Why we shouldn’t write off Merkel yet
“Isolation is a dream killer,” so the saying goes. Many commentators assert that German Chancellor Angela Merkel’s unprecedented new isolation in Europe over eurobonds and growth measures could turn her dream of tightly controlled European fiscal discipline into a limp cadaver. Some go even further and say it could accelerate her own political garrotting.
The meat and potatoes of their argument: Merkel has met her match in the new French president Francois Hollande. The Frenchman demonstrated the deadliness of his ruthless calm and razor sharp calculation when he beat the incumbent, Nicolas Sarkozy, in a dramatic run-off earlier this month. What is more, not even in office for two weeks, commentators claim he has already managed to undermine and overshadow Merkel by challenging her on two vital points.
Number one, he insists that Europe needs a healthier pro-growth plan rather than the German chancellor’s painful Atkins diet of austerity measures. Number two, he is leading calls for the the adoption of eurobonds (a European-wide version of a government bond, via which eurozone countries could borrow at the same rates through collectively guaranteeing each other’s debts). The German chancellor is firmly opposed to such a measure, which it is estimated would cost her country €50bn (£40.4bn) every year in debt servicing costs.
Hollande fans paint him as the daring new kid who has sparked a playground revolution by standing up to the school bully. They say his opposition to Merkel has emboldened previously disheartened member states and intimidated international organisations (the OECD and IMF) to voice their opposition to Merkel’s eurocrisis strategy. Even the British prime minister David Cameron, who likes to maintain a visible distance from the euro’s politics, has supported the French socialist’s rallying cry for eurobonds.
Critics of Merkel also claim that her dramatic new vulnerability abroad is mirrored by growing weakness at home. She faces a bitter showdown with the anti-austerity German opposition parties in her parliament, which are threatening to delay an upcoming vote on her fiscal pact. And her CDU party is in turmoil, having suffered its worst ever defeat in May’s elections for Germany’s most populous state, North Rhine-Westphalia. Merkel’s sensational firing of the environment minister Norbert Roettgen, who was the CDU’s main candidate for the state, is alleged to have backfired by revealing her cold side.
Commentators (rightly) point out that Germans are weary of endless talk about belt-tightening and (wrongly) attest that the public is ready for an alternative. And with general elections looming next year, talk of Merkel being ousted by a coalition between the main German left-wing party, the SPD, and the Green Party, which both oppose her austerity strategy, has intensified.
Although this negative depiction of Merkel’s situation has some substance in parts, it is hopeful anti-austerity idealism and colourful story-telling rather than cold, hard evidence which makes it hang together. A closer look at things reveals that Merkel is in a stronger position, both in Europe and at home, than many would like to admit. And she could still get her way yet.
Firstly, in Europe Merkel is not as isolated as is made out. She still has most of the AAA credit-rated countries, including Finland, the Netherlands and Luxembourg, behind her. Although they are fewer in number, it is these Member States that ultimately carry financial clout. And she has allies in Eastern Europe as well. The finance minister of Estonia, a country which has been hailed as a model example of how austerity can drive competitiveness and growth, is unenthusiastic to say the least about deploying eurobonds as a short-to-medium-term solution to Europe’s problems. The Bulgarian prime minister has also proclaimed himself outright against joint eurobonds. The prime minister of Slovenia, the first former communist country to join the euro, has expressed serious doubts about them. Lastly, Austria has declared itself against them, despite being downgraded by Standard and Poor’s and losing its prized triple A status at the same as France earlier in the year.
Secondly, the strength of Merkel’s cards against Hollande in the long term should not be underestimated. Her best strategy may be a war of attrition: she could simply dig her heels in now and wait until the uncertain French public’s support for Hollande’s anti-austerity rhetoric starts to wear thin and the leader falters under the pressure. As France’s failure to meet its deficit reduction targets is likely to be announced in the very near future, that change in the tide of public opinion could well happen sooner rather than later.
Thirdly, Merkel’s personal skills as an international statesman and her stomach for a fight against Hollande should not be underestimated. She has crucial experience at crisis-managing Europe in a way that still leaves Germany calling the shots. The unpractised Hollande, who has no ministerial experience prior to his election to draw on, may struggle to reckon with this in the long run.
Crucially, the German leader also has more to lose than Hollande if she does not get her way. Her sclerotic CDU party has made no secret of the fact that they intend to base their campaign for Germany’s 2013 federal election on the appeal of Chancellor Merkel’s personality and leadership. Part of that “personality” is based on the her characterisation as Germany’s armour against the eurocrisis. Merkel knows that if she is seen to yield to Hollande, the reputation upon which her imminent re-election is staked would be unforgiveably compromised.
Although National Assembly elections are also looming for the new French president next month and he will want to use his strong stand in Europe to gain a solid majority, he ultimately knows he has still has four years to ingratiate himself further into the French public’s favour. If it comes down purely to what is personally at stake to the two leaders right now, the German chancellor clearly wins.
The underlying steadiness of Merkel’s domestic position is also easy to overlook. It is true that her party is precariously unpopular at the moment. But the North Rhine-Westphalia defeat needs to be taken with a pinch of salt: it was not an indictment of Merkel so much as a punishment for the embarrassing campaign run by the ousted environment minister Norbert Roettgen. He came across as shallow to locals when he said he would not stay in his post as state opposition leader if he lost. His declaration that the vote was also a referendum on Merkel’s performance in Europe also sparked anger.
The paradox is that Merkel remains by far the most credible chancellor candidate for the 2013 election as far as the German public is concerned. Most Germans also approve, to varying extents, of her insistence on the need for belt-tightening and wholeheartedly support her tough stand in Europe.
The rise of the Pirate party in Germany is also a lucky development for Merkel. The controversial movement has sprung from nowhere to become the country’s third most popular party according to some polls, with a 13% approval rating. It is stealing votes from Germany’s former main opposition groups, the SDP and Greens, which may ultimately rob them of the support they need to form a coalition and replace Merkel’s coalition.
To go back full circle to the eurocrisis, in the end, it is not eurobonds or an uncooperative French President which are the real danger to the German leader at the moment. As important as the debate over fiscal discipline and the need for growth policies is, in some ways the French-German “showdown” is a mere political sideshow. Merkel’s real problem is Greece.
If the Greek exit that everyone is dreading does indeed materialise, the chancellor’s reputation as her country’s best weapon for staving off total disaster in Europe will be in tatters. That would make her vulnerable both at home and abroad.
But it would be a disaster for Hollande too, whose opposition to austerity may be criticised in hindsight by conservative French commentators as foolish belligerence which has inadvertently invited further rebelliousness in the Mediterranean. And Merkel’s ability to survive political lows (such as the resignation of her defence minister in 2011 over plagiarism) and even stupendous gaffes (like her panic in moving to shut down several of Germany’s nuclear power stations in immediate response to the Fukushima disaster in 2011) is proven. Hollande remains untested.
Hollande may appear the more forcible figure at the moment but Merkel could well yet emerge the stronger statesman in the long game. Her endurance should not be written off. And, for better or for worse, neither should the survival of her austerity plan.Tagged in: Angela Merkel, economy, euro, eurobonds, eurocrisis, France, François Hollande, germany, greece
Recent Posts on Notebook
- Don't get mad about Amazon and make the right ethical choice
- Chagos: Conservationists are swimming in murky waters
- Justin Webb on the medical advances in tackling heart disease
- The Photography Blog: 'Control Order House' by Edmund Clark - Photographing our response to terrorism
- Dementia Awareness Week: Should we keep an open mind to spiritual solutions?
Latest from Independent journalists on Twitter