April 19, 2024

In Debt Deal, Merkel Seizes Initiative and Confounds Critics

Early on Thursday morning, Chancellor Merkel appeared to defy her detractors as she helped lead the nations of the euro currency zone to the most comprehensive deal yet to prop up the ailing shared currency, defend heavily indebted member states and protect the Continent’s shaky financial system.

“She is not the kind of person who leads Europe because she believes that she is meant to lead like some of her predecessors,” said Kurt Kister, editor in chief of the daily Süddeutsche Zeitung. “She takes responsibility when she sees that the others are not in a position and she believes that she has to.”

Throughout the slow-moving financial crisis it is safe to say that no one has been more fascinating, and more vexing, than Mrs. Merkel, who has frequently come under fire on both sides of the Atlantic for what critics assailed as her plodding, reactive, inadequate style of leadership. But something changed in the weeks ahead of Wednesday’s critical meeting.

The treacherous sands of German politics firmed up, giving Mrs. Merkel the base of support at home to push for a more comprehensive rescue plan.

Mrs. Merkel may not always move quickly, said Mr. Kister, “but at the decisive moments she doesn’t hesitate.”

Though markets rallied Thursday, Europeans understand the debt crisis has not been solved once and for all by the latest steps. But given the relative success of the latest agreement, supporters offer an alternate narrative of the chancellor, portraying her as a consummate poker player using the pressure of the market to extract previously inconceivable cutbacks and reforms from the Greek government even in the face of rioting Athenians, while at the same time forcing banks to accept 50 percent losses on their holdings of Greek debt.

Mrs. Merkel has persevered through a difficult year that saw her party, the Christian Democrats, suffer one setback after another in key German state elections, while her coalition partners, the pro-business Free Democrats, saw their support among voters nearly collapse. But she managed to turn weakness into strength, reminding her coalition that a break in the ranks could spell new elections and defeat.

Two days before the crucial vote last month to expand the size of the bailout fund, Mrs. Merkel flashed the wit she keeps largely under wraps, warning lawmakers from her conservative bloc that she could not have “an orgy of abstentions.”

“I’m too fond of you,” she told the parliamentarians, “and have many too many plans for you anyway.”

A September vote to expand the bailout fund passed the Bundestag by a wide margin, as did a second vote on Wednesday that helped empower Mrs. Merkel as she entered the grueling but ultimately successful night of negotiations in Brussels.

Political analysts describe a sharp learning curve for Mrs. Merkel on economic and monetary issues since the very beginning of the financial crisis. The slightly patronizing view had been that she had difficulty understanding the financial markets. Rather, those close to her say, if she had any trouble understanding, it was because as a trained physicist — a rational scientist — she was initially perplexed by the emotional and at times irrational nature of market swings.

“She didn’t quite understand why 10 small steps didn’t have the impact on the market that one big step did, even if the little steps actually added up to more,” said a senior lawmaker from Mrs. Merkel’s Christian Democratic Union, who requested anonymity in order to speak candidly about the chancellor.

Mrs. Merkel has come a long way since those days before the September vote, when the German capital was abuzz with speculation that her parliamentary coalition would crack and her government might fall.

Article source: http://feeds.nytimes.com/click.phdo?i=acbacf2f9b4060b7b9b919080917e594

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