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Photo Gallery: The Merkel Way

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A Cold Heart for Europe Merkel's Dispassionate Approach to the Euro Crisis

Angela Merkel has more power in Europe than any of her postwar predecessors. Yet there is little passion in her relationship with the EU, with the chancellor preferring instead a strategy that can only be described as pedagogical imperialism. She sees the bloc primarily in terms of euros and cents -- and worries that it is rapidly losing relevance.

The crisis has its comical sides, of course. Take, for example, the story with the submarine. Angela Merkel starts to giggle. It was lopsided. Suddenly she snorts with laughter, as tears run down her cheeks. She can't even talk anymore. Lopsided, she says, trying to pull herself together. But she can't. The chancellor of the Federal Republic of Germany has succumbed to an uncontrollable fit of laughter.

The story Merkel is having so much trouble relating goes like this: The Greeks ordered a state-of-the-art, class 214 submarine from the Howaldtswerken-Deutsche Werft shipyard in the northern port city of Kiel. But when the vessel was ready, they refused to pay. The Greek military experts who had traveled to Kiel explained that the Papanikolis listed even in slight swells, and they declined to take delivery of the vessel.

The Germans tested, measured and checked the sub, but found nothing amiss. The boat's lopsidedness is apparently something only Greeks, up to their eyeballs in debt, can detect -- an anecdote that still sends the chancellor into fits of laughter years later.

Oh, those Greeks. Sometimes, when things get really bad, Merkel resorts to gallows humor. But it doesn't really help. The show must go on, and in the end, it all comes back to her, anyway.

For three years now, the euro crisis has been smoldering. It has brought down governments in Ireland and Spain, in Italy and Slovenia, and has led to countless summit meetings in Brussels, at which first a temporary and then a permanent bailout fund was established.

European leaders will meet in the Belgian capital once again this Thursday and Friday, at what is expected to be the year's most important summit. The agenda consists of nothing less than the political realignment of the euro zone and the question of whether members can agree to a European banking union to save the Continent's ailing banks. In the midst of it all, as always, is German Chancellor Angela Merkel.

The Fate of Europe in her Hands

All eyes in Europe are directed at Merkel. No other politician on the Continent arouses as many hopes -- or as much hatred -- as the German chancellor. When she visits Greece, protesters wearing Nazi uniforms march through the streets of Athens, and yet a word from Merkel can also mean saving a euro country from bankruptcy.

She currently holds the fate of Europe in her hands. If the euro is rescued, Merkel will get most of the credit, and if it falls apart, she will be forced to shoulder the blame. No other German chancellor has had as much power on the European continent as the current one. And yet, ironically enough, none of Merkel's predecessors were as dispassionate about the European Union as the woman currently governing from the Chancellery. Merkel is different.

Germany's first postwar chancellor, Konrad Adenauer, together with then French President Charles de Gaulle, established the foundation for the Franco-German friendship. Later, Chancellor Helmut Kohl would tear up whenever he mentioned the "House of Europe," and even his successor Gerhard Schröder, initially concerned that German money was being "frittered away" in Brussels, eventually became an ardent supporter of Europe.

National interests, of course, have always been part of European politics. After the war, Adenauer wanted to firmly anchor Germany in the West. For France, on the other hand, Europe was a means to keep its neighbor across the Rhine in check. But passion was always the fertilizer on which Europe thrived. And passion is exactly what Merkel lacks.

Her Shangri-La was not Paris or Rome, but America. The United States was the antithesis to the musty stuffiness of East Germany, and for her, Europe did not promise any deliverance. This attitude distinguished her from those members of the conservative Christian Democratic Union who came of age in the western part of Germany. They grew up with the belief that the rehabilitation of the Germans, and the recovery of Germany's national dignity and identity after the crimes of the Nazi era, could only be achieved through Europe.

For Merkel, Europe is no dream, vision or object of desire. She has since learned that it is part of the Christian Democratic etiquette to sugarcoat Europe with pathos, which is one of the reasons she traveled to Oslo on Monday for the presentation of the Nobel Peace Prize to the EU. It was, however, little more than a show for the public. In the end Europe, for Merkel, is a question of prosperity, of euros and cents -- and not a matter of the heart.

A Brief Lecture

Which begs the question: Can this woman lead Europe out of crisis? Or is a dispassionate politician like Merkel precisely what Europe needs -- someone who lacks the unrealistic emotionalism that led the euro astray in the first place?

Close observation of Merkel this year, as she travels through Europe and around the world, reveals a relentlessly objective woman -- one who is primarily interested in key indicators like growth rates, demographic trends and debt levels. When Merkel is asked about the causes of the euro crisis, she likes to reply with a brief lecture on economics.

"Where are my beloved tables?" she asks, seated in a plane in the summer. Then she pulls out a stack of papers. On one side, they show the skyrocketing labor costs in Southern Europe. On the other side are the low interest rates that enabled countries like Greece, following the introduction of the common currency, to embark on such an unrestrained path to debt in the first place.

It isn't sentimentality that drove Merkel to make €400 billion ($520 billion) of German money available to help prop up the euro zone. This quickly becomes clear when she speaks. She treats the debt-ridden countries of Southern Europe like unruly children that have to be brought to their senses so that Germany isn't dragged into the abyss of the euro crisis along with them.

When she flew to Greece in October, she prepared by reading an interview with the Greek prime minister in the leading German business daily Handelsblatt. In it, Antonis Samaras said that he now makes himself available to his ministers on weekends, and that he also has time for face-to-face meetings. The message he was trying to convey is that the era of inefficiency is finally over. But one could also interpret the premier's words differently, namely as evidence of the long road ahead for Greece. How can a prime minister, after all, believe that having to work on the weekend is even worth mentioning?

For months, Merkel wavered over whether or not Greece should remain in the euro zone. As recently as summer, she couldn't decide whether to believe in the domino or the ballast theory, as she called the two alternatives. According to the first theory, a Greek bankruptcy could drag other threatened euro countries into the abyss. Proponents of the second theory, on the other hand, believe that Greece is the ballast that the euro zone has to jettison to recover.

Most-Hated Woman

It's difficult to say why Merkel eventually chose the domino theory. Perhaps it was partly the doing of Chinese fund managers who, during her visit to Beijing in the summer, bluntly described to her what they saw as the devastating consequences of ejecting Greece from the euro zone. If that happened, they said, China would no longer have any confidence in the euro and, as a result, would stop buying bonds issued by euro-zone member states.

Perhaps it was also the warnings coming from her counterparts in Europe. The Slovenian prime minister, for instance, told her that a Greek bankruptcy would result in a 5 percent shrinkage of his country's economy. That too made an impression on Merkel.

What don't tend to make an impression on Merkel are the protests against her. She is undoubtedly Europe's most-hated woman at the moment. When she traveled to Athens in October, her motorcade quickly swept through the empty streets of the Greek capital; it felt like the setting for one of those films that depicts a world devoid of human beings.

Visiting Lisbon in mid-November, she met with her Portuguese counterpart in a centuries-old fortress on the Atlantic coast, where police officers dressed in black and carrying submachine guns were posted along the battlements. A helicopter circled overhead, while frogmen in an assault boat kept watch over the sea approach.

The chancellor's motorcade had hardly left the airport before demonstrators greeted Merkel with Hitler salutes and extended middle fingers. In the summer, Time ran a cover story titled "Why everybody loves to hate Angela Merkel."

The chancellor was horrified at first over the amount of aversion she encountered, say her advisors. But now she sees things in a more pragmatic light. Her confidants say that the protests do sometimes lead Merkel to wonder if she is on the right track. She usually answers the question in the affirmative.

Disney World for Tourists from China

Every morning, Berlin's Press and Information Office compiles a summary for Merkel of what the Greek press is writing about her. It often isn't very flattering. But by now Merkel finds it amusing that the proponents of austerity in Greek politics are known as "Merkelists."

On the one hand, she is of course aware that it's meant as a disparagement. On the other, though, she has no objection to her name becoming synonymous with saving money. In fact, the protests abroad benefit Merkel, because they demonstrate that she isn't simply giving away Germany's billions in aid but is instead tying them to strict conditions. She isn't losing any sleep over being regarded as the iron chancellor.

What earns Merkel's respect is discipline. When she flew to Indonesia in the summer, she lionized President Susilo Yudhoyono. He's a short, inconspicuous man, but his country has managed to reduce its deficit from 80 percent of gross domestic product to 20 percent within just a few years.

Indonesia is the kind of place she wishes Greece resembled: industrious, calm and inspired by the will to make up for the mistakes of the past. If Indonesia can get its debt crisis under control, Europe certainly should be able to do the same. That was the unspoken message of Merkel's trip.

Merkel's reality holds: Germany is strong, but not strong enough to keep a sick Europe going in the long term. "We want a European Germany, not a German Europe," author Thomas Mann said after the war. Merkel would probably subscribe to Mann's somewhat abstract statement. But in practical terms, she believes that it wouldn't hurt Europe to become a little more German, at least when it comes to incurring debt. How else is the Continent supposed to compete with the up-and-coming Asian economies?

Since becoming chancellor, Merkel has been to China six times. The only non-European country she has visited more often is the United States. She admires the efficiency with which the Chinese have managed to become the second-largest economic power on earth in the space of three decades. But she also knows how this has shifted the balance of power worldwide -- and that it doesn't look good for the Europeans.

A Trio of Factoids

The people who work for her are familiar with Merkel's favorite trio of factoids: Europe represents only 7 percent of the world's population, it accounts for about 25 percent of global economic output but also hands out half of worldwide social expenditures. You don't have to have a Ph.D. in theoretical chemistry, as does Merkel, to understand that Europe has a problem.

It's important to prevent the worst from happening, the chancellor says sometimes, and she is quick to describe what "the worst" means for her: that Europe might eventually become a place to tour the evidence of past successes, a sort of Disney World for Chinese tourists.

That's why she finds trips to China instructive. For three millennia, Chinese civilization was considered the most advanced in the world. But then poor political decisions resulted in China falling behind the rest of the world and it became irrelevant.

Merkel fears that Europe could now be at a similar historical fork in the road. The financial crisis of the last few years has clearly demonstrated that the Western model of freedom isn't nearly as firmly established as it might seem.

It is a conviction that is mirrored in her conversations with counterparts around the world, many of whom view the old continent with a mix of condescension and pity. The feeling is that Europe has completely lost all momentum. Her husband Joachim Sauer, a chemistry professor, likewise tells her how Europe is talked about at international scientific conferences. The image painted is not an optimistic one.

What, then, is to be done? Merkel has opted for a policy of pedagogical imperialism. Her exports include fiscal discipline, structural reform and bank regulation. She would never expect the Germans themselves to put up with most of it. And none of her predecessors would have dared to push through his agenda in such an uncompromising fashion, if only for historic reasons. But Merkel's dominance is of the quiet and inconspicuous sort. She isn't loud like Schröder, nor is she a massive and all-encompassing presence like Kohl. This reduces resistance.

The Philosophy of Muddling Along

In Europe, she applies the same method she has already perfected in domestic policy -- a method she essentially acknowledged two years ago when she quoted Karl Popper during her New Year's address. The actual quote, "the future is wide open," was surreptitious, but it served to demonstrate that Merkel is familiar with the social philosopher, who died in 1994. And her familiarity is telling.

Popper, after all, is the great theoretician of a policy best described as muddling along. He argued that policy should not be based on visions, but instead should move forward in small, manageable steps. Popper called this approach "piecemeal social engineering," and it holds that even far-reaching social changes can only be achieved through small steps. If they prove to be flawed or wrong, they can be corrected or reversed as necessary.

Helmut Schmidt -- who once said: "People who have visions should go see a doctor" -- was the last chancellor to publicly invoke Popper. Merkel hasn't been known to make similarly categorical statements, but Popper would nonetheless be pleased.

Merkel's predecessor Gerhard Schröder was at his best when the air in the Chancellery was saturated with testosterone and a showdown was looming. He yearned for the great dramatic moment, a giant explosion or the ultimate political dispute. It's an approach that his successor finds abhorrent.

You don't solve things with grand posturing, she said this summer. She prefers to dissect problems, making them smaller and she slows things down if need by, thereby removing the tension from certain processes.

At a recent dinner at the Chancellery, Merkel reportedly worked out a simple equation: According to former Chancellor Ludwig Erhard, she said, 50 percent of the economy is psychology. Therefore, she noted, would only say nice things about Greece from then on. With regard to the remaining 50 percent, she explained there is a 50 percent chance that the right decisions have been made. Combine the two numbers and you have a 75 percent probability of success. She couldn't have put it more coolly.

Mistakes Made

"It can't be said often enough," she told delegates to the convention of her Christian Democratic Union (CDU) in Hanover last Tuesday. "The European debt crisis cannot be solved with a single stroke, a single bang, the one supposed panacea." It was a typical remark for Merkel and one that she has indeed repeated several times.

She finds visions -- and master plans -- horrifying. Who knows what the world will look like in a year? She proceeds cautiously, moving from one crisis summit to the next. If a decision proves to be a mistake, she corrects herself.

And she has made many mistakes in years gone by. For instance, it was her hesitation that led debt-ridden Greece to the brink of failure in the spring of 2010. "There are no budget resources for the Greeks," she said through her spokeswoman in March of that year, with an eye to the upcoming parliamentary elections in the western state of North Rhine-Westphalia. She knew how unpopular an aid package for the Greeks would be.

But a day before the election, the situation had evolved such that she no longer had a choice. Merkel's hesitation had exacerbated the situation in Greece to such an extent that European leaders, in a dramatic nighttime meeting, were forced to approve a European bailout package for Athens. Since then, things have only gotten worse in Greece.

It's a policy devoid of passion, one that assumes that voters should only be given the truth in homeopathic doses. She treats the Germans like children, covering their eyes when reality becomes too horrible to look at. Merkel deliberately keeps things up in the air and ambivalent, leaving room for a variety of possible outcomes.

Her opponents are clueless, not knowing how to attack Merkel and her approach. She is a moving target and therefore is rarely caught. Her Social Democratic challenger for the Chancellery in next year's general election, Peer Steinbrück, calls it a "veil dance." And it is one that completely flummoxes his Social Democratic Party. They criticize Merkel's approach to Europe only to vote in favor of it in parliament every chance they get.

A Degree in Communications?

Merkel doesn't want to alienate anyone, not the euro skeptics and certainly not the euro supporters. Everyone is taken along for the ride, and because progress only consists of small steps forward, hardly anyone knows where the journey is headed.

That's the advantage of the Merkel method. If she had announced, a year-and-a-half ago, that the Germans would soon be backing Europe to the tune of €400 billion, which is significantly more than an entire annual budget, it would likely have triggered a political earthquake. And now? Most voters have reluctantly accepted the fact that they'll eventually have to pay up, hoping merely that it might be a while longer before it happens.

Merkel spoke to the delegates for an hour at the CDU convention last week. Only after she had talked about the problems associated with the JadeWeserPort harbor project, Germany's only deep-water facility port in Wilhelmshaven, did she turn to the biggest challenge of her chancellorship. Yet only a few minutes later, she was done, having said all there was to say about Europe. What else could she have said?

Unlike her finance minister, she has no plan for Europe to announce. In an interview with SPIEGEL  in June, Finance Minister Wolfgang Schäuble said that he saw the possibility of German referendum on further political integration in Europe -- and was promptly criticized by fellow CDU members.

Such a thing would never have happened to Merkel. She steers clear of sweeping ideas, knowing that they would only provoke resistance. People have supported her until now because the Germans are still the big winners in the euro crisis. They are lulled by the pleasant feeling of finally being able to set the tone in Europe. It's easy to support a Europe in which one sets the tone.

But now things are beginning to shift. Merkel has admitted, for the first time, that a debt haircut in Greece is conceivable. The crisis is about to become expensive, especially for Germany. The question will be whether the Germans will continue to support Merkel's levelheaded approach when they're being asked to fork over real money.

The chancellor senses what she could be in for. After German reunification Merkel, with her doctorate in physics, sometimes said that she wished she had studied law, because most of her counterparts in the West were lawyers. These days, though, she has changed her mind again, saying that she now wished her focus had been communications.

Translated from the German by Christopher Sultan