CHANCELLOR ANGELA Merkel is facing growing criticism from political allies and rivals over her handling of the euro-zone crisis ahead of a crucial parliamentary vote in September.
Her Bavarian political allies, the Christian Social Union (CSU), yesterday dismissed the idea of a European finance minister and ruled out the Franco-German proposal for euro-zone economic governance if it involves the transfer of greater competences to Brussels.
Beleaguered foreign minister Guido Westerwelle, of the Free Democratic Party (FDP) junior coalition partner, has admitted that a “two-speed Europe”, long a taboo in German political circles, could be the outcome of the eurozone crisis.
Meanwhile, days after being silenced, federal labour minister Ursula von der Leyen has reiterated her call for collateral on all future euro-zone bailout loans.
The German leader has a month to secure a parliamentary majority for bailout reform proposals. Yesterday’s CSU euro-zone paper suggested Dr Merkel’s Bavarian allies are anxious to show their independence from the chancellor.
“Tackling the debt crisis and reform of the currency union cannot be allowed to increase or widen the democratic deficit of the EU and the development of new institutions not democratically legitimised,” the party wrote in a position paper, seen by The Irish Times.
Earlier this month, Dr Merkel and French president Nicolas Sarkozy called for “real economic governance” with euro-zone leaders meeting regularly for meetings chaired by European Council president Herman van Rompuy.
The CSU said yesterday that Lisbon Treaty competences should be exhausted before new institutions are created and national competences transferred.
Wary of a public backlash to further bailout measures, some CSU members are calling for automatic sanctions for stability pact breaches. Others want orderly insolvency legislation for euro-zone members and the possibility of temporary exits to devalue.
“It seems to us a very poor solution to transfer competences to the very institutions that, in the last decade, haven’t done their job,” said Dr Thomas Silberhorn, CSU European affairs spokesman.
Dr von der Leyen has ensured her call for loan collateral, shot down by her own party last week, was back in discussion in Berlin yesterday. In an interview with Der Spiegel, she called for a guarantee system to secure loans issued until the permanent rescue fund ESM, with its inbuilt guarantee mechanisms, comes into effect in 2013. "The task of my generation is to create a united Europe. The problem is that, after the introduction of the euro, we simply stood still," she said.
For the labour minister, an ad-hoc collateral system on gold reserves or state assets would discipline national governments and prevent the current bailout regime going the way of the stability pact.
Settling for promises rather than collateral will, she believes, discredit further euro-zone rescue measures in the eyes of donor country voters. Her remarks have been seen as an attempt to position herself as a German voice on Europe next to Dr Merkel and finance minister Wolfgang Schäuble. The 68-year-old finance minister says Europe needs political debate about the direction of the EU rather than technical discussions over collateral.
“We have to ask ourselves the fundamental question: how will things develop with the EU?” he told the Tagesspiegel newspaper. “Either things will move forward or fall back.”
Unilateral declarations: Small town mayor issues own currency
ROME – A small town in central Italy is trying to go independent and mint its own money in protest at government austerity cuts.
Filettino, set in rugged hill country about 100km (65 miles) east of Rome, is rebelling against a proposal to merge the governments of towns with fewer than 1,000 inhabitants to save money.
Filettino has only about 550 people, but instead of merging with neighbouring Trevi, mayor Luca Sellari is trying to go it alone and set up a principality along the lines of the famous independent republic of San Marino to the north.
He has started issuing Filettinos own bank currency, the fiorito, with his photo on the back, which he says is already being used by the townspeople.
“We aim to achieve real autonomy from Italy and we have the financial resources to do it, Mr Sellari said in an interview on the towns website, www.principatodifilettino.com There was no immediate comment from the government in Rome. – (Reuters)