Germany's legendary export strength has long been a bone of contention between the country and its trading partners. Berlin has always argued that its export surplus is a sign of the German economy's hard-won competitiveness and as such is something to be copied, not criticized. Other countries, such as the US and France, have repeatedly warned that the surplus threatens the balance of the global economy.
Hence, the agreement made by finance ministers and central bankers at the weekend meeting of the Group of 20 (G-20) in Washington would seem at first glance like a setback for Germany. The G-20 finance chiefs, who met ahead of the spring meeting of the International Monetary Fund (IMF), came up with a plan for reducing global imbalances through monitoring of national policies, with the stated aim of avoiding a repeat of the recent financial crisis.
Members who account for more than 5 percent of the G-20's total economic output -- a group that is expected to include the US, China, Japan, Germany, Britain, France and India, although those countries were not mentioned by name -- will face especially close monitoring. The aim is to determine the causes of persistent imbalances. The official list of countries is expected to be announced ahead of the G-20 summit in Cannes, France, in November.
But Berlin has little to fear. Although the IMF will be able to make suggestions to countries as to how they should rectify their policies, those recommendations are not binding. Observers predict that Germany is likely to continue with business as usual.
German Finance Minister Wolfgang Schäuble welcomed the plan, saying it would increase transparency. "The key thing is that this process will involve us mutually evaluating each others' economic policies," he said on Saturday in Washington.
At the G-20 summit in Paris in February, countries had agreed on a number of indicators that could be used to determine imbalances, including trade deficits and surpluses, public debt, budget deficits and levels of private saving. No concrete values have been identified as targets, however.
German commentators on Monday take a look at the G-20 plan.
The center-left Süddeutsche Zeitung writes:
"All in all, it was a satisfying weekend for German Finance Minister Wolfgang Schäuble. Once again, Germany has managed to get off scot-free in the debate about the consequences of the economic crisis. The steps that the G-20 agreed on in Washington to reduce 'global imbalances' are a harmless process. They do not create any real pressure to reform. In any case, the German government long ago decided to do nothing, arguing that a market economy is self-regulating."
"China is the country with the largest trade surplus, followed closely by Germany. Nevertheless, the German government acts as if the whole discussion had nothing to do with it. It resists being put in the same boat as Beijing. After all, it insists, Germany's export success is not based on dirty tricks with currency manipulation, but on hard work and German craftsmanship."
"But a trade surplus also means that Germany is falling short of its potential. Domestic demand is still too weak, and wages need to rise further."
The Financial Times Deutschland writes:
"It is in the nature of such things that resolutions by international bodies are masterpieces of hair-splitting and meaningless, rambling sentences. But even measured against these standards, the new resolution by the G-20 regarding global imbalances is a particular high point. In barely understandable, sometimes contradictory phrases, the signatories commit themselves to taking action in the future against excessive surpluses and deficits in trade and capital flows."
"But despite the vagueness of the document, the fact that it exists at all is a big step in the right direction. For the first time, pressure can be created at the highest political level when states threaten the fragile equilibrium of international trade and capital flows through their economic policies. That's already a lot, given the fact that countries such as China, India and the US vigorously opposed the slightest outside interference in their policies before the financial crisis."
"Germany, too, will no longer be able to simply claim that its trade surplus is just the result of an almost magically competitive economy and recommend that all other countries follow suit. Now the Germans have in writing something that has been clear to economists for some time: It is not possible for all countries to have an export surplus at the same time, no matter how hard they try. Hence it is gratifying that German self-righteousness on this subject has been shot down on the world stage."
The conservative Die Welt writes:
"The era when meetings of the IMF and the G-20 saw increasingly ambitious promises to save the world from evil speculators, greedy bankers and unscrupulous hedge fund managers is over -- at least for now. More than ever, the discussions (at the weekend meetings) were reminiscent of the small-scale tinkering that characterized the negotiations during the years before the onset of the financial crisis. And the G-20 meeting also made something else clear: Many of the plans that world leaders announced in recent years are unlikely to have any significant effects in the future."
"The best example is the debate about global imbalances. America's debt, the low valuation of the Chinese currency and long years of low consumption in Germany are all factors that could dislodge the global economy from its current upswing. It's true that the G-20 leaders agreed last year in Korea to address these imbalances. But what will emerge in the end will be little more than a formulaic compromise, which will leave it up to the individual countries to decide whether they want to take any concrete action as a result. The idea is that public pressure from the international community will be enough to remedy the situation. That hope is likely to be disappointed."
-- David Gordon Smith
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