Merkel’s Plan B?

As recession bit hard early in 2009, Angela Merkel proclaimed Germany’s “social market economy” as provider of a new set of benchmarks for capitalism. Sounding very sure of herself and her country’s healing wisdom, the chancellor exclaimed, “These guiding principles must be followed worldwide.”

Germany’s economy bounced upward after a deep descent, and the rest of Europe, without a rival game-plan and in thrall to the power of German finances, accepted Berlin’s liturgy of austerity cum low-growth. Now, those two components are colliding.

Austerity is strangling a European recovery that never really took place. Achieving the E.U.’s debt and deficit reduction targets can look like a torturous long-shot. And Merkel’s Germany, which she portrayed as dwelling above such second-rate failings, is forecast by the O.E.C.D. to enter recession by January [pdf].

So where’s Plan B, a little recalibrating, or even a small demonstration of German suppleness and imagination? Looking ahead in July, I wrote it wasn’t yet forthcoming.

Now, the answer is: Nowhere.

The 2013 national election campaign began last week with the Social Democrats’ selection of a candidate to face Merkel, effectively setting up a campaign in which nothing will be dared.

The chancellor’s unique selling point has been making German voters immune to external grief. With a recession and an election at her throat, there will be a new reality that hardly lends itself to cutting the rest of Europe more slack — one likely to lead the incumbent in the direction of finding a scapegoat or two (like America flooding the globe with cheap, inflation-causing dollars), and repeating that Germany has gotten it just right, its new misery being the product the world’s weaknesses.

Merkel’s opponent, Peer Steinbrück, is not the guy to challenge her on Germany’s inadequate blueprint. During the Grand Coalition government of Social Democrats and Christian Democrats, he served as her finance minister, and in 2008 set the tone for Germany’s attitude toward E.U. members in trouble by initially refusing to join an E.U. bailout fund for fear of German money being misused.

“There is no plan, no idea about Germany’s future, and Ms. Merkel’s cubbyhole is empty,” Handelsblatt, the business newspaper, wrote this week in an editorial. It added: “Today’s Social Democrats are no better.”

In a sense, you might call this a reflection of the instincts of the German electorate. In an essay titled “No risks now, folks!”, Renate Köcher, director of the Allensbach opinion research institute, described voters as predominantly concerned with their own material security and “allergic to political reforms.” She wrote, “There is not the slightest indication of a growing feeling of European identity. An overwhelming majority of citizens is skeptical about accelerating the process of European integration.”

This, of course, is not acknowledged by the political class, but Merkel and Steinbrück certainly won’t play against the reflexes of the electorate. So, the non-articulated heart of the campaign is a battle between the candidates to appear as the most eager guardian of German interests and voters’ social benefits.

Want to think of a German election campaign in which the debate between left and right is focused on sharing euro zone members’ debt through the creation of Eurobonds? Or on a European banking union that might eliminate German institutions like the chronically weak and wasteful (yet politically significant) Landesbanken and Sparkassen?


John Kornblum, U.S. ambassador to Germany under Bill Clinton, has pointed to the discrepancy between German interests that are basically not the same as its neighbors’ and the Merkel government’s self-characterization as “extremely European.”

“Hardly anybody buys that, ” he said.

Indeed, German willingness to discuss a European banking union and a decision by the federal constitutional court to approve the permanent E.U. rescue fund, the European Stability Mechanism, have been sold here as new German flexibility concerning Europe’s frailties.

But just read German exegeses of the court’s finding. What the judges really did, according to the Frankfurter Allgemeine, was to rule that any decision made by the E.S.M.’s councils requires subsequent Bundestag approval.

Concerning the banking union, the Germans have made clear they will delay its approval so as not to have it weigh on the election, and resist Spain, and eventually other countries’ notions that they could shift recapitalization of their banks from their own responsibility to the E.S.M.

What you get here is Germany saying it’s interested in much closer, even complete European political union — but putting a brake on the process. This is at time when the E.U.’s real economy is heading straight for the wall, with Claude Bartolone, president of the French National Assembly, describing as “untenable” France’s pledge to reduce its deficit to 3 percent of G.N.P. in 2013. How could a faster, more powerful German response not be required?

Last week, Merkel focused her ideas on the future, commenting that “a lot of deep respiration” will be needed to put an end to the euro zone crisis.

She may as well have told Europe, now constrained by Germany’s “guiding principles,” hey, don’t bother me now, I’m running for re-election.

John Vinocur is senior correspondent at the International Herald Tribune.

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