The Man Behind the Iron Chancellor

Merkel got the Greece deal she wanted, but it caused rifts in her party and strengthened the hand of her hard-line finance minister.


BERLIN — Last Friday, Germany’s parliament, the Bundestag, overwhelmingly voted to support Chancellor Angela Merkel’s plan for how the country should handle its negotiations with a cash-strapped Greece. From afar, it may have looked like a major victory for the so-called Iron Chancellor, who muscled Greece into accepting a third bailout package under the conditions that Athens double down on budget cutting and taxation, begin far-reaching privatization, and finally begin a wide range of structural reforms.

Indeed, the country — and the broad-based ruling coalition with the Social Democrats — appear solidly behind the popular chancellor in her tenth year in office, even as she has shown herself willing to have Germany pay a high price to keep Greece in the eurozone. What this veneer of support glosses over, however, is ever-greater dissatisfaction among ordinary Germans with the chancellor’s position on Greece and ever-louder discontent in her own party, the Christian Democratic Union, and its Bavarian sister party, the Christian Social Union. A full fifth of her party’s MPs broke ranks on the Bundestag vote, an unexpected backlash that has shaken Germany’s political establishment.

In fact, the big winner was not Merkel but her no-nonsense finance minister, Wolfgang Schäuble, whose confrontational stance in negotiations with the leftist Greek government and threat to let Athens go bankrupt (and thus leave the eurozone) caused his popularity to soar this summer. Even though he, like Merkel, backed the bailout — and is deeply committed to the European Union — he is seen as the champion of a Germany at the end of its tether with Athens and with handouts dressed up as European solidarity. Schäuble has thus positioned himself as the voice of the country’s conservative right, which has, up until now, been fighting a losing two-front battle against Merkel’s liberal reforms and what many see as stand-by-Greece-at-all-costs policies, on the one hand, and a far-right insurgency led by the populist Alliance for Germany, on the other. Over the past year and a half, the Alliance for Germany has relied on anti-EU tropes and other classic right-wing topics, like immigration, to establish a political party to the right of the CDU/CSU for the first time in decades.

The vote in the Bundestag gave the government a green light to pursue negotiations to provide Greece with EU aid worth up to $93 billion. Of the 119 members of the Bundestag who voted against the bailout package last week, 60 came from within Merkel’s own ranks. Most, but not all, of the conservative naysayers are against a third bailout because they no longer believe Greece is good for the money, reflecting a growing frustration among Germans.

The recent Bundestag vote is only one indication of this growing exasperation. Fifty-six percent of Germans reported thinking the deal was “bad” or “very bad” in a recent poll from YouGov, and nearly half favored Greece leaving the eurozone. Another poll, from Infratest dimap, (which found more favorable attitudes towards Greece remaining in the currency union) reported that 78 percent of Germans think Greece won’t implement the required reforms. While 57 percent of Germans think the Merkel- and Schäuble-dictated conditions of the aid are reasonable, 22 percent think they don’t go far enough. Only 13 percent think they’re too harsh.

Christian Democratic hard-liners, such as parliamentarian Wolfgang Bosbach, have argued that Athens has instilled nothing close to the trust that it will ever be able to pay back the existing debt. Bosbach, who also voted against the previous bailout packages, has even threatened to resign from the party should it not change course, as it is ultimately detrimental to Germany’s interests and the interests of future German generations.

“This isn’t a revolt that threatens the coalition or Merkel as chancellor,” explains Joachim Fritz-Vannahme of the Bertelsmann Foundation, a German think tank. “But conservative MPs wanted to show voters across Germany that they’re not in favor of Merkel’s Greece-friendly policies. It’s a sign of discontent and an acknowledgement that the crisis is far from over. No one believes that this bailout will be the end of it, as some thought about the first two packages.”

Never in recent years has Merkel experienced such in-her-face resistance on a major issue from her own conservatives. Since she came to power in 2005, Merkel has enforced strict discipline in the CDU — clout that has only grown as her popularity has surged from one election to the next. This has disgruntled traditional conservatives, above all, who resent her embrace of left-of-center causes — from renewable energy to gay partnerships. The CDU today is a party immensely more liberal and modern than the one Merkel took over while it was still in opposition in 2000, so much so that a steady trickle of old-school conservatives, as well as various stripes of rightist voters, had been abandoning the party in favor of the Alliance for Germany.

The surge in Schäuble’s popularity — uncommon for a by-the-book finance minister — could mark a shift in the party to the right after years of creeping toward the political center under Merkel. There’s no coup in the works in the chancellery, and Schäuble is no rival — he’s not even a hard-line conservative — but the right within the CDU/CSU has suddenly reappeared after a long, unhappy hiatus. As the daily newspaper Süddeutsche Zeitung commented, “Last week marked the end of Merkel’s absolute power in the CDU.” It could well augur a shift of the government to the right on an array of issues, not just eurozone politics.

While Merkel has been adamant that there be no formal write-off of Greek debt, she has said that she is open to prolonging the loans’ maturities and reducing the interest that Greece pays. But this will only happen, says Merkel, upon completion of successful negotiations. The matter of exactly what those compromises will be and how far they will go is something Schäuble now will clearly have a say on — and it’s unlikely to be favorable to the Greeks. Bad cop Schäuble is now in the front seat together with good cop Merkel.

The nationalist-minded CSU predictably had more resisters than the CDU, even if many dissenters voted with the chancellor. “Mistrust of Greece has grown infinitely,” said Hans-Peter Friedrich, the former interior minister, last week on the evening news. “Actually, we’re not for a third bailout package, but Wolfgang Schäuble now deserves our support,” he said, ominously hinting that had it not been for Schäuble, he and other CSU partisans may have voted differently, and Merkel may not have had a majority in her own party behind her.

“Schäuble’s role has been just evil,” says Alan Posener, a commentator for the daily Die Welt. “In the course of the Greece crisis, there’s been a re-nationalization of politics all through Europe, prompted by Germany,” he said in an interview. “Now, you’ve got this ‘Greeks hate Germans, Germans hate Greeks’ dynamic in play. It’s a collapse of the idea of the euro as the cement that holds Europe together. On the contrary, now the euro is pushing Europeans away from one another. It’s increasing imbalances between the North and the South, the opposite of what it is supposed to do.”

The Social Democrats, the lead party in the coalition that has governed since 2013, distanced themselves from some of Schäuble’s more sharp-edged barbs and the idea that there could be a Grexit down the road. However, Merkel’s coalition partner voted with the government despite reservations about the fairness of Greece’s treatment. But the party’s brass was conscious that a “no” vote meant leaving Greece in the lurch — something they wanted to avoid at all costs. The Merkel-Schäuble conditions may be harsh, according to the Social Democrats, but they’re better than a Grexit.

Photo credit: Sean Gallup/Getty Images

Paul Hockenos is a Berlin-based journalist. His recent book is Berlin Calling: A Story of Anarchy, Music, the Wall and the Birth of the New Berlin (The New Press).

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