Originally appeared at DWN, translated by John T. Sumner exclusively for SouthFront; Edited by Desislava Tzoneva
Hans Michelbach, a board member of the CDU/CSU parliamentary group in the Bundestag, deems a wide common banking union in the European Union inconceivable due to serious issues of banks in southern Europe. He raises serious allegations against the European Central Bank and also against the European Commission, which in his view, has been idle for too long.
DWN:
The southern European banks seem to be in trouble. One reads that the Italian banks alone are left with bad loans of over €300 billion. In light of this, would it be responsible at all to implement the planned European banking union with a common deposit protection fund?
Hans Michelbach:
The high number of bad loans is not new. An intervention at that point is inevitable. Again, the European Commission would be required to intervene, but is showcasing total inactivity instead.
The problem is greatly exacerbated by the fact that, contrary to the requirements of the EU, no national rescue fund has been installed. Against this backdrop, a banking union would not be justifiable.
This union is based on the principle that the first to intervene are the shareholders, then the national emergency systems and at last, the EU aid funds. This sequence must not be broken. That would be a breach of the agreements and it would significantly damage the reputation of the euro and the trust in the common currency.
In a banking union under present preconditions, German savers would be directly liable for the mismanagement of banks in foreign countries, while these states would not be required to contribute even a single cent.
DWN:
By your rating, is it true that the “Greece rescue” only “saved the German and the French banks”? Or was it an issue that American hedge funds had loan loss insurances in the fire, worth over $2 trillion, which would have become partly due in case of a Greek exit from the euro?
Dr. h.c. Hans Michelbach
Hans Michelbach:
This is an apparently ineradicable assertion. In the course of the debt cut, private creditors have accepted a substantial waiver. In the end, all this was of no avail because in Athens they were not ready to implement the necessary reforms – and to this day they are still not prepared to act with efficiency. Due to this reluctance, to implement those reforms through the Greek government and the Greek parliament, the country is parlaysed.
What would have been the alternative at the beginning of the Greek crisis: a national bankruptcy with incalculable consequences for the euro zone and the global economy. Now, we are better prepared for such situations. A Greek default would have a limited impact only.
DWN:
Are there geo-strategic calculations in the “Greece rescue”? Like the American demand towards Greece to remain in NATO?
Hans Michelbach:
A Greek exit from NATO was never at issue.
DWN:
Do you think that a Greek exit from the euro would be helpful for the Greek economy?
Hans Michelbach:
The subject has at least two fundamental aspects: An exit of the country from the euro would entail a sharp devaluation of the then new national currency, which could make Greek goods and services tawdrier on the world market. The question whether they would become more competitive thereby and whether the Greek economy would undergo a revival this way, however, cannot be answered with a simple ‘yes’.
Otherwise, you have to realise that the country would not get rid of its debt by an exit. It can be assumed also, that in the event of a euro exit, Greece would lose any solvency.
A crucial prerequisite for the recovery of Greece is a consistent reform policy. What´s obviously missing is the political will and the political strength. Instead, they wait until the last day or even longer to implement every single requirement. Urgently-needed structural reforms were – apart from a few privatisations – omitted completely. If Athens will not alter its course fundamentally, the country will remain “the sick man of southern Europe” with no prospect of cure.
DWN:
On the other hand, a stay in the euro enables individual countries to print money all by themselves, through buying their own government bonds via Agreement on Net Financial Assets (ANFA). Well over €700 billion were absorbed this way, especially by the Banque de France and the Banca d`Italia. What do you think of this practice?
Hans Michelbach:
Initially, this has nothing to do with the euro. So far, the ECB refuses to elucidate these dubious transactions. In its day, the aggressive response to the questions about ANFA clarified that the ECB is drawing a veil over something. If the unconfirmed reports having emerged so far are accurate, the ECB has conducted secret agreements in order to facilitate uncontrolled state funding via the national central banks – and thus the accumulation of uncontrolled liability risks. Obviously, the independence of the ECB has been abused. If the ECB is still busy buying government bonds and corporate bonds with high risks, this would be quite frightening for the taxpayer.
DWN:
Regarding ANFA, would it be a daring comparison to assume the existence of a joint credit card account, where all are depositing but only a few are withdrawing? The euro will not gain more stability by such a flood of money, after all.
Hans Michelbach:
It´s obvious that the murky use of ANFA might pose a threat to the stability of not only the euro.
DWN:
Would you support the view of Chancellor Merkel: “if the euro fails, then Europe will fail too”? Or do you also understand those voices, who rather consider the euro as being presently constructed and as having to be “saved” permanently, a strain for Europe?
Hans Michelbach:
According to its spiritual mothers and fathers, the euro should have become an additional connection towards a common identity of the European community. That certainly might have succeeded if everyone would have followed the rules and their signed contracts and if, in fact, the EU Commission would have fulfilled its job as the guardian of treaties. This is exactly what did not happen. Instead, tricks were played and everybody looked the other way. So, a country like Greece, which had pretended a qualification for the euro by computational tricks, contrary to all warnings, was added to the euro zone.
Europe will fail if it does not take its own rules and agreements seriously. Recent statements by President Juncker about two deficit breaches by France, among other things, demonstrated to me that this insight has not yet arrived in Brussels. The stability criteria were simply dissolved.
DWN:
Another matter altogether in Europe is the so-called “Russia sanctions”. Do you think we are heading for a new Cold War?
Hans Michelbach:
The warning of an impending Cold War is a mere propaganda figure Mr. Putin is utilising in trying to divert from the root cause. Because a Cold War is not the problem here, but a hot hybrid war of Russia in eastern Ukraine, persisting until now. We must not accept it without a proper reaction when European borders are altered by force. That much we should have learned from the history of our continent.
DWN:
Do you think that peace and prosperity in Europe can prevail without Russia? Or do you consider it appropriate to pursue peace and security together with Russia?
Hans Michelbach:
A conflict with Russia is not the objective of Germany. It was not Germany and Europe who picked a conflict with Russia, but it was Russia who has acted as an aggressor in eastern Ukraine. This jeopardises the European blueprint for lasting peace. We are completely open to good relations with Russia. Mr. Putin knows that the sanctions will fall and the relationship will improve abruptly after he ends the occupation of eastern Ukraine and after the territorial integrity of Ukraine is restored.
DWN:
Do you think the course of Chancellor Merkel will sustainably deteriorate our relationship with Russia?
Hans Michelbach:
Here, we are not dealing with an individual course of the Chancellor, but with a common attitude of the entire EU. The deterioration of the Russian-European relationship started from Moscow, not from Germany.
DWN:
How big would you estimate the damage which might arise for the German economy by the “Russia sanctions” – both directly and in the medium or long term? Against this backdrop, isn’t it appropriate to speak about sanctions against Germany as well? Are there extensive geo-strategic considerations creating the context in which we have to see these “Russia sanctions”?
Hans Michelbach:
In the past, sanctions were implemented against many countries – but an ever-revived debate about job losses is something new. This is very interesting and you have to ask yourself who has an interest in the control of such a debate.
The truth is that at the moment, certain transactions with Russia are not possible. I do not expect this to be the case permanently. I think Mr. Putin is not a gambler. Therefore, I am convinced that we will solve the underlying problem. This will not happen overnight, but it will come.
At that time, defensive sanctions due to the occupation of eastern Ukraine were countered by Russia with certain import prohibitions. The Moscow government burdens its own people more than the European economy. Our economy, in any case, continues on a solid growth path.
The mysterious whispering about alleged mysterious geo-strategic considerations, which might be behind the Russia sanctions, belongs to the ‘department of legends’. It seems to me, the sole objective should distract from the Russian aggression in eastern Ukraine – and thus from the starting point of the current tensions – or to even justify the aggression.
Dr. H. C. Hans Michelbach is a board member of the CDU/CSU parliamentary group, Vice Chairman of the CSU party German Bundestag, Deputy Chairman of the Parliament district, Mittelstand, and the MIT of the CDU/CSU parliamentary group.
Dr. H.C. Michelbach has the normal line of B.S. when he states that the EU is on solid growth path, when they are printing billions/trillions trying to save what little remains of the EU economy.
And of course cutting thru his propaganda on the Ukraine he never mentioned the coup in the Ukraine funded by both the U.S. and some of the E.U. members including Germany.!!!