Copyright ©2011 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

ROBERT SIEGEL, host: From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

MELISSA BLOCK, host: I'm Melissa Block.

And in this part of the program, Europe's economy. We'll hear about the dismal job market and questions about whether much of Europe can continue to share one currency.

SIEGEL: On the currency markets, the euro gained a little value today and that means there must be some optimism for a big meeting in Paris tomorrow. German Chancellor Angela Merkel and French President Nicolas Sarkozy meet to talk about the euro.

BLOCK: The debt crisis in Greece and other European countries has jeopardized the future of the euro, and with it, the idea of European unity.

NPR's Tom Gjelten is in Berlin to tell us about what that means for Germany.

TOM GJELTEN: It's a pleasant Sunday afternoon in Berlin, and Berliners are out to enjoy it. The stores are closed but the sidewalk cafes are open and they're full. Germans have money to spend. Germany in recent years has achieved a prosperity and a quality of life that puts it above other countries in Europe. But this is still Europe.

How much for the cappuccino?

UNIDENTIFIED MAN: Three ten, please

GJELTEN: Three-ten.

UNIDENTIFIED MAN: Yeah.

GJELTEN: Good. Thank you.

UNIDENTIFIED MAN: Yeah. Yeah.

GJELTEN: That's three euros, about four and a half dollars. Whether you order a cappuccino in Paris or Rome or Athens, you pay for it with euros. It's the European money, a symbol of European unity. But the euro is now in danger. Germany is the only country that can save it.

In a way, the idea of the euro was flawed from the start. Germany, as its number one supporter, figured the countries that adopted the euro would treat it the way Germans treat their money: They'd be thrifty.

Daniela Schwarzer of the German Institute for International and Security Affairs.

Dr. DANIELA SCHWARZER: Germany, on the one hand, sticks to the euro but, at the same time, it still wants the euro to work the German way, meaning a respect of the rules and stability.

GJELTEN: There were rules, sort of. Countries weren't supposed to run big budget deficits. But the rules weren't enforced. Meanwhile, banks figured countries using the euro were good credit risks, so they offered them low interest euro loans. A few couldn't resist the temptation to borrow, and borrow, and borrow - the opposite of the German way.

Before long, they were in trouble and had to borrow more just to make their interest payments. Some euro countries started drifting toward default.

German Parliamentarian Klaus-Peter Willsch says it's time to admit the euro plan didn't work.

KLAUS-PETER WILLSCH: One of the ideas was that economies within the eurozone would come together in terms of productivity. In fact, they didn't. So I think we have to think about redesign of the eurozone.

GJELTEN: Willsch, a Christian Democrat from the state of Hesse, says maybe the eurozone should be smaller, with the weaker nations dropping out and going back to their own currencies. That would be costly for those countries but also for the banks that loaned them billions of euros, euros they would not fully recover.

The alternative to shrinking the eurozone is to redesign it in the other direction: to make it stronger, more unified, with stricter rules and more top-down control. The wealthier states, with Germany in the lead, would take responsibility for the poorer states. The Association of German Banks favors this course, says the group's CEO, Michael Kemmer.

MICHAEL KEMMER: We have a currency union without a political union. And I think it is necessary to go more in the direction of a fiscal and a political union, and there we need leadership from the stronger European nations.

GJELTEN: There are strong arguments on each side. Even a partial breakup of the eurozone could be highly damaging to the European economy. And Gerhard Schick, a Green Party representative in the German Parliament, says a retreat from Europe would be a blow against all the young Germans who've become accustomed to thinking in European terms.

GERHARD SCHICK: They pass part of their studies at European universities abroad, or they make an internship with a French-based enterprise. But they don't work in France but in London. So they understand how Europe works.

GJELTEN: On the other hand, if the eurozone is now to become a political union, with the wealthier states helping the poorer ones, it would cost Germany billions, maybe hundreds of billions. Plus, Germany and other countries would have to cede some of their authority to Europe-wide organizations.

Markus Kerber, a prominent Berlin lawyer, is so alarmed by the prospect that he's prepared to lead something like a German Tea Party movement in defense of what he calls the principle of fiscal sovereignty.

MARKUS KERBER: That is to say, that German citizen and their representatives keep the right to dispose of German resources and to defend the rating of the nation.

GJELTEN: This choice for Germany - to strengthen the eurozone or to abandon it - is as vexing a political challenge as any the country's leaders have faced since the unification of East and West Germany 20 years ago. There are risks everywhere, costs on all sides.

Chancellor Angela Merkel's meeting with Nicolas Sarkozy tomorrow will be just the first of many leadership tests for her in the next few months.

Tom Gjelten, NPR News, Berlin.

Copyright © 2011 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.

Support comes from: