Tuesday, August 20, 2013

Greek reality denial in the German election

Peer Steinbrück, probably the most pathetic candidate the German Social Democratic Party (SPD) has ever run, finally brought up Greece.

Klaus Stuttmann cartoon 08/19/2013. Merkel's toothy spokesperson Ronald Pofalla is saying "I hereby declare the NSA affair to be at an end!" Angela Merkel is thinking, "Super! I'm going to do the same with the euro crisis."

And in doing so, he illustrated why Wolfgang Münchau says that the SPD should be able to make Christian Democratic Chancellor Angela Merkel's mishandling of the euro crisis the key issue of the election coming in September - but that it's simply not possible with Steinbrück as the Chancellor candidate.

Michael Steen reports for the Financial Times in Schäuble breaks German campaign taboo on Greece 08/20/2013 on this, making Steinbrück seem even more hapless as a candidate than he really is:

"Does Greece need another aid programme? Will [Ms Merkel] stand by while banks directly receive money from European taxpayers?" Mr Steinbrück told the SPD party newspaper Vorwärts on Monday. "Ms Merkel has been pulling the wool over our eyes for three years, claiming that we don’t have a transfer union when in fact we do."
Translated from weasel-speak, this would mean that Steinbrück is saying that Merkel is being too generous to Greece.

But this article from Vorwärts doesn't contain that quote: Yvonne Holl, Steinbrück: „Wirtschaft mit Leidenschaft und Augenmaß“ 20.08.2013. And what it reports him saying about Merkel's handling of the EU crisis is actually reasonable and critical as far as it goes. He talks about Merkel is pushing the heads of the troubled eurozone nations under water. And he rightly mocked her plan from last year to combat youth unemployment in southern Europe, saying that essentially nothing had come of it. He even called for a new Marshall Plan for Europe, which doesn't seem compatible with the Financial Times quote. But without seeing the original article in context, it's hard to know what to make of the discrepancy. Focus gives this version, which is basically the same as the FT version but also without context (Steinbrück: Merkel muss Wahrheit zu Griechenland sagen 19.08.2013):

Merkel müsse heute erklären, was nach der Wahl komme, sagte Steinbrück der SPD-Zeitung „vorwärts“. „Braucht Griechenland ein neues Hilfsprogramm? Wird sie zulassen, dass Banken direkt Geld europäischer Steuerzahler erhalten?“, fragte Steinbrück an die Adresse Merkels. Die Zeichen dafür verdichteten sich. Steinbrück warf Merkel eine systematische Täuschung der Wähler vor. „Frau Merkel streut uns seit drei Jahren Sand in die Augen, wir hätten keine Haftungsunion. Dabei haben wir sie längst.“

Still, the statement quoted by FT version is consistent with his response to the Cyprus crisis early this year, when he criticized Merkel by demanding more pressure on Cyprus. (Eric Bonse, Steinbrück macht Zypern Druck Taz 19.02.2013)

And Steinbrück already made it explicit that he's opposed to another debt haircut for Greece. (Steinbrücks Interview-Offensive: "Da werde ich als Kanzler die Kavallerie satteln" Spiegel Online 17.08.2013) And that means all his talk about sympathy for nations being shoved underwater and having high youth unemployment is just hot air.

The ugly truth is that Germany is currently benefiting from the euro crisis in various ways. And not just in lower interest rates, though that's far from trivial in itself. (Profiteering: Crisis Has Saved Germany 40 Billion Euros Spiegel International 08/19/2013) But that's chump change compared to the advantage their export-oriented economy gets from the euro, which is a cheaper currency than a German national currency would be.

Finance Minister Wolfgang Schäuble tried to softpedal the issue of Merkel's government being deceptive over the problem.

Mr Schäuble portrayed his own comments as being in line with previous statements: "The public, parliament have always been told". There could be no further debt forgiveness for Athens, he maintained.

That still ignores a warning by the International Monetary Fund which said at the end of July the financing gap, which it puts at €11bn to cover the period into 2015, would need to involve some debt relief.

In tackling an issue that causes deep anxiety among German voters fearful that they will bear the brunt of any bailouts or debt write-offs, Mr Schäuble appeared to be seeking to protect Ms Merkel from Mr Steinbrück’s accusation that the government was hiding the truth on Greece and the eurozone crisis.
But with both the two largest parties in Germany coming down hard against debt relief for Greece, it's hard to avoid the impression that the German political elite is living in a wishful fog. Schäuble himself seems to be insisting on a slightly more realistic perspective, emphasis on slightly.

This headline from the Handelsblatt sums up why Steinbrück can't hope for much traction on the issue: "Unity on the Topic of Greece: Merkel and Steinbrück Against Debt Relief" (Merkel und Steinbrück gegen den Schuldenschnitt 17.08.2013). On the critical issue of the euro crisis, the differences between the two candidates are scarcely perceptible.

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