The German Times, April 2010
The German chancellor had to dodge several bullets ahead of the EU summit. Because she didn’t immediately and unconditionally commit to helping troubled Greece, former Belgian Prime Minister Guy Verhofstadt accused her of betraying the European idea by abandoning the principle of solidarity. “In the space of a few weeks, we are destroying all our efforts to bring Europe closer together,” the International Herald Tribune quoted him as saying. The paper dubbed Merkel “the bloc’s naysayer.”
The chairman of the Party of European Socialists (PES) in the EU parliament, Poul Nyrup Rasmussen, said Merkel’s dilly-dallying had “wasted two months.” And the EU justice commissioner, Viviane Reding urged: “Angela, show a little courage!” Germany had received financial assistance from Europe during reunification, she said. Reading between the lines: It’s payback time for Germany.
Just before the EU summit got underway on March 25, the deputy chair of the Social Democrat’s parliamentary group in the German Bundestag, Angelica Schwall-Düren, accused Merkel of opportunism. “You’re isolating Germany in Europe,” she charged. While the co-chairman of the Green Party, Jürgen Trittin, said Merkel had exacerbated the crisis for failing to rule out the idea of forcing insolvent members of the eurozone to quit the monetary union. A moniker for Merkel, “Iron Lady,” started to make the rounds.
But Merkel is no Maggie Thatcher. The chancellor’s approach has nothing to do with opportunism and a great deal to do with common sense – and courage. Her determination in the face of the most virulent criticism is a quality that few modern politicians are able to demonstrate.
The chancellor was and is convinced that promising unconditional help to Greece before it needs it would not have doused the burning EU flags in Athens. Instead, it could have caused a conflagration with no way of knowing what would come next. Unscrupulous speculators are ready and waiting to make a profit at taxpayers expense on the next crisis in Portugal or Spain. Merkel and those who supported her view have taken the wind out of the speculators’ sails, proving that politicians are still capable of shaping events.
Greece will receive assistance when it has become inevitable. If Athens can no longer supply itself with funds on the capital markets, then – and only then – will EU countries step in, as will the International Monetary Fund. The aid would have to come in the form of loans at sufficiently high interest rates. There will be no subsidies for countries that have knowingly violated the EU Stability Pact by using misleading accounting practices.
In contrast, Germany has increased its competitiveness over the years but at the expense of ordinary workers. They are retiring later, their social benefits have been slashed and they have forgone real increases in their wages. That is how Germany has remained competitive, as German Finance Minister Wolfgang Schäuble pointed out. The unemployment rate here has not risen as much as was feared during the economic crisis.
On the other hand, even workers earning above average wages are finding it more difficult to make ends meet, not least because of the high tax burden – and in Germany, most people actually pay their taxes. Granted, Germans may be complaining from a position of privilege but there have been better times.
Greece, meanwhile, was living on borrowed money, and keeping it secret from European regulators. That, the EU has promised, will no longer be so easy to do: The bloc aims to expand the types of sanctions and assistance at its disposal – by setting rules and then actually monitoring them. “The Stability Pact is unsuitable for uncovering financial wrongdoing by a few countries,” Merkel recently told the German parliament. But whether a European monetary fund will be established – a proposal backed by both Merkel and Schäuble – was not discussed in Brussels but was referred to indirectly in the final summit declaration.
The chancellor’s hard line is based upon two lines of thought. She did not want to leave herself open to the accusation at home that (German) taxpayers would again have to pony up for the financial “trickery” of others. She also wanted to maintain the credibility, stability and trust in the single European currency. Personal reasons may have played a part: Merkel, a native of East Germany, had only just begun to enjoy the benefits the much-desired West German mark when she had to trade it in for the single European currency. Many predicted at the time that Germany had swapped the stable German mark for an unstable and soft European currency. So Merkel was looking for the right way to keep both Greece and the euro from going under.
The chancellor’s fearless and determined approach does not just prove her political far-sightedness but also shows how Merkel has become her own woman. She has emancipated herself from the one-time European model student Helmut Kohl, as well as his successor Gerhard Schröder. They probably would have opened their wallets and bailed out Greece to prove their allegiance to Europe.
In the past, if the EU needed money, Germany could be counted on to shell it out. Merkel is no longer prepared to take that approach. But the European Union can continue to count on her, and Germany’s, loyalty.