Connect to share and comment

Merkel’s ‘masterpiece’ meets criticism back home

German opposition and unions slam EU fiscal pact.

Merkel protest euro deal 31 01 2012Enlarge
Protesters dressed as German Chancellor Angela Merkel and French President Nicolas Sarkozy stage a demonstration in front of the chancellery in Berlin October 21, 2011. (John Macdougall/AFP/Getty Images)

BERLIN, Germany — German Chancellor Angela Merkel may have pronounced herself delighted with the result of Monday’s EU summit, but not everyone back home is as enthusiastic about the new fiscal pact.

"Considering the time frame, this was a real masterpiece," Merkel said of the deal that had first been discussed at a previous summit in December.

More from GlobalPost: EU embraces growth at 17th crisis summit

The leaders of 25 of the 27 member states signed up to the imposition and enforcement of tighter budget discipline. Under the agreement, the European Court of Justice will be allowed to impose fines of up to 0.1 percent of GDP on euro zone countries that break the budget rules, including reducing debt to 60 percent of GDP. Great Britain was joined by the Czech Republic in refusing to sign up for the pact.

The new stricter rules were pushed by Germany, which already has a debt brake written into its constitution, and which has had to come up with the bulk of the bailout funds for countries that have run into difficulties. Chancellor Merkel sees fiscal rectitude as the only way to prevent similar crises from occurring in the future.

Yet there is far from uniform support for the fiscal pact, with German opposition parties and trade unions fiercely critical of her approach.

Michael Sommer, head of Germany’s Trade Union Federation (DGB), said that the pact had not addressed the fundamental problems in the euro zone. “It does not answer the question of how, for example, to improve public revenues,” he told Deutschlandfunk radio Tuesday. Strict cuts just make countries poorer and leave them with little ability to act, he argued.

Left party boss Gesine Loetzch described Merkel’s victory as “pyrrhic." “The chancellor is pushing Europe deeper into crisis with the strict debt brake,” she said Tuesday, arguing that the fiscal pact would now push the whole of Europe into recession.

Green party floor leader Renate Kuenast told the N-TV news channel that instead of a strategy for more jobs the summit had just produced empty phrases, while her Green party colleague, Juergen Trittin warned that while the EU waited to ratify the pact, valuable time was being wasted. “We have no time to wait. The euro crisis is continuing and gets more serious with every day,” he warned.

Trittin said he expected the pact would only be ratified by the autumn. Since it is not an EU treaty, it doesn’t require unanimity but only ratification by 12 members to come into force.

Still, widespread ratification is not certain. Ireland may require a referendum, for example, and there is widespread resentment of the Europe-led austerity measures.

More importantly France's agreement to the deal itself could be in doubt. President Nicolas Sarkozy has said that he will wait until after April’s presidential election before pushing through the pact. And his rival Francois Hollande has already said that he will not sign up to a debt brake and would renegotiate the agreement. It's no wonder Merkel is pledging her support to the incumbent.

Meanwhile, Greece cast a long shadow over the summit, despite the fact that the meeting itself barely addressed the country’s efforts to stave off default. Athens is still in talks with its private creditors over a debt relief deal, with officials now saying the agreement should be reached by the end of the week. Greece is counting on a second bailout from its EU partners ahead of a 14.5 billion euro ($19.1 billion) bond payment on March 20.

More from GlobalPost: Greece to top the agenda at European Union summit

Yet Germany has already voiced frustration that Greece has not implemented the reforms it agreed to when it was given the first 110 billion euro ($144 billion) bailout in 2010.

However, Berlin’s proposal for a budget commissioner dedicated to ensuring Greece meets its obligations went down like a lead balloon in Brussels on Monday, with numerous figures rejecting such a notion out of hand.

"Greece's recovery plan can be implemented only by the Greeks," French President Nicolas Sarkozy said. "No country can possibly be placed in trusteeship. It would not be reasonable, democratic and efficient."

More from GlobalPost: Greek debt talks send stocks, oil down

And Austrian Chancellor Werner Faymann also dismissed the idea as inappropriate. "You don't have to insult people in politics," he said.

Jean-Claude Juncker, the head of the Eurogroup of euro-zone finance ministers, also has rejected the idea. “I don’t see the need for a special budget commissioner specifically for Greece,” he told Germany’s Deutschlandfunk radio on Tuesday. He added, however, that Greece still needed to be observed closely to ensure it sticks to its reform program.

http://www.globalpost.com/dispatch/news/business-tech/debt-crisis/120131/merkel-s-masterpiece-meets-criticism-back-home