May 6, 2010 / 2:35 PM / 10 years ago

Merkel judgment, leadership open to doubt over Greece

BERLIN (Reuters) - Germans feel cheated over the Greek debt crisis and angry at having to pay for the excesses of the euro zone’s most egregious budget sinner.

German Chancellor Angela Merkel attends a panel discussion at a so-called Europe Forum in Berlin, May 6, 2010. REUTERS/Tobias Schwarz

Chancellor Angela Merkel has played to those emotions, dragging her feet on aid and demanding ever greater sacrifices from Athens as its borrowing costs soared until the crisis threatened to engulf other south European countries.

No wonder she is having a hard time turning public opinion around now she has embraced the urgent need to rescue the Greeks from default to safeguard their shared currency.

“The worst of the scenes from Greece have affected us all. But they should not mislead us into hasty aid campaigns calling for a rush of additional action,” mass-circulation daily Bild, a trusty barometer of ordinary Germans’ gut reactions, said after three people died in anti-austerity violence in Athens.

“Even after such a tragic day, one must ask: “Where are our billions actually going?” Is the euro and Greece really helped if billions are allowed to trickle away into a possibly politically instable country?”

Parliament is expected to approve Germany’s 22.4 billion euro contribution to a 110 billion euro EU/IMF emergency loan package for Greece by a broad majority on Friday.

But it will be harder to restore German public confidence in Europe, and Merkel’s own leadership is now in question.

“We haven’t seen crisis management, we have seen an eye for the tabloids. That was the double game you played that cost us so much confidence and respect in Europe,” Social Democratic opposition leader Frank-Walter Steinmeier said in parliament.

SWIPE FROM KOHL

Criticism is not confined to the opposition. Merkel’s political mentor, former Chancellor Helmut Kohl, took a veiled swipe at her at his 80th birthday reception on Wednesday, lamenting the lack of pro-European leadership.

“Many in our country behave as if Greece didn’t matter to them,” the chancellor of German unification said pointedly in Merkel’s presence, adding that European unity was “a question of war and peace” and the euro “a guarantee of peace for us,” news magazine Der Spiegel reported.

The veteran Kohl, who co-founded the euro to anchor a united Germany into Europe, sounded increasingly remote from younger generations who view the EU unsentimentally as an economic bloc and forget the historic reasons for its creation.

The Greek crisis appears to have hardened that shift in the public and the media by triggering deep-seated fears, rooted in German history, of inflation and money losing its value.

Voters in North Rhine-Westphalia, Germany’s most populous state, may vent their anger by giving the ruling center-right coalition a kicking in a regional election on Sunday, even though Greece has not been the main issue there.

Opinion polls this week showed Merkel’s conservatives and her pro-business FDP allies heading for a defeat that would rob her of the upper house majority needed to deliver tax cuts and other sensitive reforms.

“It is different from the banking crisis a year and a half ago. The chancellor has not been a pillar that gives people confidence and direction in the crisis,” said Manfred Guellner, head of Forsa pollsters.

LESSER EVIL?

Many Germans, including senior officials, feel that European partners lied when they promised Kohl in the 1990s that Germany would never have to take responsibility for the debts of other members of the single European currency.

The “no bailout clause” in the EU’s Maastricht Treaty turned out to be no guarantee against a financial market run on the weakest link in the euro area.

Now Germany is having to lend Greece money which many are convinced they will never see again. And there are fears that Portugal and Spain may be next in line for rescue.

In private, some senior officials are almost as scathing as Bild in contrasting “lazy, cheating Greeks” and “euro free-riders” with their self image of hard-working Germans who get up early, haven’t had a real pay rise in years and retire late.

As a result, while the European Commission and fellow euro founder France see closer political union and economic policy coordination as the way to shore up the euro, the Germans are only interested in tougher sanctions to force budget discipline on profligate states.

Merkel has demanded that the EU be given new powers to suspend the voting rights of deficit sinners and expel serial offenders from the euro area.

That would require changes in the EU treaty to be adopted and ratified by all 27 members, which seems improbable given how hard it was to approve the recently implemented Lisbon Treaty.

“Whether Mrs. Merkel is deliberately demanding treaty change to assuage public opinion although she knows it is impossible, or whether she really means it and thinks it is achievable is unclear to us,” a European diplomat in Berlin said.

Given their attachment to economic stability, Germans may eventually conclude that saving the euro, even at a cost, is the lesser of two evils.

But for that, Merkel would have to invest more political capital in convincing them of how much their prosperity depends on the vast export market of the euro zone, and how much worse off they would be without it.

writing by Paul Taylor, editing by Janet McBride

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