Alan Kohler is one of Australia’s most experienced commentators and journalists. Alan is the founder of Eureka Report, Australia’s most successful investment newsletter, and Business Spectator, a 24-hour free business news and commentary website. He also hosts Inside Business, a half-hour Sunday programme on the ABC, is the finance presenter on the ABC News - and producer of the nightly graph (or two).

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Comments on this article
Comments PolicyI would like to comment on some comments in this piece (Why Merkozy is destined to fail, January 12).
Oliver says, "At a time when Europe is once again looking at Germany and, to a lesser degree, France as the two countries that ultimately will decide the fate of the common currency and the future of the European Union". That is a very scary fact, these two leaders have clearly demonstrated to the entire world they are completely out of their depth with this crisis. It is now clear Europe, with these two leading is going to collapse.
Oliver also asserts that "Internationally, Merkel is seen as a strong and sometimes feared figure." You are kidding right? It is evident Merkel is seen internationally as utterly inept.
Oliver continues "Losing 'her' president and failure to produce a replacement would be hugely embarrassing to Merkel. She knows that many commentators would interpret it as the beginning of the end of her chancellorship. She might even conclude that it is better to leave a fatally damaged president in office if only to spare her political humiliation."
With respect, she does not need her president to humiliate her. During this crisis she has done a great job of humiliating herself by lurching from one stupid knee-jerk decision to another, demonstrating her hapless, inept, directionless leadership. I think it is fair to say that the developed world outside Europe is not fearful of her, but sniggering at her clumsy attempts at leadership
Why talk of a possible Greek default? (Why Merkozy is destined to fail, January 12) If they manage to negotiate away half their bonds, that's a default. Investors will have lost half their money. If they don't, investors will lose all their money. Greece has already defaulted. The EU maintains the pretence so it won't have to admit the EU banks are broke.
At which point Sarkozy out, Hollande in (Why Merkozy is destined to fail, January 12).
I guess that what make the new 'Merkozy' (Merkel-Sarkozy) 'Merde' (Merkel-Hollande)? Appropriate for when it all hits the fan, no doubt?
That was a very insightful piece Oliver. Thankyou (Why Merkozy is destined to fail, January 12).
Isn't it interesting that the only people who think Merkel has substance are Germans.
Why? Simply because her incompetence has not yet had the chance to show itself to the German electorate. This is because Germany is protected from the effects of the eurozone crisis because it effectively owns the eurozone lock, stock and barrel, and uses it to finance foreign exchange finance in favour of Germany.
Maybe the question that the European Union should be asking is whether the large nation states they have inherited from the past, particularly the Napoleonic era, are likely ever to be stable. Britain could be said to be leading the way in posing the question of a politically independent Scotland. Why not? Properly handled the transition could please many, and hurt no one (Why Merkozy is destined to fail, January 12).
When I visited Sicily a year ago, I found myself asking why on earth what could so easily be an island paradise, was being "ruled" from Rome. Italy as a unified state has never been particularly functional. The north has little in common with the south, and the centre has little in common with either. Regional governments operating within a larger Europe-wide federal model might be far more viable.
The same question could readily be raised about the Spanish and German regions, what do they really have in common with each other? In some cases, as in Spain, barely even language.
A federalised Europe would neatly fit in with greater regionalisation. Why shouldn't the Basques for example have their own regional government under a European federation, together with the Scots, the Northern Irish, Catalonia, Bavaria and so on?
Europe needs to think more imaginatively, working towards a new political structure for the entire continent, and a more united infrastructure and economy, combined with stronger regional parliaments. Ultimately such a European Constitutional structure must eventuate – so why not save a few centuries of pain and work deliberately towards it now?
The Euro mess is just another problem caused by a combination of disunity and competing nation states. Past problems included war between those clumsily evolved nation-states. Perhaps it is time to undo the damage the Napoleons, Bismarks, and Garibaldis of Europe caused, and to recreate Europe in a different form entirely.
An opportunity presents itself that should not be squandered.
Phil's idea has merit though a federation only works if it's also a fiscal union... the perennial discord between state governments and the federal seat of power that we see here in Australia and also America bodes ill for your idea of a european federation (Why Merkozy is destined to fail, January 12).
You can't go to France and not love it - this square slab of Europe with magnificent history and geography and culture. No wonder they fought wars over it. Sad to see how it is now, though in central Paris "What GFC?" would be your response. Everything there looks fine. But its confidence is down and its economy is struggling. It doesn't know what to do about its ethnic divisions (Why Merkozy is destined to fail, January 12).
It was described by (I think, and I paraphrase) Romania a couple of years ago as like a good looker who had not come to terms with ageing, wondering why the phone didn't ring. This was in response to a finger-wag from the Elysee about where Eastern Europe was going wrong.
Correctly, but sadly, Oliver Hartwich is ironic when he says "Merkozy, the celebrated rescue duo". France will be flat out cleaning up its own mess. It's not in a position to prop up anywhere else. This is all pretentious nonsense. I wonder what Merkel and Sarkozy actually talk about in their continual crisis chats.