Angela Merkel - The Empress Without Clothes

Political crises in Ukraine and Greece expose the paralysis and lack of strong leadership from Merkel in Berlin. 

Tue, Jul 7, 2015
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A leader afraid to lead

It is not a coincidence that at the intersection of the two great crises affecting Europe --- Ukraine and Greece --- is one and the same person: German Chancellor Angela Merkel.

At Russia Insider we have often commented on how --- contrary to her image --- Angela Merkel is a weak and indecisive leader, unable to manage a crisis, whose conduct is best characterised as drift.

If Europe is now faced with crises in Ukraine and Greece it is because of Merkel's weak and indecisive leadership.  

Both crises could have been prevented and Merkel as Europe's most powerful leader should have been the person to prevent them.  That she did not do so is a testament to her lack of statesmanship.

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It is now acknowledged that Merkel mishandled the negotiations for Ukraine’s Association Agreement, seriously underestimating the Russian reaction to it.  

This is actually remarkable given that even the most casual acquaintance with Ukraine’s history and politics --- not to mention its geographical position --- ought to have made the sensitivity of the issue to Russia obvious.

Merkel’s response was not to readjust her sights when the strength of Russian concerns became clear.  Instead she sought to force the Association Agreement on Ukraine by supporting an unconstitutional coup against Ukraine’s democratically elected government.

In doing so Merkel seems to have been oblivious to the effect such a coup would have on opinion in both Ukraine and Russia.  Nor does she seem to have realised what effect it might have on the crucial relationship between Germany, the EU and Russia.  

She seems instead to have been far more focused on retaining the goodwill of the US and of the fiercely Russophobic Atlanticist faction in the German political establishment and news media.

Once the strength of the reaction in Ukraine and Russia became obvious, Germany’s national interest and the peace of Europe required that Merkel bend every effort to achieve a peaceful outcome to the crisis.

That in turn required an approach that took into account the concerns of Russia and of the people of eastern Ukraine.

Instead Merkel led the Russians up the garden path in fruitless negotiations during the spring and summer of 2014; then blamed the Russians when her Ukrainian proteges went back on all they had agreed and launched a failed offensive in the summer; then imposed sanctions on Russia even though, as she undoubtedly knows, it is the intransigence of her Ukrainian allies which is the problem.

Since then the same pattern has continued: more negotiations in January and February in Moscow and Minsk; more agreements with the Russians, which Merkel has again proved unwilling to force the Ukrainians to abide by; more conflict; with Merkel again blaming the Russians for the actions of her Ukrainian allies which are to a great extent her own fault. 

At some level Merkel clearly realises the Ukrainian project has gone horribly wrong.  An insider in the German Chancellery has disclosed off-the-record that worry about the Ukrainian conflict is what keeps Merkel awake at night. 

It has become completely obvious however that Merkel simply cannot bring herself to break with the US over this dangerous and failed policy - which is risking peace in Europe and Germany’s critical relationship with Russia - because she remains unwilling to face the political storm that would ensue.

That all but guarantees eventual failure.

The same weakness and indecision has been evident in Merkel’s handling of the Greek crisis.

Back in 2010, when the Greek crisis first blew up, it fell to Merkel to explain clearly that the eurozone is a currency union, not a transfer union, and that Germany and the eurozone did not stand as guarantors of Greece’s debt.

Greece would then have been left to deal with its creditors on its own. The strong probability is that a restructuring would have been agreed, enabling Greece to reduce its debt to a sustainable level.  

The alternative would have been a default, which would have had much the same result.  

In either case there was no reason why Greece could not have continued to use the euro.

That was not the route Merkel chose to follow. It seems she was panicked by stories that if Greece defaulted other southern European states would do so also, causing a crisis in the German and French banking system that had loaned these countries money.

A strong leader would have accepted this risk.  

Banks are commercial institutions that lend money at their own risk.  If they fail because they lend badly then the responsibility is theirs.  If they collapse under the weight of their bad loans then that is the moment for governments to step in to ensure that the banking system keeps working.

A banking crisis in Germany would however have caused a down-turn, denting the impression of economic solidity upon which Merkel’s popularity depends. She could have found herself in the same position as Gordon Brown in Britain, excoriated for the steps she was obliged to take to restore the banking system to working order.  Better therefore to look for ways to preserve the banks while transferring all the blame on the hapless Greeks.

The result was that Merkel led Germany and the other eurozone states into a succession of bailouts first of Greece and then of the other southern EU states that effectively mean that Germany does now stand as guarantor for the entire sovereign debt of the whole eurozone.

That this is a potentially catastrophic position for Germany --- and the EU --- hardly needs to be spelled out.

However it gets worse.

In order to persuade a skeptical German public to consent to the bailouts, Merkel has been forced to impose austerity policies on the southern European states that have crippled their economies and that of the entire eurozone.

The consequence in Greece in particular was that the country has been landed with a level of debt that is unsustainable and with policies that have doomed it to perpetual recession.

Not surprisingly, this bizarre mix of policies --- which have baffled every leading economist from the far Left to the hard Right --- have proved in Greece politically unsustainable, causing the political system of that country to collapse, bringing the far Left Syriza party to power.

Merkel’s reaction has however been all of a piece.

Merkel could have accepted the IMF’s advice that Greece’s debt level is unsustainable and a substantial debt write-off is needed.  That would have kept Greece in the euro but it would have provoked a storm in Germany.

Alternatively, Merkel could have adopted the policy of her Finance Minister Wolfgang Schauble and pushed for Greece to exit the eurozone in an orderly way.  Greece could then have resumed payment of its debt and rejoined the eurozone when its economy recovered.  

That policy would however have been unpopular with the US - which wants Greece to remain in the eurozone for geopolitical reasons - and with the other eurozone leaders, who are concerned about the precedent it might set.

Merkel predictably adopted neither course.  

Instead she insisted Greece continue the same policy of austerity and debt payment that has proved a failure in the five years since she first imposed it.  

When the Syriza government resisted, Merkel resorted to the same tactic she has used against Russia --  misusing the institutions of the EU to impose sanctions in order to achieve regime change. In the case of Russia this was done through the European Council, which has imposed probably illegal sectoral sanctions on Russia.  In the case of Greece it is being done by the ECB, which is being used --- probably illegally --- to cut off liquidity to the Greek banking system.

The result is that Ukraine, which in 2013 was at peace, is now at war, and Greece, which before 2010 was a stable European democracy, is now on the verge of total collapse and is in what now increasingly looks like a pre-revolutionary situation.

This disastrous paralysis of policy is now starting to become noticed and commented upon.

In Britain in the Daily Telegraph Iain Martin writes:

"[O]f the ineffective behaviour of the over-rated German chancellor, Angela Merkel, cooed over by diplomats and the foreign policy community despite no one ever being able to name a single great achievement or convincing act of leadership in her career other than the knifing of her mentor Helmut Kohl."

For RT Bryan MacDonald writes:

"The preacher’s daughter’s only concern during the years of this crisis has been to pray that neither the EU nor the euro will break up on her watch.

"Merkel is not a pro-Brussels ideologue. In fact, she’s a consensus politician who rules by opinion polls, rarely taking strong positions.

"Merkel’s surveys of the German people tell her that bailing out Greece is not a popular option. So Angela Merkel is opposed to extending a lifeline to Athens.

"If the Bild tabloid suddenly changed tack and supported the idea of debt-relief for Greece, Merkel most probably would also do a U-turn."

Most scathing of all however has been Germany’s Der Spiegel.   

In a lengthy article under the ominous title “Angela's Ashes: How Merkel Failed Greece and Europe”, it slams Merkel as someone who...

"[R]elishes her reputation as queen of Europe. But she hasn't learned how to use her power, instead allowing a bad situation to heat up to the boiling point. 

"Her inability to take unpopular stances badly exacerbated the Greek crisis." 

Der Spiegel speaks of Merkel’s approach as “delaying, hiding and allowing things to remain vague”, of her “vacillating leadership style” and of her Greek policy:

"[S]he didn't have the courage to face the consequences. And there were alternatives.

"She could have offered Greece a safe and supported path out of the euro zone. That is the course of action that Finance Minister Wolfgang Schäuble has supported internally for years.

"She could also have offered Greece a debt haircut. Had she done so at the right moment, she could at least have prevented the radicalization of Greek politics.

"None of these options would have been free of risk.

"They would have required courage and money, and they would have opened up Merkel to attack. And that is something she didn't want."

Of Merkel’s exceptional skills as a politician there is no doubt. No one can remain Chancellor of Germany for a full decade without having such skills.  In good times, which is what Germany has so far had under her watch, her style of leadership has been politically effective.

The crises in Greece and Ukraine --- which Merkel more than anyone else had the power to prevent and is responsible for bringing about --- show however that the times are becoming harder.

Harder times require qualities of leadership --- and courage --- which it is becoming painfully obvious Merkel doesn’t have. As Der Spiegel says:

“Success for Merkel is when nobody is pointing their finger at her,” and

“[A]lthough she likes power, when push comes to shove, she doesn't know what to do with it.”

Of Merkel’s staying power there is no doubt.   As the situation deteriorates --- as it will continue to do --- her position will be increasingly challenged until it finally becomes untenable.  

As for her legacy, which contrary to what Der Spiegel says Merkel most certainly does care about, she looks increasingly like Germany’s Brezhnev -- the leader whose complacency and weakness made the good times turn bad.

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