Tuesday, September 24, 2013

Angela Merkel’s Next Challenge

New York Times
September 23, 2013

Angela Merkel’s resounding re-election in Germany on Sunday is a personal triumph, but it still leaves unanswered questions about the direction she will lead Germany and the European Union over the next four years.

Under her leadership, Germany has been an oasis of relative prosperity in the slumping euro zone, and voters rewarded her for it. Although her Christian Democrats, and its Bavarian sister party, the Christian Social Union, came close to winning a majority in Parliament, she will need to find a new coalition partner. Her previous partner, the pro-business Free Democrats, were a major casualty of the vote, falling below the minimum 5 percent threshold for entering Parliament.

Ms. Merkel’s most likely partner is the Social Democratic Party, despite its relatively poor showing Sunday. The two parties shared power during Ms. Merkel’s first term, from 2005 to 2009. The Social Democrats are more firmly committed to strengthening the European Union than the Free Democrats. They are more open to easing austerity conditions for struggling debtor nations and favor measures that could usefully raise consumer demand at home, like setting a national minimum wage.

Reviving the euro-zone economy will not be easy. Although the severe recessions in Greece and elsewhere seem to be bottoming out and deficit projections are starting to improve, unemployment rates of more than 25 percent in Greece and Spain (and twice that for young people) are disastrous. A generation is losing its future, social tensions are rising and neo-fascist movements like Greece’s Golden Dawn are growing bolder in their extremist talk.


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