21st Sep 2019


Eurozone crisis tests the Merkel method

German Chancellor Angela Merkel does not like rash decisions.

A step-by-step approach, carefully preparing the ground for any policy change she may envisage has become her signature style. As a natural scientist, she has no sympathy for irrational behaviour, for panic or enthusiasm displayed either by fellow EU leaders or markets.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

  • Angela Merkel hates taking decisions under market pressure (Photo:

Speaking at an event in Berlin on Friday (15 June) organised by an association of German family enterprises, Merkel praised their "steadfastness" and their "long-term thinking" as opposed to the "quick buck mentality" of financial markets.

"In times of fast-changing environments, where financial markets are increasingly gaining importance, where bets are made several times a day, this steady, long-term oriented family business culture is a very important counterweight," she said.

Sound budget management and reluctance to take on debt are virtues the she cherishes most. It is her firm belief that the same should apply to states.

The financial crisis, followed by the euro-crisis are to her mind symptoms of the same reckless behaviour of running banks or whole economies on debt and deficits.

The daughter of a protestant pastor, Merkel has a near-religious conviction that by cutting deficits and rolling back debt economies will be cured of all ills.

She backs "sustainable growth," as opposed to growth based on credit, consumerism and real estate bubbles. Slashing labour costs, making budget cuts, investing in innovation and education are the recipes she advocates for all countries, including her own.

Her insistence on "living within one's means," as the family businesses in her view are so good at doing, is a pre-condition for the European Union to succeed and keep up with competition from India, Brazil or China.

It is why she fiercely opposes any common debt issuance in the eurozone, as France's new president Francois Hollande is advocating, which would allow southern euro-countries to borrow money at more accessible rates than now.

Eurobonds would be nothing but a "quick fix" and a repeat of the same mistake that brought the eurozone in this situation in the first place: cheap money with no structural reforms, says Merkel.

The only way Berlin could agree to a form of such common sharing of debt would be for a true political union to be created among EU states. With the European Commission acting as a government, common taxes and a more powerful European Parliament. Even with a European army, at some point.

This would require not only a change of the EU treaties, but also a referendum in Germany to modify its own constitution, as any budgetary, military or social powers transferred to Brussels would be in breach of the current basic law.

But Merkel is determined to stick to her guns. Too much is demanded - especially by France - without any willingness to cede sovereignty and beef up the EU scrutiny over national affairs.

"It cannot be that we put liabilities at community level, but that checks and balances remain at national level," she told the family business community, recalling that when the euro was created, there were two so-called convents - one working on the monetary union, one on the political union.

"The political union discussions did not materialise, so we need to catch up with that," she said.

When the last German concession was made earlier this year - the creation of a permanent bail-out fund for the eurozone - Merkel pressed for a pact signed among all EU countries except Britain and the Czech Republic enshrining a debt brake into their national law.

But she had to give up two conditions which now she will press for again: countries to be taken to the European Court of Justice if their budgets are not in line with the debt brake and with the goal of cutting debt by 1/20 each year when the total debt exceeds 60 percent of GDP.

Having the institutional structures in place first and only then pouring money in them is the preferred recipe of Angela Merkel and her coalition partners.

But as Spain's costs have reached bail-out territory and uncertainty about Greece's eurozone membership continues, the Merkel method may stretch the cord too far this time around.

Germany alone cannot save Europe, Merkel says

Germany is powerful but cannot save the euro-crisis alone, Chancellor Angela Merkel said Thursday, renewing calls for a political union ahead of a G20 meeting and putting pressure on Spain to seal the bail-out deal as quickly as possible.

Merkel under pressure to move on Spain and Italy

With borrowing costs in Spain and Italy at unprecedented highs, Germany's Angela Merkel came under pressure at the G20 summit to let eurozone bail-out funds help them out.

News in Brief

  1. Ireland: right Brexit deal is 'not yet close'
  2. UK secrecy on Brexit holds back wider EU talks
  3. Feminist mass protest in Spain after 19 murders this summer
  4. Global climate strike starts ahead of UN summit
  5. UK Brexit minister to meet Barnier on Friday
  6. Russia-Ukraine gas deal talks show 'progress'
  7. Nobel economist: Ireland 'not good EU citizen' on taxes
  8. Germany takes carbon border tax on board


Why von der Leyen must put rights at core of business

Ursula von der Leyen's in-tray must include those European executives on trial for systematic workplace harassment, the break-up of European slavery rings, and allegations of European companies' abuse in palm oil, including child labour, land grabs, and deforestation.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew programme studies infectious diseases and antibiotic resistance
  2. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  3. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  4. Nordic Council of MinistersNo evidence that social media are harmful to young people
  5. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  6. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  7. Nordic Council of MinistersEducation gets refugees into work
  8. Counter BalanceSign the petition to help reform the EU’s Bank
  9. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  10. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  11. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  12. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat

Latest News

  1. Europe goes to New York This WEEK
  2. Nine EU 'commissioners' asked to clarify declarations
  3. Dismiss Italy's Salvini at your peril
  4. Malta PM accused of 'blackmail' over slain reporter
  5. Diplomats back Romania's Kovesi for EU top prosecutor
  6. Brexit raises questions for EU defence integration
  7. Low-carbon cities can unlock €21tn by 2050, report finds
  8. France, Italy want 'automatic' distribution of migrants

Stakeholders' Highlights

  1. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  2. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  3. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  4. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  5. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  6. Nordic Council of MinistersNordic commitment to driving global gender equality
  7. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  8. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  9. Nordic Council of MinistersNordic talks on parental leave at the UN
  10. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  11. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  12. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID

Join EUobserver

Support quality EU news

Join us