German chancellor Angela Merkel was criticised by political allies for ceding to France and giving up on her call for mandatory sanctions on euro area countries that breach budget-deficit limits.
The comments from within Ms Merkel's ruling coalition echoed the reaction to her decision earlier this year to back a rescue for Greece and financial backstop for euro-area countries.
"After agreeing to stump up for the Greek bailout, Germany is now being pulled over a barrel twice," Frank Schaeffler, a financial spokesman for the Free Democrats, Ms Merkel's junior coalition partner, said in an interview today. "This is a fatal compromise."
Germany, which had pushed for "quasi-automatic" sanctions, shifted its stance on October 18th to embrace French calls for euro area governments to vote on penalties, leaving decisions in the hands of politicians.
"Either you have automatic sanctions worthy of the name, or you leave the door wide open to a repeat of the fiscal mess we're in now." Mr Schaeffler said.
While France backed Ms Merkel's effort for a rewrite of European Union treaties to create a permanent way to handle debt crises, the Frankfurter Allgemeine Zeitung newspaper said other countries will now resist that push.
"Judgment on violators will still be passed by the violators," the newspaper said in an editorial today. "This isn't exactly a toughening of the pact. And the German government didn't really get anything in return."
It's "hard to understand why Mrs Merkel has given in to French pressure to such a degree," Michael Link, a lawmaker with the Free Democrats, said in a statement.
German deputy finance minister Joerg Asmussen defended the accord, saying it opens the way for finding "a permanent crisis-resolution mechanism".
"Without this German-French accord there would not have been an agreement," he told reporters in Brussels yesterday.
Bloomberg