Washington, January 25: The head of the World Bank urged Germany on Tuesday to take the lead in resolving the euro zone’s debt crisis, warning in a Financial Times commentary that simply trying to muddle through was dangerous.
“No other country can lead Europe out of crisis and into revival,” World Bank President Robert Zoellick wrote in an opinion piece in the Financial Times. “Germany must now point the way.”
Zoellick, who was the lead US official in the “Two-plus-Four” process of German unification in 1989-90, said taking the lead would not be easy for Germans, who he said are often urged to do more and then criticized for being overly aggressive.
German Chancellor Angela Merkel’s pursuit of a fiscal pact to ensure stricter budget discipline in the euro zone was encouraging, but needed to be expanded into a plan that offers incentives and support to countries, Zoellick wrote.
“Combined with new governments pushing fiscal discipline and structural reform in Italy and Spain, as well as support from the European Central Bank, Ms. Merkel’s new direction has improved prospects. But these steps are not enough. Risks abound,” he said in the opinion piece.
Merkel has been under pressure from the International Monetary Fund to pony up additional funds for a permanent European bailout scheme due to become operational mid-year.
Italian Premier Mario Monti has complained to Merkel that bolder steps are needed from Germany to avoid destabilizing Italy and the broader single currency bloc. At the same time, Merkel is under political pressure at home not to give more money for bailouts.
“Germany cannot and should not save countries if they do not act to save themselves, but it can assist reformers to sustain political support,” Zoellick wrote. “Rather than be dragged grudgingly to help bit-by-bit at the last moment, Germany and its European partners should put incentives on the table now.”
Zoellick said Germany should also look beyond the eurozone. It should bring Poland into the fold, seek to ensure Britain remains engaged with other European nations, and work to prevent a credit crisis in southeast Europe.