Saturday

30th Sep 2023

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

Become an expert on Europe

Get 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.

IEA says: Go green now, save €11 trillion later

The International Energy Agency finds that the clean energy investment needed to stay below 1.5 degrees Celsius warming saves $12 trillion [€11.3 trillion] in fuel expenditure — and creates double the amount of jobs lost in fossil fuel-related industries.

Opinion

How do you make embarrassing EU documents 'disappear'?

The EU Commission's new magic formula for avoiding scrutiny is simple. You declare the documents in question to be "short-lived correspondence for a preliminary exchange of views" and thus exempt them from being logged in the official inventory.

Latest News

  1. EU women promised new dawn under anti-violence pact
  2. Three steps EU can take to halt Azerbaijan's mafia-style bullying
  3. Punish Belarus too for aiding Putin's Ukraine war
  4. Added-value for Russia diamond ban, as G7 and EU prepare sanctions
  5. EU states to agree on asylum crisis bill, say EU officials
  6. Poland's culture of fear after three years of abortion 'ban'
  7. Time for a reset: EU regional funding needs overhauling
  8. Germany tightens police checks on Czech and Polish border

Stakeholders' Highlights

  1. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  2. International Medical Devices Regulators Forum (IMDRF)Join regulators, industry & healthcare experts at the 24th IMDRF session, September 25-26, Berlin. Register by 20 Sept to join in person or online.
  3. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  4. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA
  5. International Medical Devices Regulators Forum (IMDRF)Join regulators & industry experts at the 24th IMDRF session- Berlin September 25-26. Register early for discounted hotel rates
  6. Nordic Council of MinistersGlobal interest in the new Nordic Nutrition Recommendations – here are the speakers for the launch

Stakeholders' Highlights

  1. Nordic Council of Ministers20 June: Launch of the new Nordic Nutrition Recommendations
  2. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  3. ICLEISeven actionable measures to make food procurement in Europe more sustainable
  4. World BankWorld Bank Report Highlights Role of Human Development for a Successful Green Transition in Europe
  5. Nordic Council of MinistersNordic summit to step up the fight against food loss and waste
  6. Nordic Council of MinistersThink-tank: Strengthen co-operation around tech giants’ influence in the Nordics

Join EUobserver

Support quality EU news

Join us