German Chancellor Angela Merkel’s iron will and intransigence has often been compared to former British Prime Minister Margaret Thatcher; she’s famously known as the Iron Chancellor. Yet, unlike the English prime minister, Merkel hasn’t had half the praise she deserves. It is true that she lacks Thatcher’s charm and persona; she is consistently stolid, even drab. But why should fashion-sense count in policy-making?
Journalists, economists, and non-EU policymakers have enjoyed taking swipes at the EU’s bungling politicians, but underestimate the enormity of the task this unfortunate batch of politicians face. One of the founders of the euro itself has declared that the euro was doomed from the start, as leaders turned a blind eye to the fundamental imbalances between member states. The current batch of politicians is simply the scapegoat of the fall-out of this flawed plan that was designed to be unalterable; and yet they must somehow “save the euro.”
Merkel, the de-facto leader of the EU is now being forced to revise the basic weaknesses in the EU treaties written decades ago, and will have to get most of the members to agree on the not-so-slight changes. There are strong legal, financial, and political implications of the process and no room for mistakes.
While some moan at her unhurried decision making, Merkel is absolutely right in taking her time to attempt to “fix” the crisis in a slow and careful way. There is no rapid-fire solution to the crisis. Democracy, sovereignty and lack of growth are not issues that can be dealt with hastily to appease markets. The high levels of debt, unsustainable spending and un-competitiveness of Southern Europe were public knowledge before the crisis; but the panic has spread, and triggered a change of investor perception. This alteration in the way investors view EU risk cannot be corrected by the ECB, EFSF, or any form of throwing money at the problem. In line with this thinking, in the face of both heavy market and international pressure, Merkel has kept her cool. She staunchly stood her ground, rejecting Eurobonds and opposing the possibility of the ECB acting as the lender of last resort amidst strong market strain.
Merkel has repeatedly been criticized for not taking the crisis seriously enough, but dragging her feet seems to simply be part of her strategy. Let’s not forget that she was similarly criticized for not doing enough during the 2008 crisis, and yet Germany emerged from the crisis in better shape than any other Western economy. Getting conservative German voters and the Bundestag to agree to bail out Southern Europeans (that the majority views as lazy and undeserving) with their tax money is no small task. And yet, she’s held onto her seat as five EU governments have been toppled, and gone as far as to have Papandreou and Berlusconi replaced with technocrats that agree with her way of thinking.
Her tactic seems to be to wait until the pressure mounts, and lesser (wo)men break under it, as it is only in the midst of elevated levels of alarm that she can get her way. It is highly likely that she will get other EU members to agree to a much closer fiscal union and a level of supervision and budgetary control which would have been impossible at a time of peace.
Thus, lacking a dramatic demeanor does not mean she does not know how to use drama to her advantage. Merkel is changing the face of the euro-zone as we know it. She deserves great praise for her bold actions, as she tackles more issues head-on than most politicians will in their life-time.
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