GERMAN TENSIONS:GERMAN CHANCELLOR Angela Merkel has described last Friday's EU summit agreement as the day European leaders stopped bickering and began building a "real political union".
As the German leader talked up the deal in the Bundestag, the meltdown of her coalition partner gathered pace with the surprise resignation of Free Democratic Party (FDP) general secretary Christian Lindner.
Adding to the political tension is pressure on German financial institutions, prompting the cabinet to approve a reactivation of the German bank rescue fund yesterday.
In a Bundestag address, Dr Merkel said she sensed a “new determination and sense of common purpose” among EU leaders in Brussels.
“This will remain with us long after the crisis. It means nothing other than the vision of a real political union that is beginning to take shape,” she said in a short statement to parliament.
“A political union involves more than just created stability mechanisms, but also common and sustainable growth.”
She defended the decision to press ahead with an intergovernmental deal rather than negotiate further with Britain over its special demands.
“The answer couldn’t be to do nothing or to wait around or to try and repair things with existing means. That would have been half-hearted and irresponsible in this crisis,” she said.
Despite her regret that Britain was not participating in further euro zone efforts, she said London would remain an important partner in the union.
As EU leaders and lawyers haggle over the small print of last Friday’s deal, Bundesbank president Jens Weidmann insisted that printing money or pooled debt were not on the menu.
“I cannot imagine that trust in the euro zone will be increased if we bend the law,” he said, insisting the EU’s bond-buying programme would not be extended beyond its limited and temporary nature.
Mr Weidmann said helping to ease the euro zone debt burden by printing money was “like giving an alcoholic a bottle”.
He dismissed as “absurd” talk of a euro zone break-up and said the Bundesbank had “no printing press in the cellar”.
Germany’s ruling coalition, meanwhile, was reeling yesterday after the surprise resignation of the FDP’s Mr Lindner.
A gifted orator and strategist, Mr Lindner had come under attack for mismanaging an internal vote on the government’s bailout strategy.
With the result of the vote expected on Friday, his departure focuses attention on FDP leader Philip Rösler, still struggling to revive the party’s fading fortunes after six months in the job.
“We were already in a lead vest, now this adds a pair of concrete shoes,” said senior FDP member Wolfgang Kubicki. “We need to stop this self-obsession with ourselves and deal with political issues, otherwise people will ask, ‘why do we need the FDP?’”
Opposition Social Democrat parliamentary leader Frank Walter Steinmeier suggested that “the FDP is in a cul de sac, unable to help make the decisions this country needs”.
Meanwhile, Berlin has reactivated its Soffin bank rescue fund, established after the Lehmann Brothers collapse in 2008, adding €120 billion to allow the €480 billion fund to accept fresh funding requests from early next year.
Top of the queue is likely to be Commerzbank, Germany’s number two lender, which has to raise €5.3 billion in capital by June 2012 after a value markdown of its sovereign debt holdings.