Friday

29th Mar 2024

Germany alone cannot save Europe, Merkel says

  • (Photo: World Economic Forum)

Germany is powerful but cannot solve the euro-crisis alone, Chancellor Angela Merkel told German lawmakers on Thursday (14 June), renewing calls for a political union ahead of a G20 meeting in Mexico and putting pressure on Spain to seal the bail-out deal as quickly as possible.

"To all those looking to Germany again in these days and expecting a solution in one go, to all those trying to convince Germany about eurobonds, stability funds, European deposit guarantee schemes, more billions and many other things I say: yes, Germany is strong, Germany is the economic engine and a stability anchor in Europe."

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

"But even Germany's powers are not unlimited. That is why our special responsibility as Europe's largest economy is to use these powers in a credible way... not to overestimate them, but to move step by step on our path to a political union."

The step-by-step approach she has become renowned for since the crisis began three years ago is once again being challenged by the markets. Spain's borrowing costs on Thursday spiked above seven percent - a rate at which Greece, Portugal and Ireland were forced to seek a full-blown bail-out.

Merkel said Spain was doing the "right things", but it still had to deal with the fallout of a burst real estate bubble created by "irresponsible actions in the past ten years."

She said it was good that Spain announced its intention to seek a eurozone bail-out of up to €100bn for its cash-strapped banks, but insisted that "the sooner this request is made, the better."

Spanish newspaper El Mundo earlier this month reported that Merkel had pressured the previous government of Jose Luis Zapatero several times to accept a bail-out. EUobserver understands Merkel made some 30 phone calls over the past year to convince Spanish officials to acknowledge their funding problem.

The current Prime Minister, Mariano Rajoy, has also refused to go for a full-blown, sovereignty-denting bail-out. Not going the full way has backfired, as ratings agencies downgraded Spain close to 'junk' status, citing lack of clarity over the aid.

Spanish finance minister Luis de Guindos on Thursday admitted that the current borrowing costs are "not a situation that can be maintained over time... and I am convinced that we will continue to take more measures in the coming days and weeks to help bring it down."

But Merkel also used the Spanish situation as an example for the failure of Europe's recently created banking authority (EBA), which gave a clean bill of health to the Spanish banks just six months before they started unravelling.

She said the European Central Bank should instead take on a "stronger role with supervisory competences, so as to protect us from delaying problems due to national influences."

"We need a credible banking supervision," she stressed.

Handelsblatt on Friday reported on plans to be tabled at the 28-29 June summit beefing up the ECB which would basically strip the London-based EBA of any authority. The German central bank, however, is not supportive of the plans.

Analysis

Eurozone crisis tests the Merkel method

The daughter of a protestant pastor, Germany's Merkel has a near-religious conviction that by cutting debt, European economies will be cured of all ills.

'Swiftly dial back' interest rates, ECB told

Italian central banker Piero Cipollone in his first monetary policy speech since joining the ECB's board in November, said that the bank should be ready to "swiftly dial back our restrictive monetary policy stance."

Opinion

EU Modernisation Fund: an open door for fossil gas in Romania

Among the largest sources of financing for energy transition of central and eastern European countries, the €60bn Modernisation Fund remains far from the public eye. And perhaps that's one reason it is often used for financing fossil gas projects.

Latest News

  1. Kenyan traders react angrily to proposed EU clothes ban
  2. Lawyer suing Frontex takes aim at 'antagonistic' judges
  3. Orban's Fidesz faces low-polling jitters ahead of EU election
  4. German bank freezes account of Jewish peace group
  5. EU Modernisation Fund: an open door for fossil gas in Romania
  6. 'Swiftly dial back' interest rates, ECB told
  7. Moscow's terror attack, security and Gaza
  8. Why UK-EU defence and security deal may be difficult

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Stakeholders' Highlights

  1. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  2. UNOPSFostering health system resilience in fragile and conflict-affected countries
  3. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  4. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  5. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  6. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA

Join EUobserver

EU news that matters

Join us