Bloomberg News

Merkel Blames SPD’s Schroeder for Letting Greece Into Euro (1)

August 28, 2013

German Chancellor Angela Merkel

German Chancellor Angela Merkel said the debt crisis that emerged in Greece in late 2009 and dominated her second term had been “brewing for many years.” Photographer: Krisztian Bocsi/Bloomberg

German Chancellor Angela Merkel sought to pin the blame for the euro-region’s debt turmoil on her Social Democratic predecessor, Gerhard Schroeder, saying he should never have let Greece into the single currency area.

Merkel, addressing a campaign rally in the northern German town of Rendsburg yesterday, said the debt crisis that emerged in Greece in late 2009 and dominated her second term had been “brewing for many years” going back to the euro’s inception.

“For example, Greece shouldn’t have been allowed into the euro” at the time of its admission in 2001, Merkel told a crowd of about 1,000 supporters. “Chancellor Schroeder accepted Greece in and weakened the Stability Pact and both decisions were fundamentally wrong, and one of the starting points for our current troubles.”

Merkel, by apportioning blame for the havoc caused across the 17-nation euro region on her SPD predecessor, may be seeking to deflect attacks on her crisis policy leveled by Peer Steinbrueck, her Social Democratic challenger in the Sept. 22 federal elections.

While polls suggest voters approve of her crisis handling, Steinbrueck has ramped up his criticism in recent days that Merkel isn’t being straight over the full costs due to German taxpayers. Their opposing positions will be tested on Sept. 1 in Berlin during the only televised debate of the campaign.

Latest Poll

Support for Merkel’s Christian Democratic bloc was unchanged at 41 percent in a weekly Forsa poll for today’s Stern magazine. While her Free Democratic coalition partner dropped a percentage point to 5 percent, their combined tally of 46 percent would be enough to for a rerun of the current coalition, Stern said.

Steinbrueck’s SPD held at 22 percent and its Green party ally dropped two points to 11 percent. The Left Party had 10 percent, up 2 points. Forsa polled 2,501 voters on Aug. 20-26. The margin of error was as much as 2.5 percentage points.

Steinbrueck, trailing Merkel’s CDU/CSU bloc by 14-19 percentage points in the seven regular polls with less than four weeks before the ballot, sought to leverage comments made on Aug. 20 by Finance Minister Wolfgang Schaeuble that Greece will need more aid, saying they were evidence the government’s crisis policy isn’t working.

Marshall Plan

The SPD challenger, Merkel’s first-term finance minister, advocates an end to Merkel’s “saving, saving, saving,” and instead urges European structural and cohesion funds to be concentrated on southern Europe, with the proceeds of the proposed Financial Transaction Tax used to create a form of “Marshall Program 2.0.”

The opposition SPD and Greens “might have attacked the government for not being transparent enough, but they did not signal any major objections to supporting Greece further,” Andreas Rees, chief German economist at UniCredit Bank AG in Munich, said in a note today. While the details of any further measures to help Greece have yet to be announced, “renewed broad-based approval in the Bundestag after Sept. 22 is likely,” he said.

Merkel, who has repeatedly backed Greek Prime Minister Antonis Samaras and said that she wants Greece to stay in the euro, stressed the importance of Europe to Germany as an export nation and for having delivered more than 60 years of peace.

German Solidarity

“That is such a treasure, such a boon, that we can’t place it in doubt,” she said in Rendsburg. “That’s why the euro is more than a currency. For this reason we’ve shown solidarity, but solidarity always linked to responsibility for reforms in those countries that experience our solidarity.”

Merkel, Steinbrueck and Schaeuble are all back on the campaign trail today. Her two former finance ministers will address separate rallies in the city-state of Bremen, while the chancellor is due to speak at 5 p.m. in the cathedral city of Ulm in Baden-Wuerttemberg.

The probability of Merkel being able to repeat her current coalition was raised yesterday to 55 percent from 50 percent by Holger Schmieding, chief economist at Berenberg Bank in London. He lowered the possibility of a so-called grand coalition of Merkel’s bloc with the SPD to 25 percent from 30 percent.

“Whatever the precise outcome, we believe the German election will not change German euro policies very much,” Schmieding said, citing 70 percent approval among voters for Merkel’s crisis policies and backing from all the main parties. “Germany helps its partners but sets conditions for its help.”

To contact the reporter on this story: Stefan Nicola in Rendsburg, Germany via snicola2@bloomberg.net

To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net; Reed Landberg at landberg@bloomberg.net


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