Sunday, April 03, 2016

Chancellor Merkel

Source - Wikipedia
One of the few world leaders who skipped Obama Nuclear Security jamboree is German Chancellor Angela Merkel (along with Russian boss Putin). May be she thought a terrorist attack back home while she in Washington would not give a good optics, considering Germans think after Paris and Brussels, it is their turn. Or may be she thought Trumpian politics of USA has become lot controversial for her to appear on the American political scene. Or she thought when folks are talking disbanding NATO and Putin being not there, she can best keep her leverage with Russia by not going to DC since after all it is Merkel who has to clean the mess in Ukrain. Or may be she just does not think Barack Obama highly - 'all hat no cattle' type. We do not know those reasons, all we see is a weakened Chancellor Merkel however.

Essentially, there are two cardinal mistakes at the heart of Chancellor Merkel's reign: 
- insisting excess of austerity in the EU economic policy and
- half-baked refugee policy threatening to destabilize Europe at its seams. 

It was correct for Chancellor Merkel to show the Greek PM his place given the utterly useless and counter-productive politics Tsipras practiced in letting Greece responsibility free. No leader of stature would tolerate the free ride Greece was asking for. You don't play 'victim-hood' card to avoid any accountability. But that does not mean German and EU policy should have ignored the hopeless debt situation of Greece. Not tying explicitly concrete Greek debt relief to Greece's reform; that was a missed opportunity for EU. Merkel's nonstop advocacy of 'austerity' essential made any such deal hard to come by.

If it was only for Greece, EU could ignore that. But fearing the wealth transfer from Germany to other nations of EU; Merkel demanded never ending austerity from all other EU nations.[1] In addition to such an obvious self interest, ideological blinders of Chancellor Merkel essentially kept the EU economic policy on 'austerity auto-pilot'. [2] Chancellor Merkel did not innovate the orthodox conservative policy prescriptions. Rather there is a rote continuation of conservative policies even when empirical data points in the other direction.  

Meanwhile her call to open German arms for refugees have created strains in her political support back home. Politically weak Germany results in a weaker EU. There is a compelling case to back Merkel's refugee supporting policy, given the German history. But it is clear that the chancellor miscalculated the danger lurking in her open arm refugee policy. There is a sense that, the chancellor could have been more pragmatic and circumspect in accepting refugees rather than making it lot harder for everyone else in EU by keeping borders open for so long.

What is clear is chancellor Merkel added complexity to the EU project, the complexity which is all avoidable. May be her deal with Turkey will help to overcome the refugee crisis. But so far all this has brought the entire EU project more to a precarious state when the menace of terrorism, danger of Brexit and continued fall out of Germany driven EU austerity policy are still inflicting body blows to EU. 

May be Chancellor Merkel will survive all this. If EU remains an intact project till the end of this year without any major terrorist attack, one can say that she is on her way to mend the course. But reality is Chancellor Merkel, despite all her great contributions to European unity; has equally complicated the EU project.

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[1] - German wealth in the first place is created on the backs of consumption of German goods by rest of the Europe. Meanwhile, weaker economics of rest of the Europe weigh on Europe which pegs Euro down, helping German export globally; hence all the motivation for Germany to stay on the path of European wide austerity.

[2] - In the end, it does not matter what National Flag contemporary Conservatives are flying - whether it is Union Jack of Osborne, or Stars and strips of Republican Party, or Maple Leaf of Harper or Conservatives Down Under - they all come back to the same ideology driven policy - 'tax cuts for rich and austerity' when we exactly need 'deficit funded' public spending. 

Only the conservatives in the country of rising sun under the leadership of Abe have shown willingness to think differently. But then, conservatives can legitimately point, why is Japaneese economy not doing well then? In the case of Japan, burden of shrinking population, deeply entrenched male dominance which keeps women work force underutilized and reluctance for migration; those are all important reasons for not moving the economy. 

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