Global News Journal

Waiting for Europe’s “appropriate response”

Will the euro zone finally act decisively?

Investors are hoping for something big from European leaders at the EU summit on Oct. 23 and of the Group of 20 on Nov. 3. But they also know the 17 nations of the euro have a habit of offering delayed, half-hearted rescues that have cost them credibility.

So there’s been a lot of “urging” and “warning” in Brussels lately — politicians and central bankers have all been demanding Europe act as international alarm grows that its sovereign debt problems may drag the world into recession. “Further delays are only aggravating the situation,” said European Central Bank President Jean-Claude Trichet on Tuesday in his last appearance at the European Parliament, before he hands over the post to Mario Draghi on Nov. 1.

A day earlier, Germany’s Deputy Finance Minister, Joerg Asmussen, at the parliament to promote his candidacy to join the ECB‘s board, made his call, saying “cooperation has to be increased,” across the euro members, divided as to who should pay to rescue the heavily indebted nations of southern Europe. “I want to see a solution for debt sustainability for Greece,” Asmussen said. So do so many others, especially Greek Prime Minister George Papandreou, who in Brussels on Thursday said it was a “crucial element to make the necessary decisions concerning Greece.”

The European Roundtable of Industrialists, a business lobby of multinationals ranging from French car maker Renault to Spain’s Telefonica, has also come through Brussels to make its point. The group’s head, Leif Johansson, who is also chairman of Swedish phone maker Ericsson, warned that if European leaders fail to act, businesses could see a repeat of the liquidity freeze that followed the collapse of U.S. investment bank Lehman Brothers.

“The worst element of the 2008/2009 crisis was when liquidity froze,” he said. “The worst scenario we have right now is that that could happen again … and there is a real downside risk.” 

The Oct. 23 summit is being billed as a make-or-break event where Germany and France, the main powers in the euro zone, must come up with the solutions investors want. A meeting last Sunday between German Chancellor Angela Merkel and French President Nicholas Sarkozy, and their promise of a comprehensive strategy, suggests there will be a serious attempt to put forward a framework to try to resolve the crisis.

Berlin Wall, 1961-1989, R.I.P

There is something a bit bizarre, yet fascinating, about the way Berlin and the local media mark the anniversaries of the Berlin Wall’s construction on Aug. 13, 1961 and the anniversaries of its collapse on Nov. 9, 1989.

There are many of the same things each time: sombre speeches, fancy ceremonies, countless thousands of stories in the print and TV media and a general consensus that A) the Wall was a horrible thing B) the Communists who built it were loathsome liars C) its collapse was a  glorious moment in German history and D) its memory should serve as a global symbol of  the yearning for freedom. Yet like Berlin itself, which has gone through what are probably the most dynamic changes of any big city in Europe in the last two decades, elements of the commemorations have been shifting over the years and the city’s view of the wall has also been transformed.  Incredibly enough, some Germans now miss the Wall – a few diehards both east and west who feel their standing of living has gone down since 1989 want it back the most (about 10 percent, according to a recent poll) . But many others, especially those too young to remember it, lament that there is so little left of it to see and feel. Indeed, almost all of the Wall is gone. Yet 10 million tourists still come to Berlin each year looking for it. “Where’s the Wall?” is probably one of the most commonly asked questions by visitors. The answer – unfortunate or fortunate, depending on your point of view – is that there’s almost nothing left. It was all torn down in a rush to obliterate the hated barrier in late 1989 and early 1990.  Only a few small segments were saved – one 80 metre-long section, for instance, behind the Finance Ministry that was saved thanks to one Greens politician who declared it to under “Denkmalschutz” – a listed monument. That enraged many Berliners at the time. Despite the lack of Berlin Wall to look at and touch, a thriving cottage industry has grown up at some of the places where it once stood. You can get a “DDR” stamp in your passport if you want from a menacing looking soldier in an authentic East German border guard uniform (who appreciates tips) at Checkpoint Charlie or have your picture taken with others wearing Russian army uniforms. You can buy Wall souvenirs at many of the points where the Wall once stood. Some leaders such as Mayor Klaus Wowereit now admit it might have been a mistake, from today’s point of view, to so hastily tear  down all but a few tiny bits of the Wall in 1989. “There’s a general complaint that the demolition of the Wall was a bit too extensive,” he told me recently. “That’s understandable from today’s point of view and it would probably have been better for tourists if more of it could have been preserved. But at the time we were all just so happy to see the Wall gone.”

Wowereit added, interestingly enough, the biggest divisions in Berlin today are in the media and in the political parties: Easterners still read east Berlin newspapers and west Berliners stick to west Berliner dailies while the Left party is often the strongest in the east and the conservative Christian Democrats are stronger in the west while his Social Democrats do fairly well in both halves of the city. “The typical Kurier reader is from the east and won’t set a foot in the west and the B.Z. reader won’t set foot in the east. The Berliner Zeitung is more in the east and the Tagesspiegel is more in the west. To keep sales up, they obviously have different focusses. It’s rare that they have the same topics on their front pages and I think that’s a bad thing. They play up the east-west differences. What’s typical Berlin and what unites this city is, however, that everyone gets worked up about everything that in the end isn’t anything very important. If there’s talk about tearing down the ICC (conference centre in west Berlin), then they applaud in the east and say ‘Our Palace of the Republic’ (an East Berlin government building) was torn down — it’s sort of like eye for eye. There’s nothing wrong with that. That’s Berlin. It’s only a problem when people try to whip up those differences.”

Berlin has taken some steps in the last few years to restore some of the Wall for posterity and the all-important tourists, who bring a lot of badly revenue into the fiscally strapped city.  A whole cottage industry of books about the bits of the Wall that are still left has also emerged — inlcuding “The Berlin Wall Today, Ruins, Remnants, Remembrances.”  One of my favourite ways to see at least where the Wall was and small bits of it is the Berlin Wall Trail,  a 160-km bike path that follows the route of the Wall and offers a fascinating glimpse into the city’s Cold War history.

What’s really behind Merkel’s nuclear U-turn?

The consensus view in Germany is that Angela Merkel’s abrupt reversal on nuclear energy after Fukushima was a transparent ploy to shore up support in an important state election in Baden-Wuerttemberg. If indeed that was her intention (she denies any political motive) then she miscalculated horribly. Her party was ousted from government in B-W on Sunday after running the prosperous southern region for 58 straight years. But what if Merkel was really thinking longer-term — ie beyond the state vote to the next federal election in 2013? After the Japan catastrophe she may well have realised that her chances of getting elected to a third term were next-to-nil if she didn’t pivot quickly on nuclear. There are two good reasons why that is probably a safe assumption. First is the extent of anti-nuclear sentiment in Germany. A recent poll for Stern magazine showed nearly two in three Germans would like to see the country’s 17 nuclear power plants shut down within 5 years.  The nuclear issue was the decisive factor in the B-W election. And you can bet it will play an important role in the next national vote — even if it is 2-1/2 years away. The second reason why the reversal looks like a good strategic decision from a political point of view is the dire state of Merkel’s junior partner in government — the Free Democrats. It was the strength of the FDP which vaulted her to a second term in September 2009. But now it looks like their weakness could be her undoing in 2013.  Merkel probably needs the FDP to score at least 10 percent in the next vote to give her a chance of renewing her “black-yellow” coalition. Right now the FDP is hovering at a meagre 5 percent and it is difficult to see how they double that anytime soon. The nuclear shift widens Merkel’s options in one fell swoop. Suddenly the issue that made a coalition between Merkel’s Christian Democrats and the Greens unthinkable at the federal level has vanished. Her party set a precedent by hooking up with the Greens in the city-state of Hamburg in 2008. Now she has more than two years to lay the foundations for a similar partnership in Berlin. By then voters may see Merkel’s nuclear U-turn in a different light. And only then will it be truly clear if it was a huge political mistake, as the Baden-Wuerttemberg vote suggests, or a prescient strategic coup.

Germany’s king of the ‘Sommerloch’ silly season

But now — with the big cats out of town — Bruederele has turned into mighty mouse. He has played the German media like a fiddle, floating one trial balloon after another with a near daily deluge of newspaper interviews. With little else to write about, German correspondents are filling their columns with Bruederle.   “Koenig des Sommerlochs” (King of the summer hole) was the headline in Stern magzine’s website on Monday after a fresh batch of Bruederle proposals over the weekend. “No one has jumped into the Sommerloch with as much vigour as Bruederle,” wrote Hans Peter Schuetz of Stern magazine. “But, let’s be honest about this, Bruederle is helping journalists like me get through the Sommerloch.”   Like with most Sommerloch proposals, Bruederle’s will likely not get anywhere close to becoming law. And Bruederle knows that. He also knows his ideas will only cause tensions in the ruling coalition anger Merkel and almost everyone else in her Christian Democrats — and many of her deputies have already rejected his suggestions. But he also knows the publicity could help him raise his profile a bit.   Bruederle first said the government should scrap its 2009 promise for a guaranteed minimum pension level, an idea widely picked up in the German media for a few hours one day last week. It was summarily rejected by Merkel’s party. Yet that didn’t stop Bruederle. A few days later, in another newspaper interview, he suggested relaxing rules to allow more foreigners into Germany to counter a looming labour shortage of skilled labour, comments that filled airwaves for a few more glorious hours.   And then Bruederle criticised Merkel’s party, the coalition partners, for not having enough enthusiasm about reforms — just a few weeks after party leaders had promised to stop that very same sort of sniping that had sent the government plunging to record low levels in opinion polls. On Monday, Bruederle was at it again with a new banking proposal.   “Bruederle is doing his best to fill the Sommerloch,” wrote Sascha Raabe in the Frankfurter Rundschau newspaper.  But he attacked Bruederle as a “colourless minister with an addiction to headlines”.  He pointed out, for instance, that Bruederle’s ideas on cutting pensions actually contradicted the position of his own ministry, which views the steady pension levels as an important pillar of economic growth. “If Bruederle had only read the position of his own ministry instead of frightening millions of pensioners,” Raabe wrote. “Maybe it’s time for Bruederle to retire himself.”

Merkel in trouble, gambles with new ‘swing vote’ spokesman

Angela Merkel has come up with a risky – but intriguing – choice for one of the most-talked-about and closely scrutinised jobs in Germany:  her spokesman. The German chancellor is not normally known for rolling the dice with her decisions. Cautious to a fault, Merkel tends to seek consensus and the “safe road” with just about every decision she makes – whether that angers France when she first drags her feet on whether to push ahead aggressively with economic stimulus measures during the 2008 crisis or annoys Greece in early 2010 when it badly needed cash or at least strong words of support.

But Merkel has suddenly picked a complete outsider to try explain her government’s policies, an eye-raising choice of that may come back to haunt her.  German government spokesmen have an incredibly high public profile and appear in public almost daily explaining what Merkel and her ministers are trying to do. She will surely be hoping “Seibert’s smile will help get rid of Merkel’s woes” as Bild newspaper wrote

Merkel, whose popularity has plunged since winning the 2009 election, clearly savours surprising the self-proclaimed experts inside Berlin’s Autobahnring (beltway) with an unorthodox move now and then. And that seems to be an overriding motive in picking TV news anchor Steffen Seibert as her new spokesman. He will replace Ulrich Wilhelm, her able and eloquent spokesman of the last five years who is headed for a top TV executive job in Bavaria.

“It definitely pleased the chancellor that no one was expecting Steffen Seibert to be picked,” wrote Bild newspaper columnist Hugo Mueller-Vogg. “The rumour mill in Berlin had just about every name on the list of candidates except his.” Seibert is known to millions of TV viewers in Germany, a clean-cut man who reads the news each night with a sober voice and pretty face. (“I’ve got a pretty mother and I inherited her genes,” Seibert said once when asked about his good looks). And he has worked for his ZDF public broadcasting network abroad.

But Seibert has been based in the small and sleepy western town of Mainz and never worked in Berlin, which can be a treacherous place for novices even in the best of times. And with Merkel’s government tumbling from one new low to the next, this is hardly the best of times for a beginner.

“He’s never experienced the political world in Berlin,” said Bela Anda, a former newspaper reporter who was Chancellor Gerhard Gerhard’s spokesman from 1998 to 2005. “He’s going to find out soon enough that Berlin is not Mainz.”

Angela Merkel’s “read my lips” moment

    Angela Merkel has already abandoned plans to pursue billions of euros in tax cuts next year — the central policy pledge of her 2009 election campaign and main plank of her 7-month-old coalition agreement with the Free Democrats.

    But now her uneasy government looks ready to go one step further and raise value-added tax on certain products which benefit from a reduced rate to help it consolidate the budget.

    This is what Merkel had to say about such a move in an interview with N24 television in June 2009, in the midst of the election campaign: “There is absolutely no need to worry about that, it won’t happen. In the midst of an economic crisis it is absurd to even discuss these questions.”

    She told top-selling daily Bild that same week: “With me, there will be no increase in the next legislative period, neither of the full, nor of the reduced rate of value-added tax.”

    If her government does decide to raise VAT rates — it will meet this weekend to try to forge a consensus on fiscal plans — Merkel can and will claim that underlying economic conditions have changed since she uttered those seemingly definitive words nearly a year ago.

    The Greek crisis has spooked leaders across the euro zone, and many are scrambling to consolidate their budgets to avoid suffering the same fate as Athens, which was forced to go cap in hand to the EU and IMF.

    But Merkel’s about-face is different and more serious, especially for a leader who came into office in 2005 vowing to put an end to the “false promises” of previous German governments.

EU squabbles feed market frenzy

  The European Union can rarely have been more in need of a show of unity than now, as it tries to convince financial markets it can handle the euro zone’s debt crisis.

    Hardly a day goes by without a European leader underlining the need to act together, but hardly a day passes without signs of differences among them that undermine the impression of unity.

    This week is no exception. European Commission President Jose Manuel Barroso said in a speech in Brussels on Tuesday: “We can turn today’s challenges into opportunities only if we stand together, give a collective response.”

    But comments he made in an interview published hours earlier showed the EU’s leaders are anything but united in their vision of how to tackle the crisis.

    In the interview with Frankfurter Allgemeine Zeitung, Barroso dismissed as “naive” Germany’s call for the EU treaty to be modified to prevent a repeat of Greece’s debt crisis — and Germany hit back quickly.

    Economy Minister Rainer Bruederle said he was surprised at the remarks and went on to criticise a joint euro bond proposed by European Union President Herman Van Rompuy, saying it would create the wrong incentives and reward member states that do not pursue sensible budget policies.

    “What we need are clear signals for solid state finances in order to secure trust in the euro over the long term, and to prevent future crises,” Bruederle said.

Who do you call to speak to Europe?

Who do you call when you want to speak to Europe? The question, long attributed to Henry Kissinger, has yet to be answered convincingly by the 27-country European Union.

Six months ago, European Commission President Jose Manuel Barroso told a news conference the person to call on foreign policy issues was Catherine Ashton, who had just been chosen as the European Union’s foreign affairs chief.  The “so-called Kissinger issue is now solved”, he said.

Ashton reinforced that view on Monday by suggesting she was the person to call if Iran wanted to discuss the latest diplomatic moves on its nuclear programme. “They have my phone number,” she said.

But Barroso was more vague at the news conference last November when asked whom U.S. President Barack Obama should call if he wanted to speak to the EU. He pointed out that the EU was not one country, like the United States, China or Russia — implying they each had one clear leader. He seemed to be saying that the person you have to call depends on circumstances or the nature of the problem a foreign leader wishes to discuss.

So who did Obama call when he wanted to discuss the debt crisis threatening the group of 16 EU states that use the euro?

It wasn’t Ashton — as a Briton, she is not from a euro zone country and anyway this was a call about economics, which is not in her brief.

It wasn’t Herman Van Rompuy either, even though he too could stake a claim to be the face of Europe as the bloc’s first full-time president.

Germany: a tale of two foreign ministers

“Self-confident”, “smart” and “rhetorically brilliant” – just some of the adjectives the media have lavished upon Germany’s favourite politician as he has covered thousands of miles traversing the globe on his country’s behalf since Chancellor Angela Merkel’s new centre-right administration took office late last month.

But Karl-Theodor zu Guttenberg is not in charge of foreign affairs — a position usually associated with voter popularity. He is defence minister.

Already nicknamed ”the other foreign minister“, the 37-year-old Guttenberg, a conservative former economy minister who cut his teeth on foreign policy, has won praise for his fluency in English, his directness and his ability to outshine more powerful counterparts on the international stage.

Watching the aristocratic AC/DC fan from the sidelines has been the new foreign minister, Guido Westerwelle, whom newspapers have mocked for adopting a cautious, defensive approach that critics say is more redolent of, well, a German defence minister.

In fact, Westerwelle, 47, has already travelled thousands of miles further than his predecessor Frank-Walter Steinmeier over the same period. By the time the first month in office has passed he will have journeyed to some 15 states, including Israel, Afghanistan and the United States. Steinmeier managed only 10 and did not get beyond Europe in that time, a Foreign Ministry spokesman said.

Germany might be the winner if its diplomatic duel helps it towards a more assertive foreign policy — something it has struggled to achieve in the long shadow of the Nazis.

But it could also find itself giving mixed messages to the outside world, to say nothing of potential tensions within the new coalition. Guttenberg belongs to the Bavarian CSU and Westerwelle heads the pro-business FDP — parties that have clashed on a range of policies in the past.

The two faces of Angela Merkel

But at home in Germany, Merkel has been surprisingly timid on many key issues – especially when they involve her conservative Christian Democrats. Her tendency to avoid clear positions has driven her coalition partners mad. Merkel might be a lion when she’s on foreign stages but she tends to be a lamb at home. One of her favourite sayings is: “If you try to beat your head into a wall, the wall will usually win.”

Merkel’s latest evasive action centres on another woman in her party, Erika Steinbach. Ostensibly, it’s a relatively minor issue about a seat on the board of a new museum about the plight of German World War Two refugees. But in reality it is an issue that reverberates deeply in Merkel’s conservative party as well as across Germany’s eastern border in Poland. 

The League of Expellees, a powerful force in Merkel’s party, wants their leader Steinbach, who is a conservative member of parliament, on the museum’s board. Merkel’s past and present coalition partners have vetoed Steinbach (pictured above with Merkel) because of Poland’s objections to the woman with controversial views in the past on the German-Poland border and Poland’s membership in the European Union.