Leave it to the World Economic Forum's annual India conference to reveal some home truths about...the euro crisis.
I was moderating a panel discussion here in Mumbai yesterday on the increasing amount of trade within the developing world, and amid an unrelenting stream of on-the-record optimism from the various panelists, I tried to spark things up a bit.
Look, I said, I'm a born pessimist. For the sake of argument, let's assume a worst case or nearly worst-case scenario for Europe. I don't believe the euro zone can survive in its current form, and I think Europe is in for a deep recession, not a short shallow one. What would the impact of that be on India, China, and all the other developing countries, particularly in Africa, whose trade is rapidly expanding with developing world's two giants?
Forget what the response on the panel was. It was unremarkable. What's interesting is what happened later, during a coffee break, when I got into a discussion with two senior German executives attending the meeting.
The nature of these meetings is that the hallway chatter is always more interesting that the formal program. Part of the reason why is that, particularly when talking to journalists, the businesspeople or politicians tend to regard those conversations as off the record. So I'll abide by that here. One of the German execs was a consultant, and the other headed what I'll call a quasi-official German organization.
They were slightly irritated by the pessimism I'd expressed earlier in the day. "Don't you realize," one of them said, "that the cost to us (Germany) of bailing out Greece is far less than it cost us to reintegrate East Germany after the wall came down in 1989?"
I almost choked on my croissant. Yes, I replied, I am aware of that. I lived and worked in Berlin as a journalist in the mid 1990s, when that very painful (economically speaking) process was taking place in Germany. But doesn't that, I said politely, rather beg the question: Germany integrating their brethren, who'd been isolated and impoverished during the cold war, was a dream come true, whatever the cost. Germans, on the other hand paying to bail out Greece is, to average German, rather the opposite of a dream come true, is it not?
He waved me off. No no, he said, it will be taken care of. The Germans, he said, understood how beneficial to them membership in the euro zone has been. Without it, the gentleman said, the value of the Deutschemark would be 50% or 75% higher than it is under the euro. "German industry would be wiped off the map."
