The global financial crisis is Angela Merkel’s toughest test yet — and many inside and outside Germany say she’s not making the grade. Can she solve her passivity problem in time to rescue the flailing German economy?
For years, German Chancellor Angela Merkel has been a popular leader, active on the world scene and widely regarded as a success at home. But as the global finance crisis deepens, cracks are developing in Merkel’s polished image.
The biggest issue has been the perception in foreign capitals that Merkel — and Germany — are stumbling over their response to the collapse of financial markets worldwide. Merkel’s cautious, small-steps approach to the crisis has robbed Germany of a leadership role, while France’s President Nichalos Sarkozy and British Prime Minister Gordon Brown have stepped up to organize EU-wide recovery plans.
Indeed, after an all-smiles recent meeting with French President Nicholas Sarkozy, Merkel was barely on the plane home before Sarkozy attacked her in the press. “France is working on a solution, while Germany is thinking about one,” Sarkozy said.
The situation at home isn’t much better. Economists are predicting the German economy may have its worst year since the end of World War II in 2009. The jobless rate may climb over 700,000, and mainstays of the German economy like steel, automotive and chemical factories are planning to lay off workers and shut down plants.
Critics at home say she’s not doing enough to help Germany pull out of its financial troubles. The German economy shrank 2.1 percent in the last quarter. Meanwhile, Merkel’s rescue plan for German banks doesn’t seem to be working, her economic recovery plan has fallen far short, and she hasn’t given a major speech on the economy since the crisis began.
Now there is even grumbling from with her own conservative Christian Democrats (CDU). As the party’s membership meets Monday in Stuttgart, rumbles of complaint about Merkel are growing. Many of the party’s members want to see immediate tax cuts as a way to spur spending and an economic recovery. Merkel has signalled that any tax relief will have to wait until after elections next year.
Almost 20 years after the fall of the Berlin Wall, one target of conservative ire is the so-called “Soli,” or “solidarity tax,” a charge levied on all Germans designed to help the former East rebuild its economy. “I hope the CDU decides to raise the buying power of Germans immediately,” Federation of German Wholesale and Foreign Trade President Anton B