If you’re monitoring the situation in Europe closely, you’re now probably most worried about the impact of the True Finns on Portugal’s impending bailout.While Europe’s leadership is likely to muddle through that situation by giving the Finnish a by or sorting out a deal, there’s a vote in the fall that could halt future bailouts in their tracks, or end German Chancellor Merkel’s rule.
Germany is set to vote in the fall on the European Stability Mechanism, the successor to the European Financial Stability Fund, and the expansion of the fund itself. Right now, German Chancellor Angela Merkel is facing opposition from within, with a backbench revolt already organising against these new programs. She may have to partner with opposition parties to get the legislation passed, which is likely to turn her party against her, and even end her career as German Chancellor.
But according to the FT’s Wolfgang Munchau, this is only one of many potentially explosive moments facing the euro over the next 6 months. He cites a similar situation to the one in Germany brewing in the Netherlands and Finland, as well as a potential France downgrade as further rocks in the road to stability.
But that German example seems the most enticing at the moment. It brings into question whether Merkel will be willing to sacrifice her political future for the euro. There’s been little indication that that’s the likely outcome in the crisis thus far.