Who speaks for 'Europe': Berlin under pressure from Paris?
Source: Courtesy of INSEAD Knowledge , Author: Peter Dollé
Posted: Wed May 16, 2012 6:31 pm

INTERNATIONAL. French President François Hollande meets German Chancellor Angela Merkel: Will Merkel be forced to spend rather than save?

Early television reports in Germany portray them as shy newlyweds enjoying the public eye, but Germany’s opposition Social Democrat Party (SPD) are using the liberal political momentum generated by French President François Hollande to press for changes in Chancellor Angela Merkel’s strict austerity policies. 

SPD leaders unveiled a list of proposals on 15 May shortly before the arrival of Hollande in Berlin, intended to boost EU growth, create jobs and rein in the excesses of the banking industry.

SPD Parliamentary leader, Frank-Walter Steinmeier, told journalists, “It was not about the necessity to consolidate but how to do it.”  He argued, “Growth should not collapse during a crisis,” and insisted, “naked spending cuts wouldn’t work.”  Steinmeier is one of three former government ministers who call themselves the SPD Troika.
 
The SPD is also drawing confidence from regional elections in early May in which the Social Democrats scored impressive victories against Merkel’s Conservative CDU party.

Who speaks for “Europe?”
Steinmeier is promising to veto the European Fiscal Compact in the German Parliament before the summer recess unless Merkel’s center-right government agrees to supplementary measures on stimulating growth. 

Like President Hollande, the SPD is calling for a growth package that would draw on existing funds and not create new debt.  Party leader Sigmar Gabriel suggested better use of the European Investment Bank and EU project loans for energy, transportation and information technologies.  He also called for an EU tax on financial transactions.
 
Despite data showing the German economy growing 0.5 percent last quarter from the previous three months, national media is dominated by “euro doom” and bitterness that Germans are being called on to sacrifice their well-being for people in other EU countries who are able to retire at 58 or 60.
 
Still, Germans appear willing to give the two leaders a fair break. The fireworks are likely to start in June when Greece holds fresh elections and the SPD Troika move to make political capital of Hollande’s victory. 

They have until German national elections next year to sell those policies to German votersFrench elections analysis: A matter of different emphasis and degree.

Note: Peter Dollé is INSEAD Knowledge Berlin Correspondent

This article is republished courtesy of INSEAD Knowledge

Copyright INSEAD 2012

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MIDDLE EAST BUSINESS COMMENT & ANALYSIS

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INTERNATIONAL. Participants in the global oil market are eagerly awaiting the Opec meeting on November 27, which could potentially set the tone and the direction of oil prices.
INTERNATIONAL. In the end, it is unlikely that the territorial Islamic State can survive. The truth is that Turkey, Iran and Saudi Arabia are all waiting for the U.S. to solve the problem with air power and a few ground forces. These actions will not destroy IS, but they will break the group's territorial coherence.
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