The threat Cameron faces from imperious Germany

THE POLITICAL fall-out over the euro is gathering pace. In Greece, such is the resentment at German demands for austerity, that the official in charge of Brussels' economic task force in the country, Horst Reichenbach, has found himself nicknamed Third Reichenbach. But it is not just in Greece and Italy that concern is mounting over Germany's increasingly imperious behaviour.

From beyond the eurozone, Barack Obama and Vladimir Putin have both expressed their frustration at the refusal of the European Central Bank to do more to calm the markets. David Cameron has been even more direct, specifically naming Germany as the party that is preventing the ECB from doing enough to overcome the crisis.

Yet, whether it is abuse on the streets of Athens or a magisterial rebuke from the White House, the Germans seem remarkably unmoved. In an interview in Monday's Financial Times, the head of the Bundesbank was unyielding when asked why the ECB should not be able to undertake the sort of measures, like printing money, that other central banks engage in to help their governments – and which Germany, alone, forbids.

Nor was he any more sympathetic when it came to direct aid for his stricken neighbours. As far as helping Athens was concerned, he insisted rather chillingly: "That relies on Greece sticking to the adjustment programme. If it doesn't, the basis for this help would no longer be there – with all the consequences that entails".

No wonder other governments find Berlin so infuriating.

Yet far from being deterred, Germany continues to be driven by a seemingly unshakeable faith in its own rectitude. Yesterday, Angela Merkel told her party conference that the answer to the current crisis was "not less Europe, but more". This, apparently, will mean new rules governing conduct within the eurozone – rules, needless to say, which Germany intends to take the lead in writing.

The Germans are correct, of course, when they say that if others had not flouted the rules so blatantly in the past, the euro would not now be in such a mess. It is true, too, that they have worked hard, as a nation, to make a success of monetary union.

What they tend to overlook is that when they joined the euro, they effectively wrote the rule book to suit themselves. And for a long time it worked. Over the last 20 years, thanks in good part to the single currency, Germany has gone from being a troubled economy with high unemployment and a trade deficit to being one of the world's top two exporters.

But at the same time, imbalances within the eurozone have been allowed to build up to the point where they are never going to be unwound within the existing system. No amount of austerity will enable Greece to pay its debts, and very probably several other countries too. Nor will the ·