CHANCELLOR ANGELA Merkel’s call for deeper European integration could fall on deaf ears at home amid growing political tensions with her coalition partner and mixed signals from leading financial figures.
The German leader has described the euro zone crisis as a chance to revive political and economic integration, but the project got off to a bad start yesterday when Berlin was forced to deny claims that France threatened to leave the euro zone at the crisis summit in Brussels.
The German leader admitted she expects conflict on the reform plans, in particular a proposal for greater Brussels oversight of national budgets. However, avoiding the EU’s problems would cause greater problems, she said.
“We haven’t discussed certain problems in Europe because we tried not to see them, in order to be nice to one another,” said Dr Merkel. “The crisis will teach us that we have to put all the problems on the table to find a solution. We will have to co-ordinate more closely and pay closer attention so that we really obey the rules.”
European Central Bank president Jean-Claude Trichet welcomed her remarks and called on Germany to act as a kind of “euro zone police”.
"Germany is the biggest economy in the euro zone, with a tradition of healthier state finances," Mr Trichet told the Handelsblattnewspaper.
His call was embraced in Berlin, where finance ministry state secretary Steffn Kampeter said it was time for Germany to “once again to lead by example”. The way to do this, he said, was to push further budget austerity measures.
But it is these very austerity measures that could have dire consequences for the Berlin coalition’s political stability and hobble Dr Merkel’s ability to participate in the deeper integration process she is seeking.
After seven argumentative months in office, Dr Merkel’s Free Democrat (FDP) coalition partners are still smarting from her dismissal last week of the FDP’s €16 billion tax cut plan without prior consultation.
The German leader claimed the poor economic situation and growing bailout demands made such deep tax cuts impossible. After a weekend election robbed Dr Merkel’s coalition of a majority in Germany’s upper house, angry FDP rank and file are threatening a revolt in the lower house, too.
“It was Dr Merkel’s job to get moving on the main content of our programme for government . . . instead she has just delivered a complete lack of leadership,” said Hans-Ulrich Rülke, FDP state leader in Baden-Württemberg.
The mood has darkened further after Deutsche Bank chief Josef Ackermann has said Germany is unlikely to see again the €22 billion they loaned Greece last week.
“Whether Greece will be in a position to drum up the kind of economic strength necessary is something I would doubt,” said Mr Ackermann on German television.
Dr Merkel needs a parliamentary majority next week to greenlight Germany’s contribution to the €750 billion euro zone stabilisation fund.