30th May 2023

Merkel challenger against banks tapping euro bailout fund

  • Peer Steinbrueck has the support of only 20 percent of Germans (Photo: Valentina Pop)

Peer Steinbrueck has had a bad year so far.

His popularity rates are less than a third of those of Chancellor Angela Merkel and his Social Democratic party is also trailing behind Merkel's Christian Democrats just 100 days before the September elections.

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Speaking to foreign journalists in Berlin on Thursday (13 June), Steinbrueck admitted that Merkel is more popular. But he said it was because she is giving Germans a false sense of security, while social disparities in the country are growing and its image abroad worsening.

Celebrated at home for looking after German taxpayer's money, Merkel's "uni-dimensional crisis management" based on austerity risks "killing the patient", as unemployment rates in southern European countries are at record highs, Steinbrueck said.

But the former finance minister in Merkel's grand coalition from 2005-2009 also realises German voters do not want to hear that a future chancellor wants to squander their money.

A year ago, Steinbrueck was advocating eurobonds as a way out of the crisis, but on Thursday the Social Democrat candidate compared mutualising debt in the eurozone with "giving my credit card to my teenage son."

"We never said eurobonds with no conditionality. Nobody would simply hand over their credit cards without any demands. And the demands may be difficult for some countries - including Germany - because they imply more sovereignty transfers to Brussels," Steinbrueck said.

He also said countries like Ireland should raise their corporate tax in order to prevent a "race to the bottom" among member states on giving multinational corporations ways to pay as little taxes as possible.

As for the €500 billion strong eurozone bailout fund (ESM) directly recapitalising banks in troubled countries, Steinbrueck noted that Merkel made such a promise last year, but that she will "drag out a decision as long as possible because it is not popular in Germany."

The ESM should stick to its initial mandate of helping out governments, not banks, Steinbrueck said.

"Banks should be bailed out by their shareholders, not taxpayers."

Eurogroup experts on Friday are set to gather in Rome for informal talks on the ESM recapitalisation plans, proposing a €60 billion cap on the scheme, Wall Street Journal reports.

But southern countries are frustrated with the slow pace of the talks and the prospect of a cap. Spain's foreign minister Manuel Garcia-Margallo on Wednesday said such a ceiling would make no sense and that the ESM should have "unlimited firepower" to be useful.

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