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The Euro Crisis Hits Berlin: Merkel's Authority Is on the Wane

By SPIEGEL Staff

Chancellor Angela Merkel's authority is being undermined by leading members of her coalition partners, the FDP and CSU parties, who have openly challenged her policy on the euro. There is growing speculation that her coalition may collapse, prompting a return of the right-left grand coalition of conservatives and SPD.

At odds: German Chancellor Angela Merkel (L) and Economy Minister Philipp Rösler, the leader of the pro-business FDP party. Zoom
REUTERS

At odds: German Chancellor Angela Merkel (L) and Economy Minister Philipp Rösler, the leader of the pro-business FDP party.

German Chancellor Angela Merkel dislikes putting her foot down to solve government disputes. She associates that form of exercising authority with ill-tempered men who use arrogance to make up for their lack of competence. And she thinks people who keep banging their fist on the table end up getting ignored in the long run.

But she can't keep quiet about everything that bothers her, which is why the chancellor resorted to a tentative rebuke last week. She didn't address Vice Chancellor Philipp Rösler directly, and yet she made it clear that she was indeed talking about him. She didn't say that he should stop playing with fire in connection with the euro crisis, but she suggested it. Rösler objected, and Merkel's cautious strategy fizzled out.

The events of last week have cast doubt on whether Merkel still has the authority to get her own way against her coalition partners, the pro-business Free Democratic Party (FDP) and the conservative Christian Social Union (CSU). It is not just a matter of concrete policy, but also about how the euro crisis should be discussed, openly or behind closed doors, and what tone should be adopted in doing so. Everything is contentious, even within the innermost circle. In addition to Rösler, who also chairs the FDP, CSU leader Horst Seehofer and Transport Minister Peter Ramsauer, also of the CSU, have made skeptical remarks about the euro.

In the middle of a crisis, Germany is being run by a government that doesn't seem capable of taking action. The FDP, in particular, is no longer far removed from political positions that could lead to its eviction from the coalition. Public confidence in the government is shot, with 65 percent of Germans saying that they believe that Berlin's decisions on the euro are wrong, according to the most recent "Deutschland Trend" opinion poll commissioned by the ARD television network. But can those 65 percent also specify which decisions they are referring to? The coalition has been shifting back and forth between opposing positions on the euro, and the constraints on the chancellor's leadership have become more evident. It was a week that saw her power decline.

At the end of the week before last, Rösler, who is also the German minister of economics, had a member of his staff write a piece on European economic policy. The essay mentions Greece, but not a bankruptcy. Rösler's advisors told him that, as a cabinet member, he could not stir up the issue, because the markets are too sensitive for that. The original text of the essay said, "the path toward an orderly government re-solvency should not be ruled out."

The German word "resolvenz" (literally, "re-solvency") is hardly ever used in economics. It refers to a procedure for getting back on one's feet after a crisis.

Rösler wanted to see the essay published in the press, but he had to sharpen it first. On Sunday, he met with his close advisors and the editors of the German daily newspaper Die Welt. At the end of the discussion, Rösler said: "To stabilize the euro, there can no longer be any restrictions on free thought in the short term. That includes, if necessary, an orderly insolvency for Greece." This sounds sharper than "re-solvency."

The CDU leadership was alarmed when the news agencies published Rösler's remarks on Sunday afternoon. It quickly became clear that if Merkel's economics minister was openly discussing a Greek insolvency, he was torpedoing the Europeans' efforts to bail out the country and undermining confidence in the German government. On Monday afternoon, Merkel discussed Rösler's move in a teleconference with top advisors. Everyone agreed that Merkel had to take her vice chancellor to task.

A Mild Rebuke

She called Rösler and said that there were already doubts in Brussels as to whether the Germans have the will to do what it takes to save the euro, and that speculation over a Greek insolvency is not helpful in this situation. Rösler defended himself, saying that it must be made clear to the public that the aid for Greece is tied to binding conditions, and that this would boost public acceptance of the coalition's policies.

In a radio interview on Tuesday, Merkel said that everyone should "consider his words very carefully. What we don't need is turmoil in the financial markets."

She had put her foot down lightly, and it seemed to have had some effect. Rösler was alarmed, partly because the markets were tumbling. He made a few phone calls, hoping to drum up support from his party. General Secretary Christian Lindner asked former Foreign Minister and honorary FDP chairman Hans-Dietrich for some words of support, but Genscher, unwilling to back an anti-European policy, said nothing. Parliamentary floor leader Rainer Brüderle told Rösler: "It's time for you to stand up." Rösler complied, but only half-heartedly.

"A cabinet minister has a duty to his country. I must do what I feel is right," he said in Rome on Wednesday. But he was no longer speaking openly about insolvency, instead returning to the more gentle term "re-solvency."

Other critics are also refusing to be silenced. Transport Minister Peter Ramsauer said: "We can't act as if the people who are critical of the measures to save the euro are all wrong." And CSU Chairman Seehofer, in an interview with SPIEGEL, defended his position by saying: "I will not allow myself to be intimidated."

That makes three against Merkel, including two from within the top echelon of the political leadership. Merkel's wings have been clipped, and now she faces even bigger problems ahead. There are rumblings within the FDP and the CSU that could distance the two parties even more from Merkel.

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A survey last week showed Germans are unhappy with Merkel's handling of the euro crisis. Zoom
DER SPIEGEL

A survey last week showed Germans are unhappy with Merkel's handling of the euro crisis.


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