed any perspective for the future of a generation of young people, while the “aid credits” were paid directly into the coffers of the international banks.

In Germany, Schäuble insisted on a balanced budget. While the infrastructure collapsed, health care and provisions for the elderly were bled dry, the shortage of teachers grew unbearable, and wages and pensions sank, he boasted for four years about the so-called “black zero” (balanced budget).

The praise that Schäuble now receives on the international and national stage shows that the great majority of the ruling class supports this policy. Schäuble himself has urged a tightening of austerity policy in a long interview with the Financial Times .

At his last meeting with the euro finance ministers on Monday, Schäuble brought with him a “bad gift” ( Die Welt ), a working paper from his ministry suggesting that the euro rescue fund (ESM) be expanded into a European Monetary Fund that would support budgetary policies and the observance of debt limits by members of the euro zone, and which would enjoy far-reaching powers of control.

In this way, Schäuble wants to disempower the European Commission, which in his opinion is subject to too much political influence, and replace it with an institution immune to social pressures and which subjects all of Europe to the financial diktats of Germany.

His paper is also directed against the European plans of French President Emmanuel Macron. The latter has the support of Schäuble when he attacks the social gains of the working class in France, but not if he calls for the establishment of a EU finance minister with his own budget for the euro zone.

“Less nation-state, more Europe, according to his [Macron’s] ideas,” writes Die Zeit. “Schäuble wants more power for a European control body following German thinking. But it should be less subordinate to the unloved commission than the national governments.”

These contradictions are likely to intensify if a coalition of the CDU/CSU with the Greens and the Free Democratic Party (FDP) comes about in Germany and the new finance minister comes from the FDP. The FDP rejects not only Macron’s but also Schäuble’s plans. It wants to abolish the euro rescue fund, which was set up in 2012 to overcome the financial crisis, and to prevent any financial equalisation among the euro countries.

What the future German government will ultimately look like is not yet clear. However, one thing is certain: it will not only continue Schäuble’s austerity course but will also follow the motto “Germany first” and intensify national contradictions in Europe.

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