Can Merkel Be Moved?
Berlin -- Ever since the march to European union began in the late 1940s, French-German collaboration has been at the heart of the project. Until the recent defeat of French President Nicolas Sarkozy, his close alliance with German Chancellor Angela Merkel continued this tradition, albeit on behalf of policies that have driven Europe deeper into depression and inflicted brutal austerity on smaller nations such as Greece and Portugal.
With the May 6 election of French Socialist Francois Hollande on an anti-austerity program, Paris and Berlin are now at odds. If a Social Democratic-Green coalition wins next year's German elections, expected in September 2013, that would create a progressive Paris-Berlin axis.
There are, however, two huge problems. September 2013 is an eternity away and the European project could go up in smoke in the meantime. The other problem is German public opinion.
Though Chancellor Merkel's Christian Democratic Union suffered two election defeats in recent state elections, including in Germany's largest state, North Rhine-Westphalia, this is not because the German electorate rejects her austerity policies for the rest of Europe. If anything, some voters fear that Merkel is a little soft on Europe.
Thus the dilemma for the opposition Social Democrats. Whenever there is the slightest departure from Merkel's austerity line, the tabloid press is quick to accuse the Social Dems of "treason" to the fatherland, and organs like Der Spiegel question their competence to govern.
The German Bundestag faces a crucial vote on whether to ratify the latest European Stability and Growth Pact, a key Merkel goal that provides for even more stringent deficit and debt targets, with penalties for violating them. Because this requires two-thirds approval, the Social Democrats as the largest German opposition party have the power to block it, which would be a huge defeat for Merkel.
But my social democratic sources say the Party in all likelihood will not have the nerve to vote no, because party leaders are fearful of defying public opinion. Social Democratic economic policy documents and speeches by leaders, calling for wage increases and more public investment, invariably seek to bullet-proof the Social Democrats by reiterating the call for budgetary toughness. The Green leaders I've spoken with have admirable plans for a green investment agenda, but are basically in the same place on austerity.
Why this German embrace of austerity (for everyone else)? Because it serves Germany just fine. The French situation, with rising unemployment, rising deficits and falling exports, could not be more different.
Postwar Germany, fearful of inflation, has always pursued a policy of fiscal and monetary prudence combined with a strong export economy. But the shift to the Euro supercharged this strategy in unanticipated ways.
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