- Israel hits symbols of Hamas rule; scores killed
- Mississippi abortion law can’t be enforced
- Teacher who survived Sandy Hook has book deal
- Jury awards Jesse Ventura $1.8M in case vs. ‘American Sniper’ author Chris Kyle
- Middle Eastern firm’s deal to manage U.S. cargo port raises security concerns
- Bob McDonnell’s defense: Lonely wife developed ‘crush’ on CEO
- Chinese hackers stole ‘huge quantities’ of sensitive data on Israel’s Iron Dome
- House Republicans unveil bill to speed deportations of border children
- Californians protest middle school for hiring white man to teach cultural studies
- Killer’s sentencing overturned because mother couldn’t find seat in courtroom
Greece’s economy plays role in German election
Talk of another bailout could hurt Merkel’s chances
Question of the Day
BERLIN — In Germany, rumors of yet another Greek bailout and the escalating conflict in Syria could prove to be the greatest threats to Angela Merkel’s re-election campaign, just two weeks before voters head to the ballot box.
The German chancellor enjoys a big lead in polling and has brushed off earlier criticisms that she helped the National Security Agency spy on her own citizens, an issue that at one point seemed as if it could derail her campaign.
But there are two things Germans hate more than an invasion of their privacy: They do not like giving away money to perceived freeloading countries like Greece, and they do not want to be involved in any wars in the Middle East.
“I think the voters are worried about that whole situation,” said Ferdinand Fichtner, head of the forecasting and economic policy department at DIW Berlin, also known as the German Institute for Economic Research.
Mrs. Merkel’s conservative Christian Democratic Union leads in the polls with 40 percent, compared to 25 percent for the center-left Social Democratic Party.
But that could change. Talk of a third Greek bailout has flared up in recent weeks with Mrs. Merkel’s finance minister, Wolfgang Schauble, making an off-the-cuff remark at a campaign rally that deviated from her plan to avoid the hot-button issue until after the Sept. 22 election.
“There will have to be another program in Greece,” he said.
Since then, Mrs. Merkel has tried to distance herself from Mr. Schauble’s comments, going as far as to say that it was a mistake to admit Greece into the eurozone in the first place, an obvious shot at her predecessor from the rival Social Democratic Party who welcomed Greece a decade ago.
“The crisis emerged over many years, through founding errors in the euro — for example, Greece should not have been admitted into the euro area,” she said at a campaign event.
Greece has received nearly $300 billion in public bailout money in the past few years and has even more debt in the hands of private lenders, but “patience is running out,” said an analyst with close ties to the CDU.
“Now, most Germans think Greece should stay in the eurozone,” said the analyst, speaking on condition of anonymity so as to speak freely. “But, at some point, I think people will realize it can’t go on like this. The Germans will say, ‘No, no further bailouts. It’s done.’”
Economists say Greece is still nowhere near to solving its financial woes.
Falko Fecht, a professor of finance and economics at the Frankfurt School of Finance & Management, called it “wishful thinking” on the part of Mrs. Merkel’s government to assume that the past bailouts would solve Greece’s financial problems.
“They underestimated the severity of the problem at that point and time,” Mr. Fecht said. “Now, it’s hard for the current government to go back and accept the view that another bailout is needed, because to a large extent, all those previous programs were made with the mindset that they wouldn’t need anymore bailouts and they wouldn’t have to write down those loans.”
A “haircut” would involve forgiving part of Greece’s debt, which would result in losses for taxpayers and bondholders in the eurozone and worldwide. Or Germany could restructure the debt by lowering the interest rates and extending the time Greece has to pay back the money.
But either would be a tough sell for Mrs. Merkel.
“I don’t think policymakers will be able to explain to the public that we have an actually loss of money,” Mr. Fichtner said. “Previously, they were saying, ‘We are just lending money to Greece, but we will get it back.’”
“I would expect that the third bailout would probably not be the last one,” he added.
It’s something that Mrs. Merkel would rather not think about at the moment as she campaigns for her third term.
“You can sell these tough decisions after you have won the elections and are in office again,” said Annette Heuser, executive director of the Washington office at the Bertelsmann Foundation, a German think tank. “That’s the window of opportunity, and there is no doubt that Merkel will use it.”
© Copyright 2014 The Washington Times, LLC. Click here for reprint permission.
About the Author
Tim Devaney is a national reporter who covers business and international trade for The Washington Times. Previously, he worked for the Detroit News, Grand Rapids Press, Portland Press Herald and Bangor Daily News. Tim can be reached at firstname.lastname@example.org.
- Dysfunction, disarray at Homeland Security management cited in IG's report
- GM's Barra to be first woman to run top American carmaker
- Treasury sells last shares in 'Government Motors'
- U.S. businesses reach out quickly to partners in Iran
- General Motors ending Chevrolet sales in Europe to focus on Opel and Vauxhall
Latest Blog Entries
TWT Video Picks
- Tactical advantage: Russian military shows off impressive new gear
- Obama thanks Muslims for 'building the very fabric of our nation'
- Federal judge grants 90-day stay in D.C. gun case
- McCLAUGHRY: Finish off the "Islamic State" quickly and cheaply
- Obama's brother wears Hamas scarf bearing anti-Israel slogans in photo
- Boehner rules out impeachment: 'Scam started by Democrats'
- Obama: 'Not a new Cold War,' but new Russia sanctions announced
- D.C. seeks to stay judge's order allowing gun owners to carry in public
- HUSAIN: Fleeing Iraqi Christians find safe haven at the Shrine of Imam Ali
- White House says Russia 'losing' war in Ukraine
Obama's biggest White House 'fails'
Celebrities turned politicians
Athletes turned actors
20 gadgets that changed the world