Wednesday, March 31, 2010

Germany Exercises it's Political Muscles

Germany Awakes. Rules of the Game Are Changing in Europe
[...] Germany is refusing to bail out Greece. Earlier this week, Chancellor Merkel told the Bundestag that Greece should be expelled from the eurozone if its financial problems risk dragging the euro down. France and the European Commission in Brussels reacted furiously to this suggestion. Barroso dismissed Merkel’s words as “absurd.” Paris and Brussels insist that the EU come to the financial rescue of Athens. Since most of the money for a rescue operation will have to come from Germany, however, such a decision cannot be taken without Berlin’s approval.

Bullying Berlin does not seem to be a clever move. Merkel’s Bundestag declaration followed shortly after Greek Deputy Prime Minister Theodoros Pangalos had accused the Germans of exploiting the Greek debt crisis for their own financial and economic benefit. “By speculating on Greek bonds at the expense of your friend and partner, by allowing [German] credit institutions to participate in this deplorable game, some people are making money,” the Greek Socialist said. “A cheap euro makes the south of Europe suffer, while German exports benefit.”

Last month, Pangalos had angered the Germans by demanding that Berlin pay reparations for Nazi crimes. “The Nazis took away the Greek gold that was in the Bank of Greece and they never gave it back,” he said. The German Foreign Ministry responded that in 1960 Germany paid Athens 115m German marks in compensation for the Nazi occupation and that “parallel to this, since 1960 Germany has paid around 33bn marks in aid to Greece both bilaterally and in the context of the EU.”

The Germans no longer accept being required to be the EU’s paymasters to atone for their Nazi past. There is also an increase in euroscepticism in German public opinion. While Germany introduced austerity measures and trimmed down its welfare system, countries such as Greece refused to do so, relying on the fact that the EU (read: Germany) would bail them out when they got in trouble in order to save the euro.

In Europe, the political rules of the game are changing. An editorial in Wednesday’s Frankfurter Allgemeine Zeitung (FAZ), Germany’s most influential newspaper, drew attention to the fact that “The biggest member state, which has for so long silently been the guarantee of the EU, has now openly expressed that it is no longer prepared to pay any price for European unification. The present Euro crisis is more than a monetary matter. … The image of [Germany as] the paymaster of Europe, the caricature of the Brussels bureaucracy, and the growing displeasure with the loss of [German] Sovereignty has shaped a eurosceptic fundamental sentiment, into which the Greek debacle has landed like a bomb. No German government today can afford to put the European interest before the German interest, especially not in core issues as monetary policy. And even if it tried, it can reckon on being opposed in the German Constitutional Court.” [...]

Meanwhile, Angela Merkel is making a state visit to Turkey:

Merkel tells Turkey EU talks 'open-ended'
ANKARA — German Chancellor Angela Merkel told Turkey Monday that its membership talks with the European Union did not guarantee accession and urged it to grant trade privileges to EU-member Cyprus.

"The rules of the game have changed" since Turkey first applied to become a member of the bloc five decades ago, Merkel said through an interpreter after talks with Turkish Prime Minister Recep Tayyip Erdogan.

"The (accession) negotiations are an open-ended process. We should now pursue this open-ended process," she added, suggesting that Turkey's integration with the bloc does not have to be full membership.

Along with French President Nicolas Sarkozy, Merkel remains one of the staunchest opponents of Turkey's bid to join the European Union, arguing that a vast, relatively poor country with a mainly Muslim 71-million population has no place in Europe.

She has instead proposed a "privileged partnership" between Turkey and the bloc, an alternative Ankara flatly rejects.

Merkel however stressed the immediate task for Ankara was to open its ports to vessels from Cyprus -- an EU member Ankara does not recognize -- under a customs union accord with the Union.

"The most important issue is the implementation of the protocol... We have to deal with the Cyprus issue. That would be to the benefit of us all," she said.

Turkey's refusal to grant trade privileges to Cyprus has led Brussels to freeze talks in eight of the 35 chapters that candidates must successfully negotiate prior to membership.

Since starting the talks in 2005, Turkey has so far succeeded in opening only 12 chapters.

Merkel also pushed Turkey on Iran, urging it to back Western allies in imposing a possible fresh set of sanctions over Tehran's suspect nuclear activities. [...]

She's pushing for quite a few things. Turkey is still voting against sanctions on Iran. Merkel has made an interesting concession, regarding Turkish schools in Germany. As for Cypress and the rest... it will be interesting to see if she gets anywhere.

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