Merkel and the Euro: Is Germany's Finance Minister Going Rogue?
He used to be regarded as Germany's safest pair of hands when it comes to the euro crisis. Now, criticism of Finance Minister Wolfgang Schäuble is growing within the government parties. Some believe that Schäuble wants to exploit the crisis to push through his vision of a United States of Europe. By SPIEGEL Staff.
A pall of silence fell over the German parliament as Finance Minister Wolfgang Schäuble went up to the lectern last Thursday. The debate over the expansion of the euro backstop fund, the European Financial Stability Facility (EFSF), had already been going on for over an hour. Previous speakers addressing the Bundestag had tried their hand at a number of different roles. Schäuble's predecessor in office, Peer Steinbrück of the left-leaning Social Democrats (SPD), had tried to present himself as a European statesman, whereas Rainer Brüderle, the parliamentary floor leader for the business-friendly Free Democratic Party (FDP), had vehemently attacked the opposition.
Now, it was the turn of Schäuble, a member of the center-right Christian Democratic Union (CDU). He feigned the honest broker who tries to mediate between the parliament's legitimate demand to have a say in such important matters and the exigencies of international political crises. "No one here sees this as an easy decision," he said. The question at hand, he continued, is whether politicians are capable of "controlling these developments."
The government, it seems, is certainly able to exercise control, at least when it comes to maintaining discipline within its own ranks. German Chancellor Angela Merkel and Peter Altmaier, the conservatives' parliamentary secretary, exchanged congratulatory text messages after winning the key Bundestag vote on the euro bailout fund: "Our efforts paid off."
Two things became clear at the end of last week -- a week that many pundits had prematurely predicted would spell the end of the center-right coalition of the CDU, its Bavarian sister party the Christian Social Union and the FDP. First, the government can rely on its own parliamentary majority to push through euro bailout legislation -- at least for the time being. Second, Merkel's finance minister, of all people, has sown doubt about the government's crisis management. In the days running up to the vote, Schäuble needlessly fueled a debate over expanding the euro backstop fund, and his comments sparked renewed tensions within the coalition.
Keeping His Cards Close to His Chest
FDP parliamentarians have long been convinced that the finance minister is not playing with an open hand, and that he would prefer to force them out of the coalition. But there has also been an increasing amount of discontent over Schäuble among the ranks of the CDU/CSU parliamentary group. Quite a number of his fellow conservatives accuse him of undermining their rights as parliamentarians and forging agreements on a European level that he largely keeps under wraps at home. The CSU even suspects that the finance minister is paving the way for a European super-state, something that the Bavarians strongly oppose.
This criticism is directed at one of the last political heavyweights in Merkel's cabinet. For months now, Schäuble has topped the opinion polls as one of Germany's most popular ministers. No one else on the nationwide political scene enjoys such high regard, even across party lines. The Germans believe that if anyone can steer the country through the perils of the euro crisis, it's Schäuble, with his extensive experience in political maneuvering. The veteran party and parliamentary group leader stands at the twilight of his career and doesn't have to prove anything to anyone anymore -- and is not aspiring to any position.
This makes him a formidable figure, but it also feeds his longstanding tendency toward arrogance and his penchant for political intrigues. Many conservative parliamentarians, regardless of their position on the common currency, feel as if they are being treated with contempt. His statements made during the euro crisis have rarely been unequivocal; he always leaves himself a way out. Not only does this confuse his political friends and foes, it also flusters the financial world, with its propensity for panic.
Many German politicians are also insinuating that he has a hidden agenda. They fear that one of the last fully committed supporters of the European project is taking advantage of the crisis to advance his dream of a United States of Europe -- at almost any price. Even the chancellor is sometimes annoyed by the finance minister's moves.
Pithy German Wisdom
Schäuble's antics last week were a perfect example of his modus operandi. It began with business as usual. At the fall meeting of the International Monetary Fund (IMF) and the World Bank in Washington, the finance minister used quaint German phrases to broach the topic of the crisis in the euro zone. Referring to the fact that every country in the monetary zone is first and foremost responsible for the soundness of its own finances, he recited a quotation by Goethe: "Let everyone sweep in front of his own door, and the whole world will be clean."
Schäuble finds himself irresistible at such moments. He is not bothered by the fact that foreigners and representatives of the international media who he is addressing have no idea what to make of such Teutonic pearls of wisdom.
To make matters worse, Schäuble often doesn't even adhere to his own admonishing axioms. "Silence is golden," he decreed in Washington, a reference to the need to avoid panicking markets with loose talk. But then he heedlessly allowed himself to be drawn into a dangerous debate over whether the EFSF could get a banking license and leverage its assets to borrow even more money from the European Central Bank (ECB).
Most of his German predecessors in office would have rejected such notions with indignation and referred to Germany's traumatic experiences during the 20th century, when governments printed money to finance public expenditure, causing the value of the currency to plummet.
Not once, however, did Schäuble clearly reject the proposals, which had been spearheaded by his American counterpart, US Treasury Secretary Timothy Geithner.
Instead, he talked about alternatives to a banking license, which would make it possible to achieve similar leverage effects. Schäuble did not exactly say just what these alternatives might be, but he did mention that Berlin is considering bringing forward the launch of the European Stability Mechanism (ESM), the permanent bailout fund for the euro zone, from 2013 to 2012.
In addition to being imprudent, Schäuble's comments showed bad timing. Ironically, during the very week in which the coalition was struggling for a parliamentary majority to extend the reach of the euro backstop fund, Schäuble was publicly contemplating yet another reform of the initiative.
German Vice Chancellor Philipp Rösler, the leader of the FDP, is appalled. "Granting a banking license to the European bailout fund would be the wrong approach," he says, adding that such a step could be interpreted as a sign "that the finance minister has been given a license to print money."
It took an intervention by the chancellor herself to clear up the matter. She informed Schäuble that there would be no solution that involved integrating the ECB.
- Part 1: Is Germany's Finance Minister Going Rogue?
- Part 2: Concealing His True Intentions
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