• English Site
• > Europe
• > Economic and Financial Crisis

The Queen and Ms. Merkel

Germany and Britain Close Ranks on Finance Crisis

By Sebastian Borger in London

Former German Chancellor Gerhard Schröder never got invited to Buckingham Palace, but on Thursday Angela Merkel did. The rare date with the Queen came as Merkel was in London to discuss the financial crisis with Gordon Brown.

The German chancellor features prominently in Gordon Brown's appointment these days. The two met on Thursday in London, they're meeting next week in Brussels and again in two weeks in Washington. Angela Merkel and the British prime minister "get along very well," a source close to Brown assures. And currently, there are no serious hitches in German-British relations -- Merkel and Brown are working together on a common approach to a "global problem that requires a global solution." Merkel added that "we are in agreement." So far, so good.

But what most people wanted to know on Thursday was what Merkel discussed with Queen Elizabeth II.

Before a routine luncheon at 10 Downing Street, the German leader was invited as a guest to Buckingham Palace -- an unusual gesture in Britain in terms of diplomatic protocol that was never bestowed upon Merkel's predecessor Gerhard Schröder.

So it came as little surprise that a flattered Merkel wore a glowing smile as she entered the hall. But the coquettish chancellor said Thursday she could not, of course, provide any details of her casual chat with QEII. She did say, however: "The invitation pleased me a great deal -- it was a great honor."

Merkel said she assured the Queen that Germany was working to deepen its friendship with London. "And we are pleased that Great Britain is a member of the EU." The country has already been a European Union member state for 35 years, but in her discussion with the 82-year-old monarch, who has been sitting on the throne since 1952, Merkel is believed to have discussed Britain's long-term opportunities in the EU, telling the Queen how important it is for Germany that Britain work together as a member of the bloc. The fact that Queen Elizabeth II is closely following current events was evident to German Ambassador to Britain Georg Boomgaarden, who recently received the Queen as a guest. "She asked very precise questions about how we Germans are dealing with the financial crisis," he said.

Not too long ago, as banks on both sides of the English Channel were booking record profits, there wasn't much point in trying to engage in a German-British dialogue about tighter regulation and greater transparency of global financial markets. When Merkel put the issue on the agenda at the Germany-hosted G-8 conference in Heiligendamm in June 2007, the British just rolled their eyes. After all, the nearly uncontrolled juggling of billions is one of the reasons the City of London was able to emerge in recent years as the world's financial capital. These days, Brown is expressly mentioning Merkel's initiatives for greater transparency in the financial markets and the chancellor is returning the compliment. "This is a global problem and we can only solve this multilaterally," she said. "Together the United Kingdom and Germany are more than ready to do that."

And what will it entail? Brown has just released a proposal under which the International Monetary Fund (IMF) would be given greater funding and powers. The money would come from emerging economic giants China and India, countries that, in exchange, would be given greater influence in the international financial architecture. Merkel has also adopted Brown's initiative, pleading for "a strengthening of the IMF's role," but also the need to "show more responsibility on our behalf, but also on the side of the emerging economies." But she didn't name any specific countries.

Despite the mutual approaches, however, Merkel said one cannot forget that each must also deal with the problem at the national level in their own countries. Her statement appears to be a reference to her controversial decision at the beginning of October to unilaterally move to protect the savings of German depositors. London was briefly annoyed, but the irritation has since faded.

On Thursday, the pair sought to move in lockstep to "clear the path again for free trade." Merkel said a global economy that can't function properly will create an existential problem for everyone. In Germany alone, she said, 60 percent of the car industry and a full 70 percent of heavy machinery manufacturing is dependent on exports.

The aim of the joint effort, Brown said, was to "prevent the spread of the financial crisis." Brown also praised Merkel for Germany's successful labor market reforms. "To be able to announce that unemployment is below 3 million is a great achievement," Brown said.

Merkel and Brown have a lot in common. The chancellor and the prime minister both had preacher fathers. And, in contrast to their predecessors Schröder and Blair, who governed instinctually, both tend to be technocratic politicians, acting with their heads rather than their hearts.

Both want to close ranks in dealing with the financial crisis for a number of reasons -- not least of which to oppose French President Nicolas Sarkozy's dream of the partial nationalization of key European industries. Indeed, if France, current holder of the rotating EU presidency, calls a crisis summit in Brussels next Friday, the strength of the newfound common ground between London and Berlin could be put to the test.