Ausgabe 23/2009

SPIEGEL Interview with Chancellor Angela Merkel 'No Script for the Crisis'

German Chancellor Angela Merkel, 54, discusses government bailouts for companies, her achievements during her term in office and the legacy of the East German secret police, the Stasi.

Editor's note: The following interview was conducted with Chancellor Angela Merkel prior to the government's announcement Saturday that it had reached a deal to rescue the German automaker Opel.

SPIEGEL: Chancellor Merkel, you have shaped an astonishing career for yourself since you took office three-and-a-half years ago. In addition to being head of government, you are now Germany's chief executive, as your government intervenes in the economy to an unprecedented extent. Did you ever dream this would happen?

German Chancellor Angela Merkel: "The crisis is an extraordinary situation for which there is no script."

German Chancellor Angela Merkel: "The crisis is an extraordinary situation for which there is no script."

Angela Merkel: I have little interest in such word games. My daily work consists of coping with the worldwide financial crisis and doing everything possible to ensure that it doesn't happen again. In recent months, we have had to devote more of our attention to government bailout programs than anyone could ever have imagined. Nevertheless, it isn't anything new for the government to be issuing loan guarantees for businesses. For example, my election district is a center for shipbuilding. Loan guarantees have played an important role in this industry for decades.

SPIEGEL: It sounds as if you believe it is completely normal for the government to be helping one company after the next.

Merkel: I mentioned two things: The existence of loan guarantees, which are not new, and the exceptional nature of the global crisis. The key moment of this crisis was the impending collapse of banks, which had to be prevented. Neither I nor many others could have imagined that the government would have to rescue banks overnight and at great expense, because otherwise the entire financial system would collapse. Nevertheless, we did not allow ourselves to be put off and we reacted appropriately to the unthinkable.

SPIEGEL: Former German Chancellor and Economics Minister Ludwig Erhard is widely regarded as the father of Germany's post-war economic miracle. But his understanding of the market economy did not include the government rescuing weak companies.

Merkel: Ludwig Erhard assigned to the state the role of custodian of the economic and social order. After the war, for example, he supported government intervention in the construction of housing when the market failed (to provide adequate housing). The current situation is being portrayed in a highly exaggerated fashion. The government today is not playing the role of entrepreneur, but it needs to intervene given its role as custodian of the economic order.

SPIEGEL: In other words, there is nothing unusual about the federal government being called upon to bail out companies like Opel, Arcandor or Schaeffler?

Merkel: As I said, the dimensions of the worldwide crisis are completely atypical, but government loan guarantee programs and low-interest loans have existed in Germany for decades, and they have proven successful. For this reason, I believe that we currently run the risk of bundling together issues which are separate. We must be careful to draw a distinction between companies that are fundamentally efficient but are in trouble because the banks are not lending them money due to the international crisis, and those that have simply been poorly managed, independent of the crisis. A requirement for government assistance is a sustainable business model. To verify this, we have a loan guarantee committee and a steering committee, each staffed with the appropriate experts. Therefore it also makes no sense for all kinds of politicians to be dispensing advice, such as what to do with Arcandor, before the committee has taken a position.

SPIEGEL: In the past, business owners came to you and gave you advice. Now they are coming to ask for help. Has your view of German business owners changed?

Merkel: A request can also come in the form of dispensing advice, in this case the advice being that we should give them a loan guarantee. Conversely, I sometimes also give advice to businesses, which certainly balances things out and makes the issue not as relevant. Besides, I should point out that the overwhelming majority of business owners and managers do effective and responsible work. Otherwise Germany would not have the strong position in the world economy that it does.

SPIEGEL: Business leaders have often looked down on the political world.

Merkel: If my view has changed, then it would be toward some representatives of the financial industry. In the past, people in that industry said that those who did not take risks were behind the times. When we called for improved supervision, we were repeatedly told that we didn't understand how the global economy works. That was an influential experience, and I don't want to experience it a second time. We have to take decisive counter measures should banks, hedge funds and international financial managers resist rules and regulations.

SPIEGEL: The crisis in Germany is currently focused on Opel. Why are you helping a manufacturer that is only in trouble because too few people find its cars attractive?

Merkel: That's not what it is about. In the past, Opel was firmly integrated into GM and unable to act independently. The parent company, General Motors, is now more or less owned by the American Treasury Department. Opel can't do anything on its own unless the European governments take action. Why should the best part of the company go under, just because the parent company in the United States was mismanaged? We would also be taking action to help Opel if we didn't have the global economic crisis.

SPIEGEL: Your economy minister, Karl-Theodor zu Guttenberg, has repeatedly talked about a possible bankruptcy for Opel, and received sharp criticism from your coalition partner, the center-left Social Democratic Party, for doing so. Do you share the criticism of Guttenberg's crisis management?

Merkel: The economy minister is simply doing what he is required to do, which is to take the preservation of both jobs and taxpayers' money into account. It is his job, and it is both correct and necessary to carefully examine every investor's plan.

SPIEGEL: Do you consider bankruptcy out of the question?

Merkel: We are doing everything in our power to find a different solution. However, a direct government investment in Opel is out of the question for me.

SPIEGEL: How do you feel that the Americans are treating you in the negotiations?

Merkel: We need even more intensive cooperation to arrive at a mutually acceptable solution. In this regard, there is certainly room for improvement on the American side.

SPIEGEL: It is our impression that your vice chancellor, Frank-Walter Steinmeier, is putting you under pressure on the Opel issue. Do you have the same feeling?

Merkel: No.

SPIEGEL: In general, is the SPD having an easier time of it with the crisis? All of the instruments being used, from the nationalization of banks to loan guarantees, are less problematic, in terms of the limits of state power, for the center-left Social Democrats than for the center-right Christian Democrats.

Merkel: For everyone, the crisis is an extraordinary situation for which there is no script. And besides, in the end even the SPD can only spend as much money as the state has collected.

SPIEGEL: You wanted to be the chancellor who balanced the national budget on a long-term basis. Now you must take responsibility for the largest amount of new debt in postwar German history. Under these circumstances, do you find it difficult to be satisfied with yourself?

Merkel: I am very pleased about the way we cleaned up the budget and reduced unemployment before the crisis. I am also very satisfied with the determination with which the federal government has tackled the worst global recession in 80 years, and has spent billions to help workers and business bridge the crisis. This is the right thing to do, even though it's difficult for everyone. The alternative, namely not to react to the crisis in the way we have, thereby protecting the budget, is not a reasonable alternative. It would have led to far more serious consequences and would have been more costly in the end.

SPIEGEL: Do you ever have nightmares when you think about what you are leaving behind for future generations?

Merkel: Fortunately, I generally don't have nightmares. I am an optimist. Incidentally, this legislative period has shown that a government can achieve a balanced budget in normal times. For three years, until the eruption of the worldwide banking crisis, we made good progress in consolidating the budgets and had even reached a balanced budget for the state as a whole, that is, the federal, state and local governments and the social insurance system combined. Once the crisis has been overcome, we must and will resume this path of consolidation.


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