By EUGEN WEBER [The Atlantic] – Hindsight suggests that the best characterization of Germany’s approach to occupied France was “Give me your watch and I’ll tell you the time.” But if the Germans looted with all the enthusiasm once shown by Napoleon’s armies, they also struck deals that could serve both sides. The new order was European. With French and German bankers, industrialists, and other businessmen meeting regularly, the idea of a United States of Europe was making its way, along with visions of a single customs zone and a single European currency. The European Union, its attendant bureaucracy, even the euro, all appear to stem from the Berlin-Vichy collaboration. Bureaucratic controls proliferated, administrative and business elites interpenetrated, postwar economic planning took shape—as did that greater Europe in which France’s Hitler-allotted role would be one of a bigger Switzerland, “a country of tourism … and fashion.” For the present France offered an economy to be milked at will, and a reservoir of labor.

Continued at The Atlantic | Previously noted here in The Fortnightly Review |

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In Berlin, 523 parliamentarians do what the Wehrmacht could not.

By GARTH THEUNISSEN  [Bloomberg] – The euro rose toward a one-week high versus the dollar amid speculation German lawmakers will approve the expansion of a bailout fund for debt-stricken euro- area nations to help contain the sovereign-debt crisis.

The 17-nation currency strengthened against 12 of its 16 major counterparts as German Chancellor Angela Merkel attempts to win the backing of her coalition to expand the powers of the European Financial Stability Facility. . .

“The German talk about the euro zone is becoming a bit more positive, which reduces the risk of a disorderly breakup,” said Adrian Schmidt, a currency strategist at Lloyds Bank Corporate Markets in London. “The ratification of the EFSF by Germany should be routine and that suggests an upside bias for the euro.”

. . .

The vote in Berlin on changes to the EFSF would allow the fund to buy the bonds of distressed member states and offer emergency loans to governments, raising Germany’s guarantees to 211 billion euros from 123 billion euros. The main opposition Social Democrats and Greens have said they will vote with Merkel’s government, assuring passage.

“The main thing for the market today is the EFSF vote in Germany,” said Chris Walker, a foreign-exchange strategist at UBS AG in London. “It’s widely expected that the vote will pass and that’s squeezing the euro up a bit.”

Continued at Bloomberg |

. . .

UPDATE [Wall Street Journal] – Germany’s parliament Thursday approved by a wide margin legislation to boost the scope and volume of the euro zone’s rescue fund.

Lawmakers passed the reform of the European Financial Stability Facility with 523 ‘yes’ votes, while 85 lawmakers voted ‘no’ and three abstained, in a vote that was seen as a crucial test of German Chancellor Angela Merkel’s center-right coalition.

All 17 euro-zone governments have to approve the expansion, which will boost the fund’s lending capacity to €440 billion ($595.94 billion) from €250 billion and expand its powers to allow it to extend credit lines to banks and buy bonds on the secondary market.

Continued at The Wall Street Journal |

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Germany’s ‘Balkan Mess’.

By TED GALEN CARPENTER [National Interest] – German officials have spurned Belgrade’s hints that, despite major domestic political impediments, the Serbian government might be prepared to accept Kosovo’s independence—if territorial adjustments were made so that the predominantly Serb region north of the Ibar River would remain with Serbia. Shrewd diplomats would have explored those hints to see if they were serious. Merkel and her advisers, unfortunately, rejected any suggestion of reciprocity.

Yet, if a partition of Kosovo would remove a major headache from the Balkan region, it would seem to be a price well worth paying. To reject such an idea out of hand is a case of diplomatic malpractice. Insisting that Kosovo be recognized within its current, arbitrary boundaries creates needless instability. At best, the Serb population north of the Ibar will be a restless minority discriminated against by the Albanian Kosovar regime. At worst, they become a candidate for ethnic cleansing on the watch of NATO and the EU.

Not only did Merkel probably wreck any chance for an orderly end to the Kosovo squabble, virtually guaranteeing that peacekeeping forces will have to remain for a very long time, she also set a worrisome precedent regarding the standards for joining the EU. By demanding that Serbia abjectly accept the secession of a portion of its territory, she is including a requirement that no current member had to meet. The contrast with the treatment of Cyprus is especially striking.

Continued in the National Interest | More on this topic | More Chronicle & Notices.