COMMENTARY – VIVA ANGELA MERKEL
By Howard Wheeldon, FRAeS, Wheeldon Strategic Advisory Ltd.
23 Sep 13. Having taken 41.5% of the popular vote in yesterday’s federal elections many in Germany and across the rest of the European Union who will be relieved today that Angela Merkel’s Christian Democrats (CDU) party and its Bavarian based Christian Social Union (CSU) party alliance colleagues are to remain the dominant force in German politics for at least the next four years.
Whilst the actual result may not have surprised the size, scale and level of the CDU/CSU vote caught many commentators off guard. So be it but whilst there should be concern expressed that centre politics in the form of the Free Democrats (FDU) has as a direct result of the election been all but eliminated in Germany and that as a consequence opposition in the Bundestag to Frau Merkel’s dominance will have been weakened on balance I take the view that this election result is excellent for Germany, for the EU and that it is also positive for continued political viability of the Euro single currency.
Assuming that Frau Merkel is able to conclude some sort of deal with the Social Democrats (SDU) who managed 26% of the vote yesterday and that the two political opponents are able to form a workable coalition in the Bundestag I take the view that Germany looks set for a period of reasonable political stability and, assuming the Euro pack of cards can be maintained in the upright position for a little longer, some level of economic growth. As the political power house of the European Union and the economic engine whose power will for now be required to define immediate Eurozone stability the political and economic health of Germany is hugely important to the rest of us.
Germans may have loathed the ‘whatever it takes” phrase used last year by European Central Bank president Mario Draghi as he laid out his bold intentions to save the single currency from complete collapse but deep down most Germans want nothing less than for the Euro to prosper and grow in strength. Unlike their British cousins German want more EU as opposed to less meaning that they actually wish to see more political power being given away to Brussels.
That doesn’t mean that the majority of Germans have an out and out desire to cede more control over their own destiny to Brussels but it is to say that they believe others should. And not without good reason either as to the average German it is ‘others’ that have failed the Euro system and that must be brought to heel. It is unarguably right to say that it is the failings of others that have seriously damaged the whole Euro concept and dream albeit one that was surely flawed right from the start. It is others rather than Germany that by their notions of joining the single currency would allow them to borrow and spend and create artificial growth who brought the single currency concept to its very knees. It is others rather than Germany who by their profligate ways, by their failure to manage their respective economies properly, by their deficits and their debt that led the pack of cards to all but collapse.
It is of course Germany that will in the end always help to pay for it because as the powerhouse of the Eurozone economy if it wants the Euro to survive Germany has little choice. Not that Angela Merkel will give any of the failing states an easy ride and if she can see a way to rid the Eurozone of Greek membership then her start will rise even further. Germany will for the next four years at least not allow the Euro to fail because to do so would not be in Germany’s interests! Close your eyes and imagine for one moment that the Euro had failed in 2012 and that Germany returned to the deutschmark.
Given that the collapse of the Euro would probably have had less of an effect on Germany than anywhere else one can imagine that the value of the German currency would be so high that remaining international trade competitivenes