Waiting for Merkel

As in the Samuel Beckett’s outstanding play, European leaders seem to wait endlessly for the arrival of Godot. Their endeavours will not be in vain. They will receive the visit of Angela Merkel commanding full authority both at home and on the EU scenario once she secures another mandate.

Those betting for a shift in German policies after the general elections are likely to be highly disappointed. The new Chancellor will not move a single inch from her well entrenched positions. Budget stability will remain the cornerstone of economic policy. It has taken Berlin more than a decade to enshrine such a principle in the Treaty and it is not ready to dump it so easily. If only to  dispel any doubt on the very nature of the Euro zone. It embeds the key notion that monetary policy can only deliver non-inflationary conditions should all governments commit themselves to preserve a zero-deficit stance at all circumstances. Thus we are up to be lectured over the next years on the merits of maintaining tight budgets regardless of the casualties in terms of unemployment or utter poverty.

Those longing for a growth strategy to invigorate their ailing economies delude themselves in thinking that Ms Merkel might prove to be more tractable once she is re-elected. All main parties in Germany share the deep-rooted view that footing the bill for their neighbours’ profligacy or poor economic performance stands as a red line never to be crossed.

Those nurturing hopes financial solidarity will mend their woes will be shocked by the stubborn refusal on the German side to endorse mutualisation of liabilities. Instead they will rewarded by the consolation prize that future disarrays might be financed on a common basis. Past contingencies, both under the Banking Union and other potential venues, would not receive any helping hand.

Those ready to wait till the German elections for showing up their shopping list lose their time. Nothing will change in the aftermath of such a date. They might as well start up pressing for a growth model to be implemented the sooner the best. Their frail situation shatters all hopes they might countervail German supremacy. For all the talks of a combined front by the main Southern economies, Hollande only aims at getting extra time to reduce its budget deficit, Letta faces a fierce struggle to ensure his Cabinet survival and Rajoy proves too cautious to risk an open row with Ms Merkel. Needless to say she holds all the winning cards in this contest.

About the Author

JP Marin Arrese
Juan Pedro Marín Arrese is a Madrid-based economic analyst and observer. He regularly publishes articles in the Spanish leading financial newspaper 'Expansión'.

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