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Germany should not be allowed to call the shots any longer

It would be farcical if it weren't so utterly tragic. This week Brian Lenihan reported that there was "considerable shock" among EU finance ministers at the "tone" of the debate in Ireland regarding the possibility of a bond default in the Irish banking sector. Good lord, who would have guessed that those hard-hitting finance boyos were so sensitive? Better have the smelling salts to hand, lads, because we haven't even started to mention the war yet.

In an online poll last week (thejournal.ie), the vast majority said that Michael O'Leary should be sent to Europe to negotiate on our behalf -- which should give those sensitive finance ministers a very good indication of how the Irish people feel the debt crisis should be handled.

Kowtowing to Trichet or Merkel is not on the agenda.

We are going to default. We have no choice. All that's left to decide is when. Either we wait until the country is broken beyond measure or we do it now, while we still have some sort of functioning society. Historically we could deflate our way out of a recession but as a member of the eurozone that is now impossible. Either we leave or insist that Europe agrees to burden-sharing.

Why hasn't Europe cottoned on to this? It's not like every independent economist here and elsewhere isn't singing it from the rooftops.

Perhaps it's because large institutions can often suffer from 'group think', where it is difficult for individuals within them to assert opinions that are contrary to official central policy. Not all European politicians want to destroy Ireland, it's just that they're a little blinkered at the moment.

This is the kindest interpretation I can think of to explain why Europe -- and Germany in particular -- is still intent on following a path which will send not just Ireland, but also many other EU periphery countries, on a disastrous path to economic and social oblivion.

Continue with these austerity policies and the euro will collapse. Yet Brussels remains ignorant of this reality.

As Costas Lapavitsas, a Greek economist, said: "Ireland must come to the realisation that being in the eurozone with its current structure is a trap.

"It offers no option to the country other than austerity. The response must be radical . . . they (Ireland and Greece) simply cannot handle the present scale of their debts and must default."

Yet a few days ago, Jean-Claude Trichet repeated the mantra that "individual countries must accept the monetary policy as a given and adjust their national policies accordingly".

And earlier last week, EU commission offical Servaas Deroose advised the Greeks to 'sell beaches' to help pay off their debts.

What's next? Suggestions that the fecund Irish should rear their kids to sell to the rich? (We're doing that already via emigration.)

The eurocrats seem to be blindly refusing to acknowledge reality: if the euro is to survive, debt restructuring will have to be key.

As Nobel-winning economist Joseph Stiglitz said: "It will eventually happen. But delay is very costly -- and largely unnecessary."

As well as costly, delaying on debt forgiveness is to play a very dangerous political game as a simmering resentment against the austere policies favoured by Germany starts to turn to more vocal protestation in countries like Ireland who cannot deflate their way out of this recession.

Recently, a cartoon map went viral on Facebook and Twitter -- posted by one of the Financial Times Alphaville bloggers. The title was 'Introducing Greater Germany' and it featured a map with all the German bits coloured blue: the entire eurozone.

Gallows humour or xenophobia? Whichever you believe, Germany, backed up by France, is calling the shots in Europe and the anger of the smaller nations is beginning to show.

The reason for this, of course, is not just that people are disgusted at having to pay for the gambling debts of private banks, but that we're only beginning to realise that ever since the unification of Germany and the introduction of the euro, many monetary decisions made by Europe have been for Germany's benefit.

Low interest rates and all the money German banks were handing out to gobshites like us meant that the German economy -- depressed in the 1990s as a result of low demand from domestic consumers -- was able to make a triumphant recovery, fuelled by an export boom driven by all the cash it lent to its neighbours.

Even at the most recent meeting of the European Council, Angela Merkel got everything she wanted: governments that can't borrow on the open market will receive "loans" from the rest of Europe there will be no e-bonds, there will be no transfer union. Germany insist that it's all for our own good. But really they're just using us as a horrifying example to other euro countries in debt.

In a bout of teutonic self-righteousness, Germany is doing to us what France and Britain did to it after the First World War. You'd think they'd know better, wouldn't you?

It doesn't have to be this way. As David McWilliams pointed out this week, the central vision of the European project is forgiveness and unity. We work together as a family for communal prosperity so that we will never again experience the horrors of a European war.

It's very unsettling to hear citizens of countries traditionally so proud of euro membership start to point the finger at Germany and France as the cause of all their problems. It's also very dangerous.

If Germany and France are serious about the future of the European project they need to cop on to the impact of their current unforgiving attitudes towards countries in debt. Otherwise it's all over.

So, how do we make them listen to us? McWilliams' idea of a referendum would seem to be the best choice available at the moment.

If we vote to renegotiate, while asserting our commitment to the euro project, Europe, which prides itself on its democratic ideals, will have to listen.

The only problem is that the clock is ticking -- do we have enough time to force the Germans to see sense? Or is it already too late?

Sunday Independent