Chancellor Merkel's decision to recapitalize German banks represents a double breakthrough. On the one hand she recognizes that the crisis is fed by the constant interaction between sovereign debt and banking balance sheets and it is not just a problem of those Countries lacking discipline. Now a well coordinated intervention on banks will be necessary, unlike the one that took place in October 2008 that prompted the crisis giving rise to the interaction with sovereign debts.

The other breakthrough is the admission that "the policy of uncertainty" supported by Berlin was counterproductive. Without a European political structure able to force discipline on other Countries, the German strategy was to leave room to market pressure through uncertainty on aid. The strategy was for Berlin to strengthen the political commitment towards the euro, but at the same time to put a brake on those solutions to stabilize the crisis – the purchase of bonds by the ECB, Eurobonds, the broadening of the stability fund – in order not to alleviate the pressure for reforms in the Countries in crisis.

The last meeting of the Eurogroup gave the extent of this poker game. The aid to Greece was postponed to put pressure on Athens in its talks with the Troika. The Greek government then "found out" that it had a well hidden reserve that allows preventing default and finally it strengthened the reform package.

The uncertainty could have been useful if one or two years had been enough to transform the Greek economy. The idea comes from the exceptional experience of the Eastern European countries that – without touching the exchange rate with the euro – were able to come out of the 2008-09 recessions in a very short period of time. But those economies were already "open", foreign investments were significant, the banks were in foreign hands and the production chain was integrated with Western companies. The Greek economy is far off from being an open and integrated. In these conditions a cut in prices and salaries – that was successful in the East – produces for now just recession and debt. It will take 5-10 years, in which they cannot always be on the brink of default, to recover productivity.

The alternative to default and uncertainty is a common management of the economic sovereignty of the assisted Countries. In 15 days the governments of the euro area will discuss the reform plan presented by Van Rompuy that will give a political character to the Eurogroup, it will limit the cacophony of multiple voices of the governments and it will define the greater potential of financial assistance to the stability fund. It could be the right moment to understand how much sovereignty it is possible to share.

Italy's role is fundamental. If it will continue to ignore the reforms that were requested, last of all by the ECB, it will prove that the political solution will be inefficient and that the only discipline can come from the markets and the threat of default. If it will accept its European responsibility it could remove the last hurdle towards political integration on which Germany is already working on.

The German public rhetoric on the future of Europe is in fact changing. The theme of the European political union is becoming a shared outlook. Chancellor Merkel has placed it as an arrival point of the crisis. Finance Minister Schauble Sunday published a manifesto sounding like a convinced Europeanist. The possible social-democratic challenger in the next elections, Peer Steinbruck, drafted a program for a political union within ten years, with accents of strong Europeanism. The President of the Bundesbank, Jens Weidmann, opened to the scenario of a fiscal federalism. Even the president of the Constitutional Court changed the course of his reserves on further integration towards a stimulus to develop the European project.

The outlook of federal elections will accelerate the Europeanist turnaround in German politics. This should not be surprising. One out of five German citizens has a history of immigration. One out of three children comes from families of "new Germans". In the kindergartens of Berlin and Frankfurt, the immigration rate is of 60%. In the heart of Europe and in this social context, one cannot think that the rhetoric on identity can prevail over the one on integration. The grammar of interdependence is a fact that has been acquired in the lives of German citizens whose jobs depend half on foreign trade and whose salaries depend even more on this. When the next Government will have finished its mandate, half of the working-age voters will have never used the D-mark in their activity. What historical sense could there be in abandoning a common European currency to go back to the mark?

The choices of the next 15 days, in Italy and Brussels, are an exemplary test of the political integration that Germany recognizes on the European horizon. Besides, the crisis is not just the story of Greek accounting scams but of bad financial tangles that tie creditors and debtors, like the Dexia case proves, and of interactions between States and banks. It is human nature to seek who is guilty, be it the Greeks or bankers. But it is in political nature to seek first the solutions and to give these solutions a context and the people's support. And this crisis has to be resolved not like an identity problem but like an integration problem.

(translated by Yael Schrage)

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