All eyes on newly assertive Merkel at make-or-break summit

All eyes on newly assertive Merkel at make-or-break summit

21st October 2011, Comments 0 comments

On her Facebook page, German leader Angela Merkel lists as her favourite quote a line from former chancellor Konrad Adenauer: "The point of policy is not to be right but to be right after all."

That sums up her leadership approach: pragmatic, cautious, waiting to see which way the wind blows before acting. But analysts say the euro crisis has galvanised her and that Europe's future lies as much in Berlin as in Brussels.

It is Merkel's Germany that kicked off the debate on bank recapitalisation in Europe, is now pushing investors to take harsher losses on Greek debt and is driving root-and-branch reforms to turn the eurozone into a fiscal union.

But it has not always been this way. Merkel earned herself the soubriquet "Madame Non" during the 2008 crisis for appearing to dither over a stimulus package for Europe's powerhouse economy.

This time around, she seems to have realised the seriousness of the crisis. As she reiterated again on Wednesday ahead of the summit: "If the euro fails, then Europe fails. We will not let that happen."

"Since the summer, there has been a quantum leap," said Celine-Agathe Caro, a European policy expert at the Konrad Adenauer Foundation. "A welcome quantum leap."

British weekly the Economist sketched out where the power lies in Europe these days with a cartoon showing a leather-clad Merkel on a BMW motorbike powering ahead with French President Nicolas Sarkozy in a Peugeot sidecar.

"The Franco-German motor remains crucial. These days it would be more accurate to call it the Germano-French engine," wrote the respected magazine.

Sylvain Broyer, an economic analyst at Natixis in Germany, also said Berlin had begun to take the crisis more seriously. "The wind has changed," he said. "The Germans realised it was in their interest to save Greece."

Merkel certainly never misses an opportunity to tell Germans how much they have profited from the euro and how their own national interest is served by keeping the single currency afloat.

Analysts suggest her new-found drive to solve the crisis may have something to do with its increasing impact on Germany's economy.

When the crisis began, Germany was a haven of fast-growing stability, registering a growth rate last year of 3.7 percent and an unemployment rate that most western economies would envy.

But with 60 percent of Germany's critical exports going to fellow eurozone countries, even Europe's economic engine is spluttering as the crisis shows little sign of abating.

The government is expected to slash its forecast for output next year by nearly half -- from 1.8 percent to around one percent. Analysts say the economy will barely grow in the first two quarters of 2012.

The political mood has changed as well. Germany's voters, once viciously opposed to picking up the tab for what are seen in the country as profligate southern European nations, have realised the importance of swift action.

Merkel's junior coalition partners, the Free Democrats (FDP), attempted a eurosceptic campaign for recent local elections in Berlin, which fell flat on its face. They were kicked out of the parliament with 1.8 percent of the vote.

"Until July, the feeling was that everything would be all right," said Caro.

The FDP "tried to take an anti-European stance and it was completely marginalised," said Natixis's Broyer.

"Germans prefer to consider problems carefully but once they decide on something, they go for it," he added.

Certainly the stakes could scarcely be higher for Merkel, whom Forbes magazine recently named the world's most powerful woman, as Europe's leaders head into Sunday's sink-or-swim summit.

As former Belgian prime minister Guy Verhofstadt recently told her in Brussels: "You have a central role in Europe's fate. History will judge you according to the decisions and leadership you show in this time of crisis."


AFP/  Mathilde Richte/ Expatica

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