Angela Merkel: Softening stance on austerity?

As question marks hang over the European Union and the single currency created by the exclusive club which has enjoyed decades of integration, all eyes are firmly on the German Chancellor Angela Merkel, who seems to be wielding the unenviable power of deciding the direction of its members.

In Brussels to attend a crisis summit on the fate of the euro, against a background of months of tension over the economic quagmire member-countries find themselves in, Europe’s leaders shared the hope that any agreement might pull the EU back from the brink.

Merkel, the scientist-turned-politician, became chancellor in 2005. Born on July 17, 1954 in Hamburg, she grew up in a rural area north of Berlin in the then German Democratic Republic. She studied physics at the University of Leipzig, earning a doctorate in 1978, and later worked as a chemist at the Central Institute for Physical Chemistry, Academy of Sciences.

With the rest of the world looking on with the knowledge that whatever happens at the summit will probably affect their own economies, some agreement was reached over the Eurozone’s bailout fund.

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Merkel seemed to have given ground on Thursday as EU leaders came to an agreement to use the Eurozone’s bailout fund to support struggling banks directly, without adding to government debt.

Speaking after 13 hours of talks in Brussels, EU chief Herman van Rompuy also said a Eurozone-wide supervisory body for banks would be created. Officials said the plans could be finalised during July.

Merkel appears to have bowed down to pressure from Spain and Italy to provide more support. Prior to the summit she spoke strong words to her government saying German taxpayers would not bear the brunt of the economic crisis. Merkel told parliament in Berlin, before going off to Paris to see Hollande in Brussels, that she would not allow “Germany to be overstretched” by bankrolling borrowing to save the euro. Unusually, she predicted “controversial discussions” at the two-day summit, signalling that she was ready for a row.

“I fear that at [the summit] there will again be far too much talk about all possible ideas for common liability and far too little about better controls and structural measures,” she said. Eurobonds, eurobills, or a debt redemption fund — all ways of pooling Eurozone debt liability — were illegal and counter-productive, Merkel said.

Merkel is Germany’s first female chancellor. She is also the first former citizen of the German Democratic Republic to lead the reunited Germany and the first woman to lead Germany since it became a modern nation-state in 1871.

She has been the target of media criticism in many EU countries over the past few months with some labelling her a red-eyed Terminator and the EU’s most dangerous leader. Britain’s left-wing New Statesman magazine last week splashed an image of Merkel as the Terminator with a glistening robotic eye and Arnold Schwarzenegger-style black jacket on its front cover under the headline ‘Europe’s most dangerous leader’.

What happens at the summit will determine the direction of the EU for the foreseeable future, and with Spain, Italy and Greece vying for lower borrowing costs and a chance of a light at the end of the fiscal tunnel, Merkel has given no promises and warned there is no ‘magic formula’ to solve the crisis.

Source: The Guardian and BBC.