Bailout fatigue forces Germany to hear the skeptics

BERLIN Wed Jul 13, 2011 6:20am EDT

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BERLIN (Reuters) - Germans' doubts about the euro zone grow with each new bailout and Angela Merkel's government is struggling to contain rampant euro skepticism.

The movement has no political voice. No local version of the nationalist True Finns or Dutchman Geert Wilders has made a breakthrough, partly because of taboos rooted in German history.

But resentment at funding bailouts for euro-zone partners poses a strategic challenge to Merkel's conservative coalition.

As Europe prepares a second bailout for Greece, on top of aid packages for Ireland, Portugal and potentially Italy, and draws up a permanent bailout mechanism for future debt crises in the currency zone, Germans are running out of patience.

Ulrike Guerot, senior policy fellow for the European Council on Foreign Relations, says the German relationship with Europe has now entered a "post-Romantic phase."

But many Germans never had such romantic notions about the euro and believe Berlin should never have thrown taxpayers' money at countries flouting European Union fiscal rules.

"It's money down the drain," 74-year-old pensioner Goetz Uhlendorf told Reuters in his modest flat in Spandau, west of Berlin.

Recent opinion polls suggest three quarters of Germans have little confidence in the euro currency, compared to less than half in 2008 before the sovereign debt crisis took hold. Two thirds either oppose more aid for Greece or think it won't work.

Such views are supported not just by populist politicians or the tabloid press, but university professors like those who are now challenging the legality of the euro-zone bailouts in the German Federal Constitutional Court in Karlsruhe.

Hans-Werner Sinn, head of the Ifo think-tank that compiles Germany's top economic indicator, warned in Bild -- a tabloid read by 12 million of Germany's 80 million people -- that Greek and Portuguese aid "will be at the expense of Germans' living standards."

"German pensioners will be among the first victims of these bailouts," said Sinn.

Bild has voiced resentment at protesters in Athens who used Nazi banners to criticize the German chancellor's insistence on strict terms for the bailout, with indignant headlines like "We pay -- and still get insulted!." But the focus of criticism of the euro zone tends to be more financial than nationalistic.

"If the German government has mobilized so much money for the Greek rescue package and other bank rescues, then it should also free up money for pensioners," Ulrike Mascher, 72-year-old president of the 1.5 million-member VdK which represents German pensioners and the disabled, told Reuters by phone from Munich.

WANT YOUR D-MARKS BACK?

The 20 million German pensioners who Sinn said were the most vulnerable to the euro zone crisis got a 0.99 percent rise this year on state pensions averaging about 1,000 euros a month, which is whittled down by deductions and inflation.

"So when we see them saying on TV that Greek pensioners get 2,500 euros on average and dead people get pensions because the authorities are so inefficient, it makes us angry -- though we don't want to take anything away from anyone," said Uhlendorf, a retired sales representative and disillusioned conservative.

The average Greek state pension is actually 1,300 euros a month, according to the Greek civil servants' union ADEDY. But the facts are often stretched -- by Merkel herself, among others -- when frustration is being vented about southern Europeans' irresponsible spending compared with Germany's fiscal prudence.

Deputy Foreign Minister Werner Hoyer is an EU-enthusiast in the party in Merkel's coalition often accused of skepticism, the Free Democrats (FDP), who are junior partners in the government.

Hoyer draws a distinction between feelings toward the euro and the bailouts, saying skeptics worry Europe will turn into a "transfer union" where rich countries like Germany take on debts of weaker ones, violating the EU treaty's "no bailout" clause.

The deputy minister said most of the skeptics in the FDP "have no problem with Europe or the euro."

"Some people might say on a whim 'how nice it would be to have our old Deutsche mark back'. But when you ask them directly 'would you really like to swap your euros back into marks and pfennigs next week?', the overwhelming majority of people in Germany will say no," Hoyer told Reuters in an interview.

Defenders of the euro commonly argue that Germany's giant export sector has made it "the biggest beneficiary of the euro," and multinationals like Daimler launched a vigorous defense of the currency in German and French media in June.

But small businesses in the Foundation for Family Companies wrote to parliamentarians calling this a "myth." They point to Germany's low growth for the past decade as it kept down pay to boost its then flagging competitiveness in the EU.

POLITICAL PRICE OF BAILOUTS

The politician who has made the biggest effort to mobilize such arguments is Frank Schaeffler, a 42-year-old MP who tried to get the FDP's congress in May to vote against the bailouts -- and lost to euro enthusiasts in the FDP led by Hoyer.

Despite his image as "enfant terrible" of euro skepticism, Schaeffler said his stance was "less about euroskepticism than Europe needing to obey the rules" on debt and deficits.

Bringing back the D-mark is "not my position, though I do think the euro has no future if we carry on the way we are," he said in an office in the Bundestag's stylish modern annexe.

Schaeffler is trying to rally opposition to a permanent euro bailout scheme -- the European Stability Mechanism (ESM) coming into effect from 2013 -- when parliament votes in September.

The ESM vote and constitutional court ruling could make it a tough autumn for Merkel. Frank-Walter Steinmeier of the opposition Social Democrats (SPD) warns that if she does not get her own majority on the ESM, "it will be the end of the coalition."

Merkel's Christian Democrats (CDU), their Bavarian sister party, the CSU, and the FDP pledge to back the ESM and the government is confident it will pass, despite Schaeffler's talk of "30 or 40" conservatives being ready to rebel.

The CSU's Secretary-General Alexander Dobrindt has made some euro-skeptic noises in recent weeks, complaining that Germany is "paying a political price" for rescuing Greece and echoing the common complaint that parliaments are being side-stepped as EU leaders argue that the crisis is too urgent to put to a vote.

But CSU parliamentary leader Gerda Hasselfeldt told Reuters she saw "no sign the CSU is becoming a euro- or Europe-critical party. If I did, I would object."

GERMANY NOT IMMUNE FOR EVER

Uhlendorf, the Spandau pensioner, is so disillusioned with existing German political parties that he has helped found the German Pensioners' Party. Joking that "a good pensioner dies at 65," he says all politicians have failed to represent his interests.

With membership fees of one euro a year -- "that's all our members can afford" -- the party has about 400 members across the country. Other pensioners' parties with names like "The Grey Ones" are even less of a threat to the big players.

Uhlendorf voices no resentment of the Greeks and says that even if Germany did stop sending money to Greece, "we pensioners still wouldn't get another pfennig."

The FDP's Schaeffler says his party has no urge to rally an anti-Europe vote "or be like the True Finns or anything like that." But he does see a risk of such a party emerging in the medium term, which he believes "would be a sad development."

Deputy minister Hoyer, asked if a local euro-skeptic party could emerge, responded: "Germany is not immune to this."

Academics say no such party has yet gained prominence for a number of reasons, not least because it would automatically be associated with the far right, still a taboo for most Germans. Such groups do sprout up at local level but tend to disappear quickly, lacking effective or charismatic leadership.

Reiner Klingholz, head of Berlin's Institute for Population and Development, said it was also because most Germans see the benefits the euro has brought, and because the established CDU and CSU generally manage to mop up any stragglers on the right.

"But I don't know if this will work forever," said Hoyer. "The phenomenon is there in Britain, Scandinavia, Benelux and in the south (of Europe), so why not in Germany too?"

Mascher at the pensioners' group VdK said it "fills her with dread to see euro skeptic elements emerging in some parties."

"I was born in 1938 and have a very clear memory of what the war was like, and the post-war period," she said. "For me Europe is quite simply a miracle, something we must look after."

(Additional reporting by Thorsten Severin and Joseph Nasr; writing by Stephen Brown; editing by Janet McBride)

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Comments (1)
SKYY wrote:
Actually there is already a party similar to the PVV of Geert Wilders in Germany. It was founded last fall and already has over 2000 members and local parties in nearly every German state. It’s called “DIE FREIHEIT” and they will take part in the upcoming state elections in Berlin in September which is also the first election for them. The chances of “DIE FREIHEIT” will be pretty good to be one of the new bigger parties in Germany, especially after CDU and FDP fail to listen to the suggestions of Frank Schäffler(FDP). DIE FREIHEIT adopted most of his points. Its also important to say that they are not against the EU or the EURO, but they criticize the actual construct of both.

Very sad that Reuters haven’t mentioned it, but has time to mention an unknown pensioners party……

Jul 14, 2011 5:36am EDT  --  Report as abuse
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