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Merkel in control despite allies' Greek cacophony

Friday, August 31, 2012    

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BERLIN, Germany - CHANCELLOR Angela Merkel wants the Greeks to keep the euro. Her vice-chancellor says it wouldn't be so bad if they abandoned the common currency. Another ally says Greece should leave the euro club within months.

Merkel's image abroad may be that of Europe's determined taskmaster, but at home the picture has long been less clear: Her coalition government has become notorious for infighting over a range of issues. At first glance, the cacophony over Greece fits that picture — but it shouldn't be mistaken for policy drift.

The chancellor still appears in control of the delicate balancing act she has performed for two years: to help struggling countries that accept tough budget cuts and reforms while convincing Germans she is defending their interests — and wallets.

This week, a prominent lawmaker from a party allied with Merkel made headlines when he declared that Greece should leave the eurozone in 2013 — flatly contradicting Merkel. His party backed down from such talk after she said in a television interview that politicians should "weigh their words".

Her personal popularity and reassuringly level-headed image, along with the opposition's reluctance so far to pick a serious fight, still give her room for manoeuvre against domestic pressure and foreign governments anxious for Germany to bail out weaker European economies.

Manfred Guellner, head of the Forsa polling agency, said that "people appreciate Merkel and in the end go along with her course" in hopes that the economic problems gripping much of Europe won't affect their lives.

Merkel's government insisted on tough conditions in return for German, and European, support for eurozone strugglers such as Greece and the two other countries that have received bailouts, Ireland and Portugal. With borrowing costs for Italy and Spain worryingly high, more such aid is likely to lie ahead.

Her diligence in demanding budget cuts and structural reforms as the price for German aid may be unpopular in Greece or Italy but it plays well among German voters.

"I think Merkel, whatever she does, will get a majority because the (opposition) Social Democrats and Greens also have to be statesmanlike," he said.

Merkel hasn't come close yet to losing any parliamentary vote on eurozone rescue measures. Although more than 20 coalition lawmakers voted in June against setting up a permanent European rescue fund, she had solid support in the 620-member parliament, with much of the opposition in favour.

The three-year-old coalition of Merkel's conservative Christian Democratic Union, its Bavarian sister, the Christian Social Union, and the pro-market Free Democrats has squabbled endlessly and inconclusively over issues as diverse as tax cuts, privacy laws and highway tolls.

The bickering extends to policy regarding the European debt crisis.

But on Europe, there's a key difference in that the centre-right alliance agrees on the broad outline: It's united by distaste for pooling Germany's debt with that of southern strugglers and of making open-ended commitments to help them with economically sound Germany's cheque book. The opposition — as well as many private economists — argues for pooling debt.

Coalition lawmakers broadly agree that Greece shouldn't have more aid money on top of the two (euro) 240-billion ($27- trillion) bailout packages of which Germany has been a key financier and that Athens shouldn't be given more time to meet its reform commitments.

Bailing out Greece was never popular in Germany, and frustration with Athens is rising.

Raising questions over Greece's future in the euro offers hopes of political gain to some in Germany's two junior coalition parties, which both face domestic political challenges, though Guellner cautioned that "no party in Germany has ever been able to score points with the euro and the issue of Europe".

The Free Democrats won nearly 15 per cent of the vote in Germany's 2009 election, but have slumped to around the five per cent needed to win seats in Parliament — a contrast with the solid ratings of Merkel's CDU, which consistently leads polls.

Their leader, Vice-Chancellor Philipp Roesler, has struggled to turn around their fortunes.

Roesler irked Merkel last fall by talking about the possibility of an "orderly insolvency" for Greece, ignoring heavy hints from the chancellor to drop the subject.

This summer, he said a Greek exit from the euro had "lost its horror". Roesler didn't explicitly call for Greece to leave and Merkel let that pass without comment.

She clearly wasn't amused, however, by a new broadside from the CSU that comes as it prepares for important local elections in Bavaria next year.

Just a day after Merkel asserted, while standing next to Greece's prime minister, that she wants Greece to stay in the eurozone and that others in the coalition do as well, CSU general secretary Alexander Dobrindt was quoted as telling the mass-circulation Bild am Sonntag newspaper that "there is no way past a Greek exit from the Eurozone". He added: "I see Greece outside the Eurozone in 2013."

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