BERLIN: German Chancellor Angela Merkel is hardening her stance on additional help for struggling euro zone economies like Greece and Spain as pressure from parliamentary allies and a looming election campaign shrink her room for manoeuvre in Europe.
At the start of the crisis, Merkel was derided by the French as "Madame Non" for refusing to approve quick aid to southern euro zone stragglers and rebuffing demands for sweeping solutions like common euro zone bonds.
Over the last year Merkel has softened that image with concessions and softer rhetoric. But growing unease among conservative lawmakers and the emergence of a new centre-left challenger points to a tougher line again ahead of a federal vote next year.
The announcement last week that Peer Steinbrueck, a combative former finance minister, will lead the opposition Social Democrats' (SPD) bid to unseat the chancellor in 2013 has swung Germany into election mode.
"We expect next year's federal election to start significantly narrowing the scope of political options in the near future," Alex White, an analyst at J.P. Morgan, wrote in a note this week.
"We think we are coming towards the end of Germany's period of relative policy activism."
For Europe, this will mean an ultra-cautious approach from Berlin to providing further aid to Greece and Spain, and a go-slow stance on banking supervision.
"There simply isn't a majority in parliament for a third rescue package for Greece," Norbert Barthle, senior lawmaker and budget expert in Merkel's Christian Democrats (CDU), told Reuters.
"We only just agreed a second package, and that isn't close to being exhausted."
Indeed, it looks like Germany's European partners will have to get used to more "nos", "nons" and "neins" from Merkel in the next twelve months as she seeks to consolidate her lead in opinion polls and win over critics in her conservative bloc.
The vote is a full year away, but Merkel, 58, will have to tread carefully against Steinbrueck, a candidate known for his fiery rhetoric and expertise on financial matters.
Until now, one of her biggest advantages had been a docile opposition that nodded through most of her government's euro policies with barely a whimper.
Those days are officially over, even if the SPD remains broadly supportive of Europe's bailouts.
SUPPORT FOR DRAGHI
Appeasing critics in her own camp is likely to become a full-time job for the chancellor in the run up to the election.
Many within Merkel's bloc, notably members of the Bavarian Christian Social Union (CSU), were troubled by her support for European Central Bank President Mario Draghi's new bond-buying programme for troubled euro zone states over the summer.
That came after a string of compromises this year stirred unease in her coalition - from the decision to give Spain more time to meet deficit reduction targets, to signals that Merkel's government would tolerate higher inflation at home.
There was also her acceptance at a June EU summit in Brussels that Europe's new bailout fund be allowed to funnel aid directly to troubled euro zone banks.
indiatimes.com
At the start of the crisis, Merkel was derided by the French as "Madame Non" for refusing to approve quick aid to southern euro zone stragglers and rebuffing demands for sweeping solutions like common euro zone bonds.
Over the last year Merkel has softened that image with concessions and softer rhetoric. But growing unease among conservative lawmakers and the emergence of a new centre-left challenger points to a tougher line again ahead of a federal vote next year.
The announcement last week that Peer Steinbrueck, a combative former finance minister, will lead the opposition Social Democrats' (SPD) bid to unseat the chancellor in 2013 has swung Germany into election mode.
"We expect next year's federal election to start significantly narrowing the scope of political options in the near future," Alex White, an analyst at J.P. Morgan, wrote in a note this week.
"We think we are coming towards the end of Germany's period of relative policy activism."
For Europe, this will mean an ultra-cautious approach from Berlin to providing further aid to Greece and Spain, and a go-slow stance on banking supervision.
"There simply isn't a majority in parliament for a third rescue package for Greece," Norbert Barthle, senior lawmaker and budget expert in Merkel's Christian Democrats (CDU), told Reuters.
"We only just agreed a second package, and that isn't close to being exhausted."
Indeed, it looks like Germany's European partners will have to get used to more "nos", "nons" and "neins" from Merkel in the next twelve months as she seeks to consolidate her lead in opinion polls and win over critics in her conservative bloc.
The vote is a full year away, but Merkel, 58, will have to tread carefully against Steinbrueck, a candidate known for his fiery rhetoric and expertise on financial matters.
Until now, one of her biggest advantages had been a docile opposition that nodded through most of her government's euro policies with barely a whimper.
Those days are officially over, even if the SPD remains broadly supportive of Europe's bailouts.
SUPPORT FOR DRAGHI
Appeasing critics in her own camp is likely to become a full-time job for the chancellor in the run up to the election.
Many within Merkel's bloc, notably members of the Bavarian Christian Social Union (CSU), were troubled by her support for European Central Bank President Mario Draghi's new bond-buying programme for troubled euro zone states over the summer.
That came after a string of compromises this year stirred unease in her coalition - from the decision to give Spain more time to meet deficit reduction targets, to signals that Merkel's government would tolerate higher inflation at home.
There was also her acceptance at a June EU summit in Brussels that Europe's new bailout fund be allowed to funnel aid directly to troubled euro zone banks.
indiatimes.com
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