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Merkel's euro moment

The Local · 22 Jul 2011, 12:46

Published: 22 Jul 2011 12:46 GMT+02:00

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Has Angela Merkel saved the euro?

That’s certainly how the German chancellor was presenting it after an emergency EU summit on Thursday forged yet another bailout package for heavily indebted Greece.

With the eurozone’s sovereign debt crisis festering for months, Merkel has faced a barrage of criticism both at home and abroad for failing to lead Europe out of its worst economic crisis since the single currency was introduced 12 years ago. But many German commentators were cautiously optimistic on Friday that she had perhaps finally decided to grasp the nettle.

The latest rescue deal greatly stretches the timeframe for Greece to repay its debt while lowering the interest rate Athens will have to pay. Crucially for Merkel, it also includes a €50-billion contribution from private creditors – something Berlin had long demanded.

And although it also inches the eurozone closer to the transfer union the Germans had long hoped to avoid, Merkel had clearly realized that sitting on the sidelines was simply no longer an option.

Throughout the crisis, the financial markets have in succession battered Greece, Ireland and Portugal – all troubled but relatively small eurozone economies. But in recent weeks, speculators began to circle Italy, which threatened to bring down the entire 17-nation currency union.

Merkel knows that, as an exporting nation few countries have benefited from the euro as much as Germany. But she has hesitated until now to simply pick up the tab for more profligate European countries. But such dithering did neither Greece nor Merkel any good.

Just days ago the chancellor was playing down Thursday’s crisis summit, warning against expecting a breakthrough. At the same time a poll showed her approval rating with German voters hitting its lowest point in five years.

The impact of Merkel’s disengagement throughout the euro crisis has been remarkable: No other major economy is doing as well as Germany right now, but her centre-right coalition is also extremely unpopular. It has not profited at all from surging growth and falling unemployment.

Instead, her failure to make tough decisions has seen her pilloried for supposedly putting domestic political concerns before key foreign policy issues. Her former mentor Chancellor Helmut Kohl reportedly even claimed Merkel was “ruining” Europe.

But now it seems clear to everyone inside the Chancellery that Merkel’s political fate and the euro have become inextricably intertwined.

In saving the euro, Merkel saves herself.

After months of criticism, she appears to have got the message – and passed it along.

Phillip Rösler, Merkel’s vice chancellor and economy minister, is reportedly cobbling together an incentive plan to encourage German companies to help the battered Greek economy. Is decisive action Berlin’s new modus operandi?

Story continues below…

Only time will tell, of course. This government has repeatedly failed to meet the rather low expectations set for it. But for the eurozone the change couldn’t have come a moment too soon.

Marc Young



The Local (news@thelocal.de)

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Your comments about this article

14:55 July 22, 2011 by Swag2TZ
Forget the euro, and forget Merkel. Time for Germany to go back to the Deutsche Mark, get out of the EU, and man its borders again. The World is not

safe. Look at Switzerland....own currency, not a member of the EU. They live quite well. WAKE UP DEUTSCHLAND.....
17:26 July 22, 2011 by Englishted
No other major economy is doing as well as Germany right now, but her centre-right coalition is also extremely unpopular. It has not profited at all from surging growth and falling unemployment.

That makes two of us.
19:01 July 22, 2011 by michael4096
@ted - your growth is surging?
19:26 July 22, 2011 by Englishted

Not when I look at her .
20:12 July 22, 2011 by JohnnesKönig
"Chancellor Merkel has decided defending the eurozone is in Germany¦#39;s best interest."

What do the people of Germany think?!
22:38 July 22, 2011 by J-Dub
The only thing Merkel knows how to do is make her party rich and us poor. Tax is out of control, people are out of work left and right, and yet the EU wants to give the Greek government more money. When are they going to smarten up and realize that the Greek politicians are pocketing this money. The only wealth surging in Germany is POLITICIAN'S wealth. All the while we are paying ridiculous gas prices, grocery prices, tax on silly stuff, and with NO JOBS. Makes you wonder, are there any intelligent leaders in our world anymore? Please God, don't anybody mention King Odumbo in the USA. The unemployment there is so bad, you would be better off staying on welfare instead of giving yourself a nervous breakdown trying to find a job. Merkel needs to just wise up and realize EU sucks, the EURO currency sucks, and so does her failure to lower taxes.
00:47 July 23, 2011 by _JD
Or as the Chief Economist of Rabobank in Netherlands put it -


- ' Mr Boonstra says both Germany and the Netherlands have started looking at the European Union with a jaundiced eye, ¦quot;We look at what we pay in and what we get out but we ignore all the advantages that Europe-wide cooperation gets us." He says the Netherlands receives billions of euros from Brussels every year, ¦quot;maybe even hundreds of billions," the free-trade agreements have benefitted us all. '

Given the exchange rate, getting rid of the Euro would cripple the German export economy. In addition, 70 years of peace and prosperity from the European Project are worth a buck or two.
08:11 July 23, 2011 by toemag
She doesn't have a choice in the matter after all the money they have poured into the €U abyss :-( There is no way that any government past present or future could explain away deserting the €U and the hated €uro....
12:23 July 23, 2011 by jg.
"....We look at what we pay in and what we get out but we ignore all the advantages that Europe-wide cooperation gets us." He says the Netherlands receives billions of euros from Brussels every year, "maybe even hundreds of billions," the free-trade agreements have benefitted us all.'

Switzerland and Norway have managed to enjoy free trade and freedom of movement with the EU without the very expensive overheads and interference of EU membership. Nobody has voted for anything more than this.

"Given the exchange rate, getting rid of the Euro would cripple the German export economy."

Yeah right, Germany didn't export anything until the Euro came along.

"In addition, 70 years of peace and prosperity from the European Project are worth a buck or two."

The EU has done nothing whatsoever for peace in Europe. NATO (and the USSR) ensured peace since WWII. The EU's first major foray into foreign affairs has brought divided towns and cities to Kosovo.

As for prosperity, whilst some may be benefiting from EU membership, the unfortunate taxpayers of Germany and other nett contributors to the EU are seeing an ever higher proportion of their earnings pissed away on bailouts and other subsidies to pay for the federalists dream of an overbearing EU superstate.

All these bailouts are simply putting off the inevitable. While the EU politicians may think that they can fix everything with tighter fiscal union, why do they think that the citizens of countries receiving bailouts be more likely to accept fiscally restrictive policies from the EU, when they have not been prepared to accept less restrictive policies from their own governments?
17:07 July 23, 2011 by Sastry.M
Progenitors struggle in their 'present' with hope and distress to wade through the stream of their lives and let the memories of history flow to posterity to continue the same ad infinitum. Now is the time for people of Germany who were united once at the close of 19'th century and fallen twice during the 20'th to recall the memories of past history to face up to the present stream of life. Defeat divided only borders into east and west due to vagaries of victors But the spirit of unity prevailed all through privation and separation but failed to measure up with distortions in the minds of people of wealthy west due to disparities of wealth with less fortunate east upon reunification. The bleak period that followed with depressed national issues and unemployment did not deter the people lose hope but lie low to work through the difficulties through solace of unity and freedom of movement that reunification offered and set the gradient of progress step upwards again.

Now that Germany has stabilized economically let the present generation recall the past when penitence prompted humility and hope to progress from fall that pride in ephemeral wealth let the spirit and nation down. Although the bailout to the Greeks places an extra burden on economy the satisfaction of extending such a needed help to a nation that defended western culture gallantly in antiquity and enriched thought with analytical reasoning and rational discrimination. Indeed the Germans owe much to the Greeks for their scientific enlightenment and technological progress and the present wealth gathered with hard and disciplined work free from speculation and greed. The divine grace and remuneration that bless the people is far superior to the wealth that is accumulated through sale of destructive weapons of war noting the fact that a baby just delivered in a nursing home needs the services of many people of fruitful employment while a bomb dropped on it puts an end to all activity perpetuating human misery and deleting divine purpose.
23:52 July 29, 2011 by DrStrangelove
Sastry.M, grand words.

I just ran your second paragraph through the blablameter. Here is what it said:

Bullshit Index :0.35

Your text shows indications of 'bullshit'-English. It's still ok for PR or advertising purposes, but more critical audiences may be skeptical.
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