Merkel’s Policy Comes Under the Microscope

As Germany takes on the role of ‘Europe’s Paymaster General,’ the Chancellor is begining to feel the heat

News | Bojana Simeunovic | July / August 2010

A clear message for the rest of Europe – ‘Not our fault!’ – continues to reverberate through the streets of Greece’s capital during the strikes and almost daily demonstrations that have continued through May and June. In Spain, the government is working toward cutting the country’s budget deficit from 11.2% of GDP in 2009 to expected 6.5% in 2011; yet the pundits emphasize the crisis Spain might face while struggling with an unemployment rate of 20%, the highest in Europe.

And in Germany, the bailout has finally been pushed through, albeit to the nation’s widespread dissatisfaction. On Jun. 12-13, the boiling public disapproval reached its peak in Munich when thousands of Germans went on strike against the bailout and proposed domestic budget cuts, leaving more than a dozen police officers injured.

The regional elections in North Rhine-Westphalia, the most populous state and the country’s industrial heartland, were held on May 9. In the pre-election campaign chancellor Angela Merkel tried to delay the rescue plan until after the election. But as the euro started its fall against dollar, Merkel was left with little choice but to push the deal through. To the intense dissatisfaction of the German citizenry.

"People do not feel happy about Germany being Europe’s Paymaster General," said for Reuters Gerd Langguth, political scientist at Bonn University and Merkel’s biographer.

And the consequences were obvious: the Christian Democratic Union (CDU) suffered 10% drop from its performance in the previous state elections, equaling into only 34.6% of total vote. The Social Democratic Party (SDP) barely gained 34.5%, while the allied Green Party doubled its share to 12.1%. After the final efforts for the CDU-SDP coalition in the region failed, SPD turned to the Green Party, intending to form a minority government alone.

"North Rhine-Westphalia needs governing stability," sources within the state’s Social Democrats (SPD) told Spiegel Online. "A coalition between the SPD and the Greens will create that."

If this attempt succeeds, the change in the balance of power in the Bundesrat (the lower house of the German parliament that legislates matters concerning the federal states) will be imminent – creating an anti-Merkel political climate and leading to her loss of control over legislation. Turning to the Free Democratic Party (FDP), which polled a disappointing 6.7%, Merkel formed a coalition which many claim will not be of long existence.

According to the International Herald Tribune, a majority of the surveyed voters showed no hope that the alliance of Merkel’s conservative party and the pro-business FDP would survive to the end of their term in the fall of 2013.

Disillusionment toward her domestic policy and the setback in the regional elections have swelled into what is possibly the worst political crisis for Merkel since she became chancellor in 2005 – growing speculation between the German people that a collapse of the current government might be inevitable.

Der Spiegel called Merkel’s coalition "a government in ruins," claiming that "not even Merkel’s faithful count on a long duration for this government."

"Either we get our act together, or it will soon be the end of the coalition," the FDP leader Jörg-Uwe Hahn told Frankfurter Allgemeine Zeitung.

A disapproving public mood started with the agreement on the bailout proposal of $141 billion rescue for Greece and even larger package to defend the euro cost sent directly from Berlin. But not until Merkel’s domestic financial plan was introduced, the citizens were eager to openly react. The sentiments exploded with the recent proposal of an additional $100 billion in tightening measures intended to slow the growth of the country’s debts by 2014. Merkel’s proposal for health system reform is also unfavorable among both nation and politicians.

"Resignations are unavoidable to avoid a lingering decline," Willy Wimmer, a former deputy defense minister, told the Leipziger Volkszeitung. He also called for an "immediate resignation of Angela Merkel."

The upcoming presidential elections planned for Jun. 30 might be the turning point, and support for the chancellor might easily slip away, if she is not able to secure victory for CDU candidate Christian Wulff, the state premier of Lower Saxony.

"New elections are now in the heads and hearts of everyone who thinks about political responsibility," said Renate Künast, a chairwoman of the opposition Greens in Parliament, in the daily Süddeutsche Zeitung.

Even though some experts claim that lack of German leadership on the bailout clouds the EU’s economic future, it must not be forgotten that the rescue package was equally unpopular in other member states as well. Particularly in Austria, which funded some 2.3 billion euros of the rescue package, opinions are divided.

"I would have forced the economically struggling country to leave the Eurozone," former Freedom Party (FPÖ) finance minister Karl-Heinz Grasser told the Austrian Independent. "I’m surprised how badly Europe managed the crisis," he continued, claiming that "the rescue plan [was] the biggest mistake of the European Monetary Union."

On the other hand, People’s Party (öVP) finance minister Josef Pröll worried that "leaving [Greece] alone would have caused the euro more trouble. Hundreds of thousands of jobs across Europe would have been lost." Some 26% of Austrians even call for reintroduction of schilling as the best solution for the current crisis, according to the polling agency Karmasin, with a full 42% disapproval of national governments helping financially unstable EU states.

Meanwhile, travel agencies are offering the cancelation of trips to Greece seven days ahead of time, no questions asked.

"We registered a double-digit decline in booking figures after three people were killed in riots in Athens," Martin Fast, head of Rewe Austria Touristik told the Wiener Zeitung.

With less and less support for the rescue plan and an obdurate public mood, the EU might find itself in an eventual stalemate. The leaders will have to work hard in order to reach the public expectations while coming to terms with their EU responsibility towards ‘irresponsible’ member states.

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