Tags: EU | Germany | Merkel | Under | Fire

Germany's Merkel Facing Pressure on All Fronts

Wednesday, 12 May 2010 12:00 PM

German Chancellor Angela Merkel has not had a good week. The euro is in crisis. An important election has been lost. Her own party is rebelling against her leadership, and now the governing coalition looks under threat.

Just six months into her second term, Merkel has irked many in Germany by pushing through an unpopular Greek bailout package and then signing onto a 750 billion euros ($951 billion) rescue fund for the euro, while at the same time saying Germans would have to wait for tax cuts at home.

"We are again Europe's fools," screamed a headline this week in top-selling Bild newspaper, while Tagesspiegel wrote Wednesday that some in Merkel's own Christian Democratic Union believe it was time to press the "reset button."

Merkel herself seems ready to do just that — this time not with promises of tax cuts and bold spending programs, but rather with her version of blood, sweat and tears.

On Monday, the day after her party suffered what she called a "bitter defeat" in a key state election, she said she was taking immediate tax cuts off the table.

"Consolidating the budget will be a priority for the federal government," she said.

While many in Merkel's party have long suggested tax cuts might not be appropriate with the federal budget some 100 billion euros in the red, it was a key goal of their coalition partner, the Free Democrats. Now they are up in arms as well.

"If the (Christian Democratic) Union is not ready to decide on lower taxes in this election period, we have to renegotiate some of the terms of this coalition," FDP financial expert Hermann Otto Solms told the daily Tagesspiegel. "In this case, we are of course not ready to support new spending as demanded by the Union." Some Free Democrats have suggested social programs and defense might be good starting points for budget cuts.

Politicians from within Merkel's party have also gone public with criticism of her leadership.

The party's election loss in North Rhine-Westphalia last Sunday was partly due to "dissatisfaction about governing or non-governing in Berlin," said the party's Stefan Mappus, the state governor of Baden-Wuerttemberg, according to Berliner Zeitung.

Saxony Governor Stanislaw Tillich, also a CDU member, addressed the chancellor directly, saying: "Frau Merkel, take the initiative!"

Others have criticized Merkel for not pushing hard enough for market regulation in the rescue packages, and for leaving the euro bailout initiative to French President Nicholas Sarkozy. Merkel had traveled to Moscow for World War II commemoration parades, while Sarkozy canceled the trip.

"At the end of March, Merkel was the Queen of Europe, dominating the EU's spring summit," Berliner Zeitung wrote Wednesday. "Six weeks later, the former dominating figure looks pretty naked."

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