German Chancellor Angela Merkel's popularity is plummeting. Her compatriots do not forgive her for using German tax money to bail out other European nations. Putting the interests of the European Union before those of her own nation entails the loss of the people's support. That is the hard lesson which Merkel has been learning in the past three months.
Chancellor Merkel herself was extremely reluctant to accept the Greek bailout, but her government was pressured into it by Germany's EU partners and the EU authorities in Brussels. The domestic political problems which the EU has brought upon her are not restricted to the loss of a Bundesrat majority. Her government has also been taken to court over the bailout.
A group of German professors have filed a legal complaint against the eurozone aid package for Greece and other insolvent EU countries. They assert that the imposition on the German taxpayers of an obligation to bailout foreign countries is not only not "democratically legitimate," but also violates the German Constitution and the EU Treaties. "We are certain that our Supreme Court will declare this coup unconstitutional and a violation of parliamentary democracy and economic efficiency," the professors wrote in a newspaper ad. The professors feel supported by a recent study of the German think-tank Centrum für Europäische Politik which claims that the eurozone bailout package is not in line with previous rulings of the German Constitutional Court and that the public has been deceived on several points with regard to the package.
The EU treaties do not have a bailout clause. On the contrary, they state that neither the EU nor the member states are liable for the financial obligations of another member state. Moreover, the EU invoked a Treaty provision designed for "exceptional circumstances" without consulting the European Parliament. This is a breach of EU law. The professors demand that the German Constitutional Court annul the bailout. There is a good chance that the Court will rule in their favor. If this happens, Chancellor Merkel will not only have lost her popularity over the bailout, but will not even have secured the bailout.
Last week, Anatole Kaletsky, a columnist for the (London) Times, presented an "undemocratic survival plan for the euro." A sardonic Kaletsky wrote that "what could be the most important event of the coming decade – an imminent break-up of the euro" can be prevented on only one condition, viz. that Europe's politicians continue as they have done so far and disregard their electorates.
"Voters must not be asked to give their verdict directly on the euro programme," Kaletsky wrote. "Even assuming substantial fiscal convergence, German taxpayers will never vote for their money to be spent on supporting Greece, Portugal and Spain. But luckily for the euro's survival, German voters will never be asked this question. The constitution of a federal Europe has never relied on democratic support, merely on acquiescence and the force of habit. The creation of a viable single currency, backed by a European federal budget, will merely be the next stage of this non-democratic process."
Every so often, however, the leaders of Europe's peoples have to present themselves for reelection, at either a national or a regional level. This is when politicians who give in to the force of habit, acquiesce, and follow orders from the EU bureaucracy in Brussels, get into political trouble.
Last May, Frau Merkel agreed to "save the euro," the EU's common currency, by bailing out bankrupt Greece, one of the countries in the so-called eurozone. Despite the opposition of the German people, the German government decided to give Athens a huge loan. Since that moment, the popularity of Merkel's coalition of her own Christian-Democrat CDU with the Liberals has fallen to as low as 38 per cent of the population. Now the Merkel government has lost its majority in the Bundesrat, the German Senate. The Bundesrat is made up of representatives of the various German states. Merkel lost her Bundesrat majority following the regional elections in the state of North Rhine-Westphalia, where CDU and Liberals took a battering.
The Bundesrat has a say over all laws which are adopted in the German House of Representatives, the Bundestag, and which affect the states. In practice, more than half of all the laws approved in the Bundestag are submitted to the Bundesrat. This situation forces Merkel to take into account the views of the Socialist opposition, as from now on she needs the Socialists' support in the Bundesrat.
The current situation is causing tensions within the present CDU-Liberal coalition. Some Christian-Democrat leaders have suggested that a coalition between CDU and Socialists, who were Merkel's coalition partners from 2005 until October 2009, would make more political sense than continuing to govern with the Liberals.
The fact that the German Socialists were in opposition during the first half of this year, and hence did not have to approve the Greek bailout, partly accounts for their present popularity, although there is no doubt that if the Socialists had been in government, they, too, would have approved the Greek bailout under international pressure "to save the euro." It is not in the Socialists' interest to join a German government in the present circumstances.
Meanwhile, on the international level, the new government of Slovakia is refusing to pay its share of the €110 billion Greek bailout package. The Slovaks regard the Greek loan as"irresponsible" as it is designed to pay for Greece's "irresponsible government policies."
Hungary, another EU member state, although not a member of the eurozone, is also teetering on the brink of bankruptcy. The EU and the IMF have offered to help Budapest in exchange for austerity measures to be taken by the Hungarian government. This week, however, the Hungarian government declared that further austerity is "out of the question." According to Ambrose Evans-Pritchard of the Daily Telegraph, Hungary's revolt against the EU and the IMF "augurs ill" for Greece. Athens's problems are higher by any measure, whether of the budget deficit or of the current account of public debt, than Budapest's. Observers wonder whether the Greek people will be prepared to accept a new round of austerity measures.
The doubts about Greece are leading to increased nervousness in Germany. This week, Prof. Dirk Meyer of Hamburg University drew up a plan for Germany to reintroduce the German Mark. "If Greece does not leave the currency union," he says, "Germany must use the emergency brake."