A warning to Chancellor Merkel

EUROPAThere has long been an assumption, undiminished as Germany entered this election year, that the centre-right is certain to prevail and Angie Merkel will be returned for a third term as Chancellor in the autumn. The assumption is as little contested in Germany as it is outside the country. And the fortunes of main opposition parties have done little to persuade anyone otherwise. Social Democratic Party’s choice of candidate, former Finance Minister, Steinbrück, is seen as presenting less of a threat to Ms Merkel than the former Foreign Minister, Frank-Walter Steinmeier, would have done, had he thrown his hat in the ring. The free-market FDP has languished in the polls as a result of lacklustre leadership and the same effect that playing second fiddle in a coalition has had on Liberal Democrats in Britain. The weakness of opposition has prompted the thought that Ms Merkel could be in need of a new coalition partner, the Greens are thought a possibility, but not that the CDU could lose. That assumption might need to be revisited in light of Sunday’s regional election in Lower Saxony. In nail-biting finish, and two of Germany’s three last general elections have been almost as close, victory went to the SPD, in alliance with Greens. This result matters not only because initial forecast was for a relatively easy CDU win, with the polls narrowing sharply towards election day, but because Angela Merkel had campaigned enthusiastically for David McAllister, who was seen as her protégé. Lustre borrowed from the Chancellor Merkel, it turned out though, was not quite enough to clinch victory for Mr. McAllister, nor was the novelty, on which he capitalised, of his Scottish roots. At a time when political left is enjoying something of a resurgence in industrialised world, in part as a response to economic crisis, Lower Saxony result offers a warning. For all Ms Merkel’s personal popularity and success, she and her party cannot rest on their laurels. There are eight months of campaigning to come and Germany’s 2013 election is far from over. (source: Editorial – The Independent, UK – 22/01/2013)

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2 Responses to A warning to Chancellor Merkel

  1. This may be the year that Europe stops being the ticking time bomb of the global economy. Ireland is on track to leave international bailout limbo by summer. Talk of Greece’s departure from the euro is off the table. And financial speculators have generally stopped betting the euro zone will blow up. But even as the sense of emergency fades, Europe is potentially facing a starker problem. For three years, Chancellor Angela Merkel of Germany and a phalanx of policy makers have been working to shore up the euro’s foundations to prevent the currency union from coming apart. As they gather with academics, executives and various experts this week at the World Economic Forum, which opens Wednesday in Davos, Switzerland, the biggest concern is that leaders might become less vigilant now that the heat is off, ushering in a spate of new troubles that could dog the euro for years to come.


    “The risk is that complacency takes hold because there is no more urgency in the crisis, and that everything that has been done up until now will be deemed sufficient,” said Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington. If that happens, he warned, “Europe will turn into the next Japan, and become a permanently depressed or stagnating economic area.”

    Ms. Merkel might be forgiven for feeling a sense of vindication. Her deliberate approach to crisis management and refusal to get too far ahead of German public opinion has often frustrated her euro zone peers and foreign allies. And yet, the strategy seems to have worked — so far, at least. Ms. Merkel, who is to speak in Davos on Thursday, and other European leaders have generally done just enough to contain the crisis without alienating taxpayers. Much of the credit for the current calm in Europe goes to Mario Draghi, the president of the European Central Bank. He appeased financial markets with his promise last summer to do whatever it took to preserve the euro, including buying the government bonds of Spain if necessary to keep a lid on the country’s borrowing costs. The effect of Mr. Draghi’s promise has been evident: financial markets have stopped driving the borrowing costs of Spain and Italy toward the danger levels that led Ireland, Greece and Portugal to reach for international financial lifelines. Today, few people fear that Europe’s southern countries will break away from the euro union (…..)

    http://dealbook.nytimes.com/2013/01/21/in-euro-zone-signs-of-progress-and-fears-of-complacency/

  2. Professor Uziel Nogueira says: True, the euro zone has not imploded thanks to the steady course taken by Angela Merkel. Southern Euro zone countries such as Greece, Spain, Portugal and Italy are taking fiscal measures to deal with the public debt crisis. The euro will continue to be a strong currency, the worse is over for the common currency.


    The main problem in the euro zone is lack of robust growth.

    Without strong economic growth, public debt, unemployment and social unrest cannot be effectively addressed and resolved. Social instability continues to be a problem in Greece, Spain, Portugal, Italy and France. The financial, economic, political and social problems in some euro zone member countries are far from being resolved in 2013-14.

    http://dealbook.nytimes.com/2013/01/21/in-euro-zone-signs-of-progress-and-fears-of-complacency/

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