GERMAN CHANCELLOR Angela Merkel has said that Berlin’s support for the euro and a permanent, unlimited euro zone bailout fund depends on EU partners agreeing to tighter economic harmonisation.
As speculation grew yesterday over the euro zone rescue plan for Greece, Dr Merkel’s officials are drafting a policy paper calling for EU-wide harmonisation of social and fiscal policy, from public salary levels to corporate tax.
Sources familiar with the paper describe it as a “game-changing document” aimed at reshaping the euro zone along German lines and correcting concessions made by Helmut Kohl in the 1990s in order to expedite currency union.
As Europe’s largest economy continues to power ahead – the official growth forecast for 2011 was raised yesterday to 2.3 per cent – Dr Merkel sees herself in an unrivalled position, economically and politically, to shape the EU well into the decade.
“There can be no return to the Deutschmark,” said Dr Merkel in Stern. “Germany has committed to the euro and will continue to do what’s necessary to guarantee a stable euro.”
What Berlin sees as necessary is contained in the draft policy paper: wide-ranging harmonisation measures within two years, even if these changes require treaty change.
“It can’t be the case that the slowest dictate the pace, nor is it about doing everything in a mediocre fashion,” said Dr Merkel of her plans. “Instead every state should become more financially stable and economically competitive – for itself and for Europe.” The Berlin plan is not about “levelling” differences, officials say, but about “removing large discrepancies”.
In recent off-the-record briefings, the German leader has shown an unusual determination for the task she has set herself.
She wants “real harmonisation”, not just “closer co-ordination”. After months of silent backing for her euro zone strategy, leaders in Scandinavia and the Benelux countries can expect phone calls from the German leader in the coming weeks calling for public support for her plan.
The Stern interview has kicked off Dr Merkel’s campaign to win the backing of German voters, who increasingly see the EU as a black hole for their taxes.
Ahead of seven state elections this year, the chancellor is confident voters will back her if, as the price for Berlin’s contributions to euro zone bailout funds, she can deliver a euro zone 2.0 along clearly German lines.
The chancellery paper contains measures German voters will already recognise, such as an EU-wide version of Germany’s “debt brake” which would legally hinder parliaments’ ability to run up budget deficits.
Berlin’s draft paper touches on an Irish hot-button issue, too: harmonisation of corporate tax. It also makes proposals to end discrepancies in retirement ages across Europe.
Asked whether they expect much resistance to the plan among Germany’s EU partners, one senior Merkel official replied: “No, because they need our money.”
And money seems to be no problem in Berlin: unlike its struggling neighbours, Germany has bounced back from the world economic crisis and its borrowing will drop below the stability pact ceiling of 3 per cent a year ahead of schedule.
Dr Merkel and her team are confident the harmonisation strategy, if implemented in a co-ordinated fashion by national parliaments, can sidestep Germany’s constitutional court.
In its 2009 Lisbon ruling, the court warned the EU away from areas of social policy.
The prospect of closer EU harmonisation has raised the hackles of Germany’s opposition parties. “It sounds very surprising to do this without France because that’s the only way to gain legitimacy and avoid accusations of a German diktat,” said Mr Axel Schäfer, SPD Europe spokesman. “We will only progress closer economic co-ordination through the European Commission and national parliaments and nowhere else.”
Berlin’s ambitious policy paper is being drafted by seasoned EU diplomat Nikolaus Meyer-Landrut and will serve as his letter of introduction in Brussels as Merkel’s top EU adviser when he takes up the post later this year.
His predecessor, Uwe Corsepius, moves to Brussels as secretary general of the European Council, the body where EU heads of state meet.
Germany’s Klaus Regling already heads the euro zone rescue fund, the EFSF and, although Berlin refuses to be drawn, Bundesbank head Axel Weber remains the favourite to become the European Central Bank chief later this year.
With so many German officials in key EU positions, some Berlin watchers are already talking about a “German decade” ahead.
But leading analysts have warned that Dr Merkel’s chances of success with her harmonisation plan depends on her ability to present them as more than just technical tinkering.
Ulrike Guerot, Berlin head of the European Council on Foreign Relations, said: “To sell her euro zone 2.0 plan Merkel needs a new European narrative.”