Merkel slammed over 'visionless' German austerity drive

8th June 2010, Comments 0 comments

Industry, trade unions and even France turned up the heat on embattled German Chancellor Angela Merkel Tuesday over drastic budget cuts, accusing her of belt-tightening without a vision for Europe's top economy.

The chancellor, who has seen her popularity ratings plummet in recent weeks over her handling of the European debt crisis and squabbling in her fractious centre-right coalition, unveiled the mammoth austerity package Monday.

But reaction to the plan, which foresees 86 billion euros (102 billion dollars) in spending cuts between next year and 2014, was withering.

The parliamentary opposition, labour representatives and advocates for the jobless charged that the plans made savings on the backs of the poor, as the biggest cuts target unemployment and parental leave benefits.

"It is not the poor who have lived beyond their means -- it is the rich who have," said the head the German Federation of Trade Unions, Michael Sommer, referring to the roots of the global financial crisis.

He said labour would band together with other affected groups in street protests: "And that will really hurt the government."

Forbes magazine's most powerful woman in the world four years running, Merkel has seen a stunning political reversal of fortune in her second term, which began in October.

Her coalition of conservatives and pro-business Free Democrats is riven by infighting over tax policy, health care reform and plans to maintain nuclear power as part of Germany's energy mix.

Public support for Merkel has plummeted in the process, and she has faced vicious criticism at home and abroad for her public zig-zagging on a massive bailout for Greece and other debt-stricken eurozone members.

On Monday, as the budget negotiations dragged on, she was forced to postpone a planned working dinner with French President Nicolas Sarkozy reportedly due to a bitter spat over French calls for a European economic government.

Both sides were quick to deny the accounts but Patrick Devedjian, French minister for economic recovery, said Paris had no plans to emulate Berlin's austerity push.

"That would be dangerous because one would risk killing growth, and there is not much of that already," he said.

Devedjian said France had had the mildest recession in Europe last year and said French debt was "not at all a problem" because "it rests on the economy of a great nation which is absolutely capable of living up to its obligations."

The French deficit is expected to reach eight percent of gross domestic product this year, against more than five percent in Germany, and both countries will clearly breach the EU's three-percent limit.

The press said Merkel's government was in a dire state, and the budget plans did not bode well for the more than three years left in its term.

"After seven months, the coalition now has an answer to the question of what it actually wants to achieve: savings," the centre-left daily Sueddeutsche Zeitung said, calling the government "visionless".

"Whether outside among the people or within its own ranks, this coalition is fighting for survival."

Banks and the airline industry slammed, respectively, a proposed tax on financial transactions from 2012 and a levy on flights.

And Cem Ozdemir, chairman of the opposition Greens that have profited in the polls from the coalition's misery, said the government was politically bankrupt.

"You cannot see a direction or a plan in these savings proposals," he said.

Rare praise came from analysts who said Germany was fulfilling its pledge to set a good fiscal example in the eurozone.

"For European policies, the German government took a clear step ahead," said Carsten Brzeski of ING bank. "Could this be a new lesson from the European austerity champion?"

© 2010 AFP

0 Comments To This Article