• Euro-Exit to the Left?

  • By Steffen Lehndorff | 06 Dec 13 | Posted under: Transformative Strategies
  • It is a well-known fact that the German right is divided over its attitude to the Euro. In the parliamentary elections of September 2013, a party of so-called ‘Euro-sceptics’ almost reached the 5 % threshold for entering parliament.

    Well-covered by the media, this debate is fuelled by certain neoliberal economics professors who are highly popular with several journalists and who remain silent about the benefits of the monetary union for German industry (and for Germany’s national budget due to low interest rates in recent years), preferring to talk about the potential burdens on Germany’s budget resulting from future ‘bailouts’. The full extent of this division has until now been covered up by Angela Merkel’s tactical skill. The Chancellor’s dictum ‘If the euro fails, then Europe fails’ has a great power to unify the German public, not least because it is based on strong economic and political interests within the German elites.1 Nonetheless, the turmoil within the political right has persisted and it will intensify with each further escalation of the euro area’s crisis.

    What is less well-known is that a euro-exit debate has repeatedly flared up also within the German left, although it is often unclear what the discussion is actually about: Is it about the dissolution of the monetary union as a whole? Or ‘only’ about the withdrawal, for example, of Greece, or about Germany’s exit (as called for by George Soros who though no leftist has deployed arguments that could only be shared by the left and not the right)? One thing is certainly clear: The decisive concern of the left Euro-sceptics is not one for ‘Germany’ (that is, for the German economy), but for the fate of the countries  hit hardest by the crisis in the Euro area and ultimately for the future of Europe itself. Contrary to right-wing anti-euro propaganda, however, the debate within the left remains largely serious, based as it is on very important questions that are very difficult to answer.2

    The first striking feature of the left debate over Euro-exit is the extent of fundamental agreement in the analysis of the plight of the Euro: All view the monetary union as a misconstruction from the very start, based on the false doctrine that the market is the best instrument for regulating everything and that the state’s main duty is to reduce its expenditure and debts. The left economists critical of the left ‘Euro-sceptics’ thus at least do not preclude a collapse of the Euro. On the contrary, they consider it quite probable, because the monetary union built as it is on monetarist and neoliberal dogmas would in the long run lead to increasing economic and social inequalities among and within member states. Therefore, if the monetary union is to survive, the sceptics can only imagine the future of the Euro as a radically reformed solidarity union accompanied by a fundamental democratisation of EU institutions. 

    Within the left debate over Euro exit there is also far-reaching agreement in the criticism of the disastrous way the German elites are handling the misconstructed Euro area. In this construction national economies were meant to compete against each other within a common currency area as if they were companies which in the event of economic failure should disappear from the market or be taken over by stronger competitors. And then the strongest of these best friends, of all people, forces – and it is the only one to do so ! – the average wage in its own country into a downward spiral and makes its own economy dependent on exports in an increasingly one-sided but extremely profitable way and through its almost stagnating domestic market makes it impossible for its competitors to compensate by increasing their exports to Germany. Making profits without investing – if the largest economy makes this its business model the project will sooner or later blow up in the face of all participants. In order to put off this collapse a medicine for the acutely ill countries is prescribed, and it is known as the ‘Fiscal Compact’ and ‘structural reforms’, which makes them even more ill. The disastrous course of the Troika diktat, pushed by the German government through massive pressure, is bringing about immeasurable damage in the current crisis countries. And by reframing social problems  as national problems, this diktat is breaking Europe apart, setting countries and people against each other.3

    The unity within the left exit debate goes even further: While, as any sober assessment shows, it is true that there is much that points to a breakup of the monetary union, critics of the mainstream would be well advised to run through various scenarios. Some proponents of such an approach also emphasise the enormous risks of Euro dissolution for all parties – not only for the German economy which stands to lose the most by Euro collapse, but also and mainly for the countries hit hardest by today’s crisis. Precisely because of these economic risks they advocate an ‘organised’ and ‘controlled’ dissolution of the monetary union. However, they do not address how the main European players could be moved to such revolutionary economic-policy rationality, since it has been impossible to force them to correct their own policies even within the Euro framework.

    Last but not least, there is also an agreement that left Euro-exit scenarios have nothing in common with right-wing anti-Euro demagoguery. When the right wing speaks against the Euro, it is because it is supposedly bad for Germany (which though up to now has been shown to be incredible nonsense, would in fact become reality as soon as the business model of ‘profiting without investing’ bursts). By contrast, when those on the left initiate a debate on Euro-exit or even demand it, it is because they believe it would benefit other countries and Europe’s future as a whole (and ultimately, through this process, Germany as well!). This is an important distinction but one that could quickly become blurred when left politicians jump on this bandwagon.

    In order to bring more clarity to the left Euro-exit debate it is not only important to play out economic scenarios; it is also necessary to run through political ones. The governments of countries such as Greece, Spain and Portugal have so far been the most willing executioners of the Troika diktat, because they lack the power to impose these neoliberal impoverishment programmes on their populations  themselves. But what if they suddenly pull the ripcord one day, because they are overwhelmed with their countries’ social and political problems? What would happen if they looked for an emergency exit from the Euro? The exit would certainly not be to the left. The enormous economic and social consequences of massive currency devaluation as well as debt cuts on which – as already stated – critical economists largely agree, would then be imposed on the populations of these countries just as the consequences of the Troika diktats are now. Only then ‘the markets’ would be to blame and no longer Merkel. Neoliberal policies, however, were carried out before the Euro and they can be continued after an exit from the Euro. The Euro is not the cause of this destructive policy, but in its current construction is a mechanism serving it.

    This scenario shows that the left exit debate is a discussion that lacks addressees. Which social and political players should it address? Is it to be another good piece of advice from Germany that will show the way – this time a left way – to the stricken southern Europeans? Perhaps in combination with the implicit message: Sorry that we, the German left, are too weak to force our government to change course, so therefore save yourself, if you can! Whether such declarations of surrender would be seen as helpful by the addressees in southern Europe, is anyone’s guess. At any rate, most of them have so far been on a different course. What is first and foremost at stake in these countries is stopping the disastrous course of austerity and destruction of social systems imposed by the Troika and their own (!) governments.

    And then, in order to have more air to breathe, they urgently need a new orientation for the economic, social and ecological development of each of their national economies, that is, reforms worthy of the name. Up to now, these have been as hard to imagine (let alone to enforce) without the Euro as they have been with it. At any rate, this is the challenge for the left in the so-called ‘crisis countries’ today. They – and not the left in Germany – must eventually decide whether overcoming the neoliberal domination of their countries’ economic orientations requires an exit from the Euro or not. In order to decide this, they must first arrive at a point where they face this question on the practical level!

    To continue the scenario: Let us assume that new left coalitions succeed in one of the ‘crisis countries’ and could set government policy – what would they be doing first? Exiting from the Euro? Most probably not. As they would be aware of the German elites’ strong interest in a continuation of the monetary union, they would repudiate the diktats of the Troika and also demand renegotiations – as Greece’s SYRIZA has already announced they would do in the event of a future electoral victory.

    The big question remains whether one of these countries would stand a chance of success in such a confrontation. The answer to this question is likely to emerge only in the actual conflict. If a progressive government in a crisis-ridden country saw such an opportunity and attempted to use it with the support of its population, the Merkels , Rehns and Draghis would then be facing a difficult decision. Through a renegotiation of the credit terms, it would be up to them to prevent this country’s exit from the Euro with the possible consequences of a breakup of the monetary union (as a result of the attendant chain reaction). The German left would then have the responsibility of calling for solidarity with the particular country, to make possible the latter’s economic and social recovery within the monetary union.

    Clearly, of course, progressive governments of countries affected by the crisis along with their European allies standing in solidarity with them could emerge defeated in such a confrontation. However, if the monetary union then broke apart, responsibility for it would be laid at the doorstep of today’s ruling elites in the EU. If the German left were right now to demand the dissolution of the Euro before engaging in such a confrontation, it would be resignedly putting on the shoes of the ruling classes.

    If the Euro fails due to the neoliberal dogmatism of the EU Commission and the Federal German government, it is only then that would left proposals for damage control whould be needed. Until then, all attention should be focused on remedying the damage. This a question of the reorientation of policy at an EU level as well as in Germany, which involves the Fiscal Compact and debt brake, the tax reforms in Germany and the most urgent reforms of the German labour market, in order to stop the redistribution from bottom to top, thus combating the root of the evil that has become a problem for the entire Euro area. Germany needs these reforms in any case, with or without the Euro.

    Success in these areas would represent the most effective form of solidarity from Germany with the people of Southern Europe. In addition, it would improve the preconditions for the renunciation of neoliberalism in Europe with the help of a reformed monetary union and with the help of reformed European institutions. This may sound completely unrealistic. But if this fails, the same Herculean task must be tackled but under conditions of a new disintegration of Europe. This will not make it any easier. Flexible exchange rates alone will not make it possible to overcome neoliberalism.


    Translated by Nima Obaro



    Altvater, Elmar (2013), ‘Der politische Euro. Eine Gemeinschaftswährung ohne Gemeinschaft hat keine Zukunft‘ [The Political Euro. A Common Currency Without a Union Has no Future], Blätter für deutsche und internationale Politik, Heft 5.

    Bertelsmann-Stiftung (2013), Vorteile Deutschlands durch die Währungsunion. Szenarienrechnungen bis zum Jahr 2025. [Germany’s Advantages From the Monetary Union. Scenarios up to the Year 2025].

    Flassbeck, Heiner and Costas Lapavitsas (2013), The Systemic Crisis of the Euro — True Causes and Effective Therapies. Berlin: Rosa-Luxemburg-Stiftung.

    Habermas, Jürgen (2013), ‘Demokratie oder Kapitalismus? Vom Elend der nationalstaatlichen Fragmentierung in einer kapitalistisch integrierten Weltgesellschaft’. [Democracy or Capitalism? On the Calamity of Nation-State Fragmentation in a Capitalist Integrated Global Economy], Blätter für deutsche und internationale Politik, Heft 5.

    Lehndorff, Steffen (ed.), 2012: A Triumph of Failed Ideas. European Models of Capitalism in the Crisis. Brussels: ETUI.

    Scharpf, Fritz (2011), Monetary Union, Fiscal Crisis and the Preemption of Democracy. Cologne: Max-Planck-Institut für Gesellschaftsforschung.

    Soros, George (2012), ‘The Tragedy of the European Union and How to Resolve It’. New York Review of Books, September 10.

    Streeck, Wolfgang (2013), ‘Vom DM-Nationalismus zum Euro-Patriotismus?’ [From the Nationalism of the German Mark to Euro Patriotism?] Blätter für deutsche und internationale Politik, Heft 9.

    Troost, Axel (2013), ‘Szenarien eines Endes der Euro-Zone’. [Scenarios of an End of the Euro Zone]

    Woo, David and Athanasios Vamvakidis,  (2012), Cause and Effect – Game Theory and Euro Breakup Risk Premium. New York: Bank of America Merrill Lynch.



    1. On the economic interests see Bertelsmann-Foundation (2013) as well as the very original scenario analysis by the Bank of America Merrill Lynch (Woo/Vamvakidis 2012).

    2. Prominent contributions to the debate by progressive ‘Euro-sceptics’ come from Scharpf (2011), Streeck (2013) und Flassbeck/Lapavitsas (2013). Critical objections have been raised by Habermas (2013), Altvater (2013) and Troost (2013).

    3. We have analysed the effects of these centrifugal forces using the example of ten European countries (Lehndorff 2012).

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