GERMAN CHANCELLOR, ANGELA MERKEL. PHOTO: ALEPH, WIKIMEDIA COMMONSMassive budget deficits cause increased unemployment rates and poverty in big parts of the Euro-zone. While Angela Merkel, Germany’s Chancellor, promotes increased financial aid to the affected economies, she is facing domestic critique for giving away German billions. Others criticize her for not being efficient and decisive enough. But Merkel is determined in her belief: without the Euro there cannot be a Europe.
An extension of the European Financial Stability Facility (EFSF) fund was recently voted through in the German Bundestag. Ongoing talks on the EU-level aim to come up with a plan for the extension, which will reach a level higher than 1000 billion Euros. Today the guarantees of the fund comprise 780 billion Euros of which Germany contributes with a quarter, 211 billion. The German vote means temporary relief for the Greek government, as the country’s economy is in acute need of financial aid. For Angela Merkel, it means continued domestic support for her EU-policy.Chancellor Merkel leads Christian Democratic Union (CDU), which governs Germany in a coalition together with the liberal FDP and the conservative CSU. She was first elected in 2005 and then re-elected in 2009, initially representing the opposition, but ending up as Germany’s first female Chancellor. Compared by many with Great Britain’s former Prime Minister Margaret Thatcher, Merkel has been referred to as “The Iron Frau”, similar to “The Iron Lady” and even as “Mutti”, which is “mother” in German.
Angela Merkel has been careful in her policy concerning the EFSF and the Greek budget deficit. She has let the process take its time despite the worsening situation in the Eurozone. A tactician, some would say. How could she not be, when despite her recent success in the German parliament, Merkel has nonetheless been faced with criticism and widened restrictions of her EU mandate at home. The German constitutional court has decided that a confirmation will now be required from the budget committee in order to transfer any larger sums of money from the country. In addition, her political coalition has been rather unstable, forcing her to consider domestic interests in her EU-policy. The U.S. government even blames her for acting too slowly, especially in the light of the hastily growing Euro-crisis. Despite their critique, she is seen as today’s most influential politician in the European Union. Yet, she is the Chancellor of one of the most influential economies in the EU, interconnected with the rest of the union by 62% of its exports.
– Germany and France are the main agenda-setters of the decisions and reforms that the governors of the Euro-zone countries later implement, says Henrik Sikström, researcher at the Swedish institute of Euro-political studies (Sieps).
THE CREATION OF EFSF IN 2010 WAS LARGELY A GERMAN PROJECT AND TODAY THE FUND HAS LENT MORE THAN 120 BILLION EUROS TO IRELAND, GREECE AND PORTUGAL. PHOTO: ALEXANDER KRUEL. FLICKR
The creation of EFSF in 2010 was largely a German project and today the fund has lent more than 120 billion Euros to Ireland, Greece and Portugal. Germany has also been a driving force in the reinforcement of the EU’s stability and growth packages and the establishment of a collective EU budget calendar. In addition, the Euro Plus-Pact, which was initiated earlier this year, was advocated by Germany and France together. Only four of twenty-seven EU-members have chosen not to take part in the pact which entails political reforms intending to improve the fiscal strength and competitiveness of each country.
Could one say that it is thanks to Angela Merkel that the Euro-project is still intact? The political situation in Germany is such that she appears not to have a choice but put the necessary effort into it. A possible defeat in the Bundestag and her government may dissolve. Also, as Angela Merkel stated in the German political talk-show Günther Jauch earlier in September, Germany needs the European collaboration in order to play in the highest political division, together with US and China. Being a part of 500 million united Europeans is not the same thing as being 80 million Germans. Such collaboration can only be efficient with a consolidated monetary union, was her message.
Her statement arguing that “we shall only make decisions of which we can predict the results”, was repeated several times in the German talk-show. However, one should not forget that Germany was one of the first countries to break the Stability Pact in 2002, when the budget deficit was above the allowed level.
Henrik Sikström reasserts the need of a thoroughly planned strategy in the present Euro crisis:
– The decisions which the Euro-zone’s politicians make in order to solve the present debt crisis can definitely have far-reaching consequences for the implementation of future regulations.
“If the Euro falls, Europe will fall as well”, Merkel said in the German parliament before winning support of an extension of the EFSF fund. At the same time, economies such as Greece, Italy and Spain among others are on a steady down slope, with immense budget deficits and sky-high unemployment rates.
Never has modern Europe needed a caring Mother as much as now, but is she Angela Merkel?