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BERLIN — Merkel is facing yet another difficult juggling act.When European leaders gather in Brussels Thursday for another summit, the German chancellor will be under immense pressure to boost the euro zone firewall — that is, spend more money — to prevent contagion from a still fragile Greece from spreading to other struggling states.
At the same time, the “Iron Chancellor,” as she is known in Europe, is facing a rebellion in her government coalition and a public that is balking at the costs of bailing out Greece and the other EU states.
This week, Merkel had to rebuke a cabinet member, Interior Minister Hans-Peter Friedrich, after he broached the idea of encouraging Greece to exit the euro zone. She then was forced to rely on the opposition to push through the bailout for Athens in the wake of a backbench revolt.
Most Germans — 62 per cent — are opposed to the latest rescue package for Greece, according to recent polls.
Still, Merkel remains a popular leader, not despite but because of the euro crisis. Germans have been impressed by her tough stance on the crisis, which has yet to have a direct impact on them.
After a difficult period last year, Merkel has been enjoying renewed popularity in recent months. How she has weathered recent setbacks will offer some insight into how — or whether — she can maintain her edge.
Germans may be hostile to the bailouts, but they seem to feel that Merkel is acting in their best interests, said Manfred Guellner, director of the Forsa polling institute.
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“Most people believe that she is doing everything in order to protect the people from dangers that the euro crisis could pose,” Guellner told GlobalPost. “They are afraid that at some stage the crisis might start to affect them personally.”
The chancellor’s insistence on austerity in the euro zone also goes down well with the German electorate, who are alarmed at the prospect of having to continue to rescue more profligate countries.
For the first time in 20 years, Germans are more concerned with the euro crisis than with unemployment, which is now at its lowest level since just after East and West Germany were reunited, said Andrea Roemmele, professor of political science at the Hertie Business School in Berlin.
Last December, at a crucial EU summit, Merkel pushed for a fiscal pact that would limit budget deficits to just 0.5 per cent of GDP. Only Britain and the Czech Republic failed to sign up to the agreement.
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“She has conveyed that the handling of the crisis is pretty much a German handling,” said Ulrike Guerot of the European Council on Foreign Relations in Berlin. “It is all about the fiscal compact, which is German-designed, and that is of course reflected also in the polls.”
As much of Europe slips into recession, Germany has faced growing resentment from nations struggling to cope with the impact of what is perceived as Berlin-imposed austerity.
Analysts have criticised Merkel for fixating on budget restraint and austerity when their countries desperately need growth strategies.
Yet, that hostility — as evidenced by the comparisons to Nazis in the Greek press — has worked to Merkel’s benefit at home.
“Attacks from abroad have led to feeling of solidarity in Germany,” says her biographer Gerd Langguth, a professor of political science at Bonn University. “She is regarded as representing German interests.”
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And Merkel is far from isolated in Europe. She has the backing of a core of hardline countries, including Austria, the Netherlands and Finland, as well as the Baltic states.
“It would be unfair to say that it is one against 26,” said Constanze Stelzenmueller of the German Marshall Fund. “In fact there seems to be something of a North-South split.”
Back home, support for Merkel is solid across the political spectrum. The latest opinion polls by Forsa, released on Tuesday, saw her personal approval ratings rise, despite Germans’ concerns about the euro crisis, to 64 per cent, two points up on the last such poll in December. It is her highest rating since the start of the current government in 2009.
Forsa’s Guellner says that there is now a direct correlation between how well Merkel is regarded and support for her party, the Christian Democrats, which are now polling at 38 per cent. With few credible rivals, either within her party or among the opposition, Merkel has been able to maintain that strong position.
While Merkel has regained the trust of the voters, she still has to contend with the political realities in Berlin.
Last year, her popularity took a hit after her hasty U-turn on nuclear energy following the Fukushima disaster in Japan, which critics saw as opportunism ahead of a key regional election.
She then lost her most popular minister, Karl-Theodor zu Guttenberg, to accusations of plagiarism, and was criticised for backing him for too long.
Merkel now presides over a volatile coalition, with a junior coalition partner that is facing annihilation in the next election. The Free Democrats are currently polling at 3 per cent, which if it were to continue until the election, slated for September 2013, would not be enough to win seats in the German parliament, the Bundestag.
The past few weeks have been particularly vexing for Merkel. Christian Wulff, who she had handpicked for the presidency in 2010, resigned amid corruption allegations. Then, she was backed into choosing Joachim Gauck, the former East German activist who had been the opposition’s candidate in 2010.
That not only annoyed Merkel, but raised the possibility that she could be pushed out of power in 2013 by a new, rival coalition.
Then on Monday, she had to rely on opposition support to push through the parliamentary approval of the second Greek bailout, after 17 members of the governing parties failed to back her. Without full support from her own coalition, Merkel wasn’t able to claim a “chancellor majority,” a major political blow.
She has more severe tests coming up. There will be another parliamentary vote to approve the euro zone firewall — officially the European Safety Mechanism.
Her coalition will also soon face difficult regional elections in the coming months. And the news that Ireland is now going to hold a referendum on the fiscal pact is also unlikely to be greeted in Berlin.
Then there is the real danger that the euro crisis could finally start to affect Germany itself.
Consumer and business confidence is high, but Germany has had to cut its growth forecasts for this year. For a country whose economy has been fuelled by exports, the contraction of many euro zone economies could start to hit German firms and eventually households.
Stelzenmueller of the German Marshall Fund agrees that Merkel is vulnerable on this score and that it could affect her chances for re-election in 18 months.
“If there were a real hit to the German economy, her poll numbers would slide very quickly,” she said. “In other words, a lot of things can happen between now and September 2013.”
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