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German commentaries on euro debt crisis May 10, 2010

Posted by Yilan in EU, European Union, Germany, Yunanistan.
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German Chancellor Angela Merkel said on Monday her cabinet aims to push through Germany’s part in a $1 trillion emergency rescue package to stabilise the euro quickly despite suffering a major election defeat on Sunday.

Following are extracts from Monday’s German newspapers on Greece and the euro zone crisis:

FRANKFURTER ALLGEMEINE ZEITUNG (Conservative)

“Only an aid package for Greece should have been approved at the Brussels emergency summit meeting. Instead, all of the principles of the monetary union were sacrificed. Now EU leaders have repeated what they did for Greece during the EU summit in February. They promised aid to Greece, though the EU treaties state that no country should be liable for the debt of another. This reinterpretation of the contracts is not reassuring the markets. Now all stability rules will be broken in order to save the euro. How can that be good? More debt will lead us into the abyss. The speculation against Greece, Spain, Portugal, Ireland, Italy and Britain will continue until it is clear how they will escape the debt quagmire. War cries and threats do not impress investors you need to finance the national debt.”

SUEDDEUTSCHE ZEITUNG (Centre-left)

“The solidarity of Europe’s nations is at risk, the political union may suffer serious damage. The heads of state and government leaders were not guilty of some hysterical attack when in the space of a few hours they took steps that would have been unimaginable in years of laborious negotiations. Europe will be a changed place on Monday, though its population may not notice… The delicate bond of monetary union has been encircled by iron rings. However, the sudden and dramatic nature of the decision means that not enough thought was given to the make-up and robustness of this new girdle.”

“Once again, it was French President Nicolas Sarkozy … who grasped the historical moment and managed to style himself as the leader amidst the turmoil. This time he led the negotiations as though the idea was to isolate Germany and force a stubborn chancellor to do his bidding. In doing so, the president has made it harder to pass what was agreed and above all, has irritated the markets. Without Germany’s contribution there will be no peace on the markets. Alongside Sarkozy is a chancellor who will have difficulty in explaining her radical change of position within a few hours to the public — and getting backing for the massive pledges of support in parliament. Now she will have to live with the verdict that a rescue package a la Francaise could have been put together weeks ago, but that she unnecessarily pushed up the cost of it.”

FINANCIAL TIMES DEUTSCHLAND (Business)

“The EU can no longer act as if it is mainly an economic union, and that political power will remain essentially in the member states. In the future, Brussels will dictate significant aspects of financial and economic policies. The economic tensions have become too great between countries with budget surpluses and those with a deficit. Every day of confusion punished the financial markets with rising spreads and falling euro rates. This has forced EU countries to finally close ranks. It still needs to show that the new rescue fund is enough to convince markets to stop speculating against Portugal and Spain. And the European Central Bank doesn’t strengthen the trust in their political independence, if it declines purchasing government bonds for weeks and then suddenly reverses.”

BERLINER ZEITUNG (Centre-left)

“There is a strong correlation between the severe euro crisis and the election night in North Rhine-Westphalia. Since it took office last autumn, Merkel’s government has shied away from tax reform, health policy and cleaning up public finances, not wanting to scare off the voters. At the same time, they have positioned Merkel in the Greece-crisis as Iron Angela. In the end they lost both in NRW and in Europe. Germany’s largest state has voted out Juergen Ruettgers’ centre-right coalition, expressing distrust in Merkel’s coalition. They have lost the majority in the upper house, and the Federal Republic will now be governed by an informal grand coalition. In Europe, Merkel wanted to restore the primacy of politics over speculation. But she underestimated how quickly the Greek crisis would spread to Portugal, Italy and the entire euro zone.”

“It’s a political landslide — only 225 days after the centre-right coalition took over the lower house of parliament! Three years before the end of her term in office, Angela Merkel is suddenly without a majority in the upper house. Juergen Ruettgers, who saw himself on his way to becoming the next President, suffers a brutal setback. And the government failed its first test by the voters of its Greek policy.”

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