A Small Band Of German Professors Is The Hottest New Threat To The Future Of The Euro
The group, which calls itself "Alternative for Germany," is made up of several prominent economists and intellectuals with a reputation for euroscepticism.
Deutsche Bank posted a nice summary of the movement today on its website – who it is, what it's all about, and its chances for success.
In the report, Deutsche Bank's Nicolaus Heinen explains who is behind Alternative:
The movement Alternative für Deutschland (Alternative for Germany) is centered around the German economist Bernd Lucke, a professor of macroeconomics in Hamburg. Other spokespersons are former FAZ journalist Konrad Adam and a former state secretary in Hesse, Alexander Gauland.
Another prominent supporter is the former president of the Federation of German Industry (BDI) Hans-Olaf Henkel – a prominent and colourful eurosceptic who wrote a book about establishing a North-EMU and a South-EMU.
Other supporters are well-known eurosceptic economists such as Stefan Homburg (Hanover), Charles Blankart (Berlin), Wilhelm Hankel and Karl Schachtschneider (both multiple plaintiffs at the German Constitutional Court of Justice in various euro-proceedings).
Germany has arguably been the biggest winner from the creation of the euro. The currency bloc provides a relatively stable and low-cost destination for German exports.
However, the idea of bailing out other countries, like Greece, Spain, Italy, and the like – even though those countries were running up debt to buy German exports all of those years – is still pretty cringeworthy in Germany. Alternative hopes to capitalize on that.
Heinen notes that this isn't the first eurosceptic party to hit the German political scene, but it is the first one in a while. (The one Heinen recalls was established in the late 1990s but fizzled out after a few years.)
The problems for these parties in the past have been four-fold, according to Heinen: fragmentation, money, content, and appeal.
The situation now, amid the economic crisis engulfing the bloc, is dramatically different than then.
So, how big of a problem for this new party do those four issues present?
Here is Heinen's take:
Fragmentation remains the crucial issue: The economists that make up the movement have quite differing views on how to achieve their political goals. They are just at the very beginning of their opinion-forming process. While their communication is professional, they have almost no experience in policymaking. Also, fragmentation within the eurosceptic party spectrum remains an issue: AD offered to cooperate with the eurosceptic Freie Wähler (free voters) during the state elections in Lower Saxony in January but the Freie Wähler refused to agree. The Freie Wähler ended up with 0.5% in Lower Saxony.
Money: The financial resources of the movement are scarce. Additional funding from economically powerful sources remains unlikely as long as the degree of internal fragmentation remains high.
Content: As long as AD does not further carve out its position in other policy areas, campaigning on just one topic will remain a risky strategy that has not paid off in the past.
Appeal: In contrast to other fragmented eurosceptic movements, the AD has some prominent supporters in its ranks. Most prominent supporters of the movement are highly professional media personalities as well as well-known eurosceptics like Hans-Olaf Henkel. Thus, a new eurosceptic party with prominent supporters could attract the media’s attention as Angela Merkel’s euro rescue politics remains a recurrent issue in German public debate and talk shows.
Alternative still needs to officially register as a party and collect the requisite number of signatures to participate in elections come September.
Moreover, Heinen says aside from the four factors above, much of Alternative's success will be determined by the public mood toward the euro crisis when September arrives – will markets be flaring up, or will the environment seem largely benign?
Click here to read the full report on Deutsche Bank's website >