Euro crisis: “Come on, Frau Bundeskanzlerin, history is knocking at your door.”

The Irish Times reports the comments by chief of the European Financial Stability Facility, Klaus Regling.

“There is zero danger,” Klaus Regling, chief of the European Financial Stability Facility (EFSF), told German daily Bild  when asked if the euro zone could break up. “It is inconceivable that the euro fails.

“No country will give up the euro of its own will: for weaker countries that would be economic suicide, likewise for the stronger countries. And politically Europe would only have half the value without the euro.”

He doesn’t rule out the risk of contagion spreading to other European states, say to Portugal and Spain.

Meanwhile in The Guardian, Timothy Garton Ash argues that, if the eurozone is to survive, historic acts of [German] statecraft will be required.

Now in numerous respects, a more German Europe would be a better Europe. There are many things about Germany’s economic model – its productivity, its consensual labour relations, its focus on product quality, its penetration of emerging markets – that other European countries would do well to emulate. However, it is also true that the entire eurozone cannot simply become one big Germany, both because the eurozone is composed of structurally, historically and culturally different countries, and because the rest of the world could not take the imbalance that would result from such a large chunk of the world economy having a German-scale trade surplus. So Germany also has to cut its partners some slack, and do something about lifting its own domestic demand. The right balance may be: 70% other eurozone countries become more “German”, 30% Germany becomes less so. (Economists can argue about the proportions.)

In other words, for both economic and political reasons, there has to be a compromise. The challenge for German statecraft is to find this difficult but sustainable compromise, in the most intensive negotiations with all its European partners – and then to sell the result to its own reluctant people. The markets will not leave it much time. The future of the eurozone now depends on this German leadership. Come on, Frau Bundeskanzlerin, history is knocking at your door. And history only knocks once.

Pete Baker