Angie stoops to conquer?

Stabilising the euro will be Merkel’s major objective

By M.n. Hebbar (View from Europe)

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Published: Thu 24 Oct 2013, 8:28 PM

Last updated: Tue 7 Apr 2015, 7:18 PM

Former US secretary of state Henry Kissinger had famously asked as to who he should call in Europe on matters relating to transatlantic relations. If the answer then was silence, there is now an astounding response. All you do now is dial Chancellor Angela Merkel’s number in Berlin! Done and dusted.

This view from Washington was expressed in different variations in European capitals as German elections brought Chancellor Angela Merkel home well and dry. “A safe pair of hands” — was how the media had exulted in the run-up to the elections from which she has emerged as the tallest leader in Europe even as reactions from some southern states were less than cordial, with Greece lampooning Merkel as the lady who has brought severe austerity measures, unemployment and increasing poverty to the Greeks.

The elections have somewhat predictably brought Merkel’s Conservatives a bitter-sweet victory as she gropes for a reliable coalition partner to govern during her third consecutive term in office. Negotiations with the opposition Social Democrats have so far yielded little result, causing a rethink on its strategy and identity. At the time of writing, Merkel has been continuing her coalition talks with the Greens. Paradoxically, these parties have pushed themselves so close to the Conservatives in energy, wages and family policy that they are virtually indistinguishable.

What does the future portend for Europe with Merkel at the chancellery in Berlin? Her election victory has set her and her country apart in a Europe that has seen as many as 12 countries in the eurozone bite the dust by their respective governments, irrespective of their political complexion. Her leadership during the eurozone crisis, though seen as cautious and uninspiring, has been reflective of her sound but inflexible economic policy that promises “solidarity in exchange for solidity”, underlining the truth that Berlin will stand by her eurozone partners on the condition that they “put their own houses in order”.

Europe is crying for attention and action. There is the difficult issue of the European Stability Mechanism – the Euro 500 billion eurozone bailout fund – with the majority view holding that it should not be used for direct recapitalisation of ailing banks, as France, Spain and Italy would like. The banking sector, not taxpayers, should fund any such recapitalisation. One cannot overlook the fact that the main constraint in resumption of growth in the eurozone is not fiscal policy but the continued failure of the banking sector.

The need for effective migration laws in Europe has come to the fore by the latest incidents in Italy. Impoverished and desperate immigrants from North Africa have been making dangerous voyages across seas to land in Europe to find a better life there but, in most cases, unsuccessfully.

Merkel’s swift response to the pressing issue has been to offer asylum in Germany to some 5,000 refugees presently although there have been cries for doing a lot more, given Germany’s economic muscle. Domestic repercussions are a serious consideration due to possible social tensions and violence based on racial overtones. However, a concerted attempt will be made by EU ministers to enact uniform European laws on migration at the European Council when it meets on October 24-25 in Brussels.

The German chancellor is now expected to push for her favourite transatlantic project, which is a EU-US trade pact. This would have been easier in her second term in partnership with the business-friendly FDP. The issue is now dicey as the trade unions are likely to offer stiff resistance depending on the nature of the final coalition in Berlin

Stabilising the euro will be a major objective but Merkel has dithered for long on a banking union for the eurozone, which some leaders had agreed on last year. Her strong advocacy of austerity measures has also contributed to the slump as unemployment rates have grown steeply, especially in some southern European states. She has, however, received high praise for protecting the interests of German taxpayers without compromising on the struggle to keep the euro alive and kicking.

Angela Merkel now has an opportunity to lead Europe out of its present quagmire and stamp her political legacy on the fortunes of Germany, as well as of Europe. How she rises to the occasion will determine the face of Europe and its place in the global economy.

M.N.Hebbar is a veteran journalist and commentator on European affairs

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