Hang on to your purse, Ms Merkel

Written on September 6, 2011 by Ángeles Figueroa-Alcorta in Europe, Globalization & International Trade, Political Economy

By Gideon Rachman

“When she walks into the room, everybody falls silent. It’s like the headmistress coming in.” That, according to one senior politician, is the impact that Angela Merkel has when she enters the regular gatherings of conservative leaders from across Europe.

The chill spread by the German chancellor is easy to understand. Her colleagues know that the fate of the euro – and the European Union as a whole – now depends on decisions made by the German government. Many criticise Ms Merkel for lacking imagination, warmth and generosity – for being too slow and too cautious. The chancellor is even under attack from pro-Europeans back home. Helmut Kohl, her mentor and the man who took Germany into the euro, complained recently that he had no sense of “where Germany stands today, and where it is heading”.

The general tenor of all this criticism is clear. Why won’t Ms Merkel live up to her promise to do “whatever it takes” to save the euro? Why won’t she finally get ahead of the crisis, by committing all of Germany’s financial might to the project? Why can she not see that eurobonds – a pooling of credit risk across the EU – are the answer? Europe needs a leader and instead it has got a hausfrau.

But rather than lambasting the chancellor, the rest of Europe should be grateful that they have a calm and cautious leader in Berlin. It was bold visionaries such as Mr Kohl who created the euro in the first place – leaving future generations to sort out the subsequent mess.

There are (at least) five reasons why Ms Merkel is absolutely right to balk at some of the more dramatic courses of action that are being urged upon her.

First, the chancellor’s critics often fail to acknowledge the real political and legal constraints that she is operating under. Tomorrow, the German constitutional court will rule on the legality of the proposals to increase the fund for bailing out debt-ridden members of the eurozone. Later this month, the German parliament will vote on the issue. It would be both arrogant and foolish for Ms Merkel to assume that she can simply win all these battles, when both German public opinion and many influential voices within the country are deeply opposed to further bail-outs. Similarly, any proposal to create eurobonds would require new EU treaties, which would be very hard to get ratified in Germany – let alone the rest of the eurozone. Those who are calling for ever bolder German actions, regardless of the legal and political difficulties, seem to have little respect for the country’s democracy. Read more…

As published in www.ft.com on September 5, 2011.


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