The Washington Post

Merkel warns solution to Europe’s crisis will take years

German Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble attend debates at the Bundestag after she gave a government declaration on the Euro and the current Eurozone debt crisis in Berlin on Friday. (Sean Gallup/GETTY IMAGES)

German Chancellor Angela Merkel warned Friday that the only real solution to Europe’s debt crisis was a drawn-out effort to alter or create new European Union treaties to punish big-spending nations, a process that will take years.

It remained unclear whether Germany, the largest and most economically powerful among the 17 countries that share the euro, would also back short-term action to contain the crisis, including possible dramatic new moves by the European Central Bank. Merkel offered no clarity on market hopes that Berlin would drop its resistance to the ECB deploying more financial firepower if the region’s leaders agree to a historic fiscal accord at a summit next week.

Merkel has emerged as the most central political figure in Europe’s debt crisis, not least because Germany has the power to make or break any effort to calm the turbulence and save the currency union. She is confronting growing resentment from nations such as Greece, where the public is smarting from a harsh austerity campaign imposed as the terms of a bailout. At the same time, she is attempting to manage Berlin’s rise, as a result of its vast purse strings, to being the most dominant political voice on the European stage.

She is also facing a growing backlash at home against fresh commitments by fiscally conservative Germany to prop up its more profligate neighbors, leaving her toeing a line between a desire to shore up a common currency union she sees as central to maintaining peace and prosperity in Europe while not jeopardizing her own standing at home.

Merkel’s statements Friday seemed to underscore the gap between Berlin’s long-term timeline for a cure for the crisis and the immediacy being demanded by investors. She did call for rapid steps to forge agreements that could, over time, control overspending, but suggested there was no quick fix to the region’s debt woes that have been rattling global markets for the past two years.

“The German government has made it clear that the European crisis will not be solved in one fell swoop,” Merkel told Parliament in Berlin. “It’s a process, and that process will take years.”

Echoing the words of French President Nicolas Sarkozy on Thursday, Merkel said there was only one real answer to a crisis that is threatening to tear the region’s currency union apart. She called for accelerated European integration through a fiscal union, or a pact that could ultimately have Italy, Spain, France, and Germany effectively forfeit full independence over national budgets and potentially give their neighbors the right to slap penalties on overspenders. Merkel and Sarkozy are expected to unveil a Franco-German plan for such a pact Monday, ahead of a European leaders’ summit in Brussels.

Until such a pact is up and running, she suggested, Germany would resist calls for at least one possible solution to the crisis: the notion that German taxpayers could be asked stand behind shaky nations such as Greece and Italy if the ECB were to sell “eurobonds,” similar to U.S. Treasuries.

Merkel’s speech did not represent a significant departure from Germany’s already-stated position, and markets appeared optimistic that the Germans would yet be more flexible than her words suggested. In addition, the kind of agreement the European leaders appeared to be coalescing around could solidify the foundations of the euro in the long term and would have been unthinkable without the urgency created by the crisis. Stock indexes across Europe rose Friday.

Merkel sought to dispel fears of Berlin’s growing dominance in the region, calling such concerns “absurd.” Rather, she said, Germany and Europe together were heading toward a “new phase in European integration.”

She bluntly spelled out that the ECB — which a bloc of nations, including France, would like to see engage in large-scale efforts to calm investors by buying up troubled country debt and relax rules for bank lending — has a narrower mission than the U.S. Federal Reserve and the Bank of England. She also reiterated the ECB’s “independence,” suggesting that it would not be helpful to offer “praise or criticism” of its actions.

Merkel’s comments came a day after the head of the ECB signaled that it might be willing to take more aggressive steps to stem the region’s debt crisis, as long as the euro-zone nations agree to bind themselves more closely in a fiscal union to tame years of runaway spending.

By calling for a E.U. treaty change, or even a new treaty, rather than, say, a series of bilateral accords between the countries that share the euro, Merkel and Sarkozy could be opening a Pandora’s box. Such a move, as Merkel said, could take years to come into effect. It could also require sign-off by not only the 17 nations that share the euro, but also all 27 members of the European Union, including nations such as Britain where anti-Europe feelings are running high.

Potentially laying the groundwork for such a sweeping deal, Britain’s Prime Minister David Cameron met with Sarkozy in Paris on Friday. In brief comments after the meeting, Cameron signaled that it was in Britain’s interest to see a quick resolution to the euro crisis. But he also said, “if there is a treaty change, I will make sure we further protect and enhance British interests.’’

“We’re witnessing the creation of a kind of German zone” in Europe, Bill Cash, a Conservative lawmaker and longtime euro critic, told the BBC. “This is very much not in the interest of the United Kingdom.”

Correspondent Edward Cody in Paris contributed to this report.

Anthony Faiola is The Post's Berlin bureau chief. Faiola joined the Post in 1994, since then reporting for the paper from six continents and serving as bureau chief in Tokyo, Buenos Aires, New York and London.



Success! Check your inbox for details. You might also like:

Please enter a valid email address

See all newsletters

Show Comments

Sign up for email updates from the "Confronting the Caliphate" series.

You have signed up for the "Confronting the Caliphate" series.

Thank you for signing up
You'll receive e-mail when new stories are published in this series.
Most Read



Success! Check your inbox for details.

See all newsletters

Your Three. Videos curated for you.
Play Videos
Be a man and cry
Deaf banjo player teaches thousands
Sleep advice you won't find in baby books
Play Videos
Drawing as an act of defiance
A flood of refugees from Syria but only a trickle to America
Chicago's tacos, four ways
Play Videos
What you need to know about filming the police
What you need to know about trans fats
Syrian refugee: 'I’m committed to the power of music'
Play Videos
Riding the X2 with D.C.'s most famous rapper
Full disclosure: 3 bedrooms, 2 baths, 1 ghoul
Europe's migrant crisis, explained

To keep reading, please enter your email address.

You’ll also receive from The Washington Post:
  • A free 6-week digital subscription
  • Our daily newsletter in your inbox

Please enter a valid email address

I have read and agree to the Terms of Service and Privacy Policy.

Please indicate agreement.

Thank you.

Check your inbox. We’ve sent an email explaining how to set up an account and activate your free digital subscription.