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ANGELA MERKEL

Merkel says she has ‘nothing to apologise for’ over Russia legacy

Former German chancellor Angela Merkel has defended her years-long policy of detente towards Moscow, saying she had "nothing to apologise for" even as the Ukraine war casts a pall on her legacy.

Former German Chancellor Angela Merkel (CDU) speaks at the Berliner Ensemble during her interview called: 'So what is my country?'
Former German Chancellor Angela Merkel (CDU) speaks at the Berliner Ensemble during her interview called: 'So what is my country?' Photo: picture alliance/dpa | Fabian Sommer

In her first major interview since stepping down six months ago, Merkel insisted she had not been naive in her dealings with Russian President Vladimir Putin.

“Diplomacy isn’t wrong just because it hasn’t worked,” the 67-year-old said on stage in a Berlin theatre, in an interview broadcast on the Phoenix news channel on Tuesday. 

She recalled her support for economic sanctions against Russia over its 2014 annexation of Crimea, and the German-French efforts to keep the Minsk peace process for Ukraine alive.

“I don’t have to blame myself for not trying hard enough,” the conservative ex-chancellor said.

“I don’t see that I have to say ‘that was wrong’ and that’s why I have nothing to apologise for.”

The veteran leader, who frequently met with Putin during her 16 years in power and championed a commerce-driven, pragmatic approach towards Moscow, said the February 24th invasion of Ukraine had marked a “turning point”.

READ ALSO: Are Germans questioning Merkel’s legacy?

‘Wants to destroy Europe’

There was “no justification whatsoever” for the “brutal” and illegal war of aggression, she said, adding that Putin had made “a big mistake”.

“He wants to destroy Europe,” she warned. “It’s very important for the European Union to stick together now.”

But she batted away criticism that she had been wrong to block Ukraine from joining NATO in 2008, saying it was not ready then and she wanted to avoid “further escalation” with Putin, who was already seething about the military alliance’s perceived eastward expansion.

She also insisted that the 2014-2015 Minsk peace pacts, which now lie in tatters, were at the time seen as the best bet to end the fighting in eastern Ukraine between pro-Russian separatists and Ukrainian soldiers.

The peace process “brought some calm” that gave Ukraine an extra seven years to develop as a democracy and strengthen its military, she said, in a nod to Kyiv’s much praised resistance against the invading Russian troops.

“The courage and passion with which they are fighting for their country is very impressive,” Merkel said, adding she had “the highest respect” for Ukrainian President Volodymyr Zelensky.

But Merkel insisted there was no way to avoid dealing with Putin because Russia, like China, was too big to ignore.

“We have to find a way to co-exist despite all our differences,” she said.

During the interview, Merkel – who remains hugely popular in Germany – also offered a glimpse into her private life since retiring, spending time on her own on the Baltic Sea coast, taking walks and catching up on her reading.

After 30 years in politics, Merkel said she was enjoying not having to rush from appointment to appointment.

“Personally, I’m doing well,” she told the audience, even if she felt sombre about the war in Ukraine, “like so many people”.

“I had imagined my time after leaving office a bit differently,” Merkel said.

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MONEY

‘€10-€15 more for groceries’: How price hikes are hitting consumers in Germany

Russia's war in Ukraine is driving up energy and food prices. While the German government mulls new measures to protect consumers, buyers are increasingly feeling the price hikes, reports Cecilia Filas.

'€10-€15 more for groceries': How price hikes are hitting consumers in Germany

Consumer prices are rising in Germany – and people are noticing it in their wallets. In May, inflation rose by nearly 8 percent year-on-year, the highest level since the country’s reunification in 1990. First, it was the pandemic and the resulting disruption of global supply chains that pushed up prices, now, it is Russia’s invasion of Ukraine that is driving energy and food prices to record high levels. 

Olaf Scholz’s coalition government launched a €30 billion plan to help German consumers, especially the most vulnerable. The measures included the €9 monthly ticket over summer; fuel tax cuts; energy subsidies; and a one-off €300 payout for all taxpayers, plus a €100 ‘Kinderbonus’ for children.

But while the measures provided temporary relief – in June inflation fell to 7.6 percent – experts fear another surge is around the corner. The numbers could get significantly worse in the coming months when some of the measures end and Germany will face the winter with a reduced amount of Russian gas – or none at all. 

READ ALSO: Who gets Germany’s €300 payout – and when?

Thinking carefully about bigger purchases

People living in Germany are feeling the pinch.

At the supermarket, a shopping bill that used to be between €70-€80 is “now €10 or €15 extra,” says Nicolás, an Argentine expat in his 30s who lives in Berlin.

Unlike in Argentina, where consumers are used to offers and different forms of financing to cover themselves against inflation, Nicolás says he has no strategy and has not reduced his consumption because of the rising prices, although it is impacting him. “You don’t need to pay in instalments (for items), but you do feel the difference. You save less,” he says.

Federico, another Argentina native who has been living in Germany for more than 10 years, agrees.

“It’s not that you have problems making ends meet, but that you save a little less,” he says. “Or if you have to make a big purchase, you might think about it a little bit more.”

He says everyday food products in Berlin have also noticeably gone up. 

“The most classic thing – to buy a kebab which is something everyone eats – you can see how much it has increased,” he adds.

“There is a lot of advertising on TV and radio showing you ways to save, and years ago there was no advertising or products with so many promos. Now, this has become more visible, as there is a much greater variety of bargains and people tend to go after that a little bit more than they used to.”

Fruit and veg being sold at a market in Oldenburg.

Fruit and veg being sold at a market in Oldenburg. Photo: picture alliance/dpa | Hauke-Christian Dittrich

‘Price shocks’

Chancellor Scholz has promised more measures in the coming months to cushion the burden, especially on lower-income families. The Chancellor plans to meet with employers, trade unions and the Bundesbank team in September.

Bundesbank President, Joachim Nagel, said recently that there is a risk of inflation remaining high in the medium term, and the German central bank is forecasting an average rate above 7 percent for 2022.

“For this year, we think that we can really manage the inflation headwinds we see on the energy side but also on the salary side,” Bettina Orlopp, CFO of Commerzbank told Bloomberg TV.  “Next years – 2023, 2024 – the story will be different, becoming more difficult”, she said.

But is Germany really experiencing an inflationary process? Dr. Silke Tober of the Hans Boeckler Foundation’s Macroeconomic Policy Institute (IMK) doesn’t think so.

“The inflation we are experiencing in Germany at the moment, and in the euro area as a whole, is not inflation in the real sense. What we have are price shocks”, she tells The Local. “What really makes an inflationary process is that wages and prices rise, and then you get persistent inflation.

“We are not at that stage. What we are really seeing instead is that the energy price hikes and the increase in food prices are pushing up prices.”

READ ALSO: When will Germany’s rising cost of living slow down?

Tober adds that there are assistance measures which make a difference.

“The government has put in place several transfer payments to households, especially low-income households, and other measures that reduce the burden of inflation,” Tober says.

She expects price rises to come down “substantially” next year, provided the war in Ukraine does not escalate.

However, Tober says: “If we have a gas embargo and no more gas from Russia, we will have another jump in energy prices, and then inflation will stay high next year as well. And then we have the problem that there may be second-round effects, meaning wage increases might be excessive and then will have persistent inflation.”

The expert from IMK says that rising prices are especially affecting lower-income households, who must “cut back on other expenses to pay for food and energy” because they tend to have fewer savings to fall back on.  

“Households with higher incomes tend to have wealth and a high savings rate, so they cope with it by reducing their savings rate or maybe even reducing their savings,” Tober says.

“But low-income households usually, in Germany at least, they don’t have a positive savings rate – that means they’ve already spent all of their money or most of it – and have very little wealth, so what they have to do is actually reduce consumption to deal with the current [price] shocks.”

READ ALSO: What is Germany’s new gas ‘tax’ and who will pay it?

Money lies on a radiator.

Money lies on a radiator. People with gas heating will face much higher costs. Photo: picture alliance/dpa | Patrick Pleul

Ongoing concerns about price hikes

Indeed, June retail sales plunged 8.8 percent year-on-year, the biggest drop since 1994, according to Destatis. Non-essential items such as furniture, household appliances, clothing and shoes were the hardest hit.

On the other hand, to avoid passing on cost increases to customers and remain competitive, several companies are maintaining prices (or raising them at a very low rate) but reducing the content of their products, warned Verbrauchenzentrale Hamburg, a consumer advice centre. These are hidden price increases, generally referred to as ‘shrinkflation’.

With an interest rate of just 0.5 percent, credit or financing purchases in instalments might seem an attractive option to protect from inflation.  However, Verbrauchenzentrale Nordrhein Westfalen, the consumer protection association in the state of North Rhine-Westphalia, says that there hasn’t been, at the moment at least, “increasing demand in our debt counselling service as a result of the current inflation, although we notice ongoing concerns about the price increases”.

“Normally excessive debts and consumer insolvency are not seen immediately but with a time gap -they follow a crisis,” the agency told The Local. “Therefore, it is just possible that in the end, we will see more consumer insolvencies due to these general price increases.”

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