Ambrose Evans-Pritchard in the Telegraph writes that this coming month, or even next couple of weeks, will decide the future of Angela Merkell, Germany’s destiny, and the fate of the Euro:
German Chancellor Angela Merkel no longer has enough coalition votes in the Bundestag to secure backing for Europe’s revamped rescue machinery, threatening a consitutional crisis in Germany and a fresh eruption of the euro debt saga.
Mrs Merkel has cancelled a high-profile trip to Russia on September 7, the crucial day when the package goes to the Bundestag and the country’s constitutional court rules on the legality of the EU’s bail-out machinery.
Mrs Merkel’s aides say she is facing “war on every front”.
There are ever louder concerns being aired in Germany about the lack of democracy in a fiscal union which the Euro survival depends on:
Christian Wulff, Germany’s president, stunned the country last week by accusing the European Central Bank of going “far beyond its mandate” with mass purchases of Spanish and Italian debt, and warning that the Europe’s headlong rush towards fiscal union stikes at the “very core” of democracy. “Decisions have to be made in parliament in a liberal democracy. That is where legitimacy lies,” he said.
Merkel therefore faces defeat which would surely start the unravelling of the Euro. But I wonder if, despite their reservations, the Germans really will put their concerns above the EU knowing what the ultimate consequences will be? Would they be prepared to take the inevitable blame over the fall of the EU?
I doubt it. The German Constitutional Court has a track record of wriggling rulings out in favour of the EU on these issues (it will do so again) and then there’s the boundless stupidity of the German Government as AEP acknowledges (my emphasis):
While the bill is likely to pass, the furious debate leaves no doubt that Germany will resist moves to boost the EFSF’s firepower yet further. Most City banks say the fund needs €2 trillion to stop the crisis engulfing Spain and Italy.
It’s important to appreciate the almost limitless determination to keep EU and the Euro going come what may. So a bumpy September awaits the Euro but I suspect it will continue albeit in an even more crippled state than before.