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Europe's Second Versailles Moment
The First Versailles Moment
The Weimar Republic Analogy
In analysing how the European Debt Crisis will be resolved, some commentators have drawn on historical precedents. There has been a tendency to default to the precedent set by the Weimar Republic of Germany. The scenario of an indebted democracy, trying to find ways of meeting foreign demands for debt payments, seems appropriate when analysing the Peripheral European countries.
Some observers have said that this kind of analysis is flawed; because it ingores the fact that the current European Debt Crisis is set against the background of a common currency. If one however considers that in the days of the Weimar Republic the common international currency between nations was Gold, then one can counter this criticism; and apply the same Weimar analogy. The fact that today the Gold price has risen and many are talking of it as a real alternative currency, only helps to strengthen the analogy.
The Second Versailles Moment
The Issue of Reparations
The strongest hint that the Weimar Republic analogy should be used today actually came from Germany itself. Professor Dr. Kurt Lauk, President of the Christian Democratic Union's Economic Council, suggested that:
Chancellor Angela Merkel will have to drop her resistance to pooling European debt and look toward the 1919 Treaty of Versailles as inspiration for a payment plan, according to the head of her party’s business caucus.
“We have to find something equivalent for the European debt situation,” Lauk said today by phone from Stuttgart, adding that Merkel will have to agree to a debt-sharing arrangement to save the euro. “The German government will move before the European monetary union hits the wall.”
When German political leaders themselves use contemporary analogies that draw upon this period in history, one can conclude that Germany and ideed the World has not progressed very far from this period. There are other signals from Germany, that actions are following words in this context.
If this indeed is the case, then the auspices are very ominous.
The European Redemption Pact
Germany has proposed a European Redemption Pact, which involves indebted nations pledging their Gold Reserves in return for financial support. In effect, this means that these nations are parting with hard currency in return for support in a weaker currency known as the Euro. The lending nations get to replace some of their weak Euros with Gold. Given that this aid comes against further pledges of austerity from the bailed out nations, it is hard to see that they will ever be in a position of economic strength; to pay back the aid and get their pledged Gold back. The strategy therefore resembles a scheme to remove the Gold Reserves from the Peripheral Nations, so that they have no choice other than to accept political and fiscal union on unfavourable terms. The situation in the Peripheral Nations is therefore the same as that of the ill-fated Weimar Republic.
- Merkel Must Pool Debt and Look to Versailles, CDU’s Lauk Says - Businessweek
- The German Enabling Act of 2012
Germany has changed its Constitution in relation to Homeland Security. German troops may now be mobilized for domestic military operations; for the first time since the Second World War.The historical precedent for this change is a matter of signific