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Saturday, February 18, 2012

Angela Merkel: To lead or not to lead... that is the question!

Angela Merkel: To lead or not to lead... That is the Question!
...or from Germany to Male Leadership to Gold to China!
February 17, 2012 

After such a long hiatus, do I dare begin with a political statement? I am on a return flight from a business trip to Europe. The newspapers have been full with articles on the financial crisis in Greece, and even more so with criticism of German Chancellor Angela M erkel, who has been the most vocal in her unwillingness to bail out Greece…once more. She is looking for tighter guidelines, austerity measures, monitoring and specific rules so that bailout packages are not taken for granted, burdening other economies, and spending habits in economies under distress actually change. Given the relevance of Germany as an economy and the need for support, her role in finding a solution is critical. According to an article in the Financial Times, “if Germany does not take on the leading role in the bailout mechanisms and carries 27% of the financial burden, the system will fall apart.”

This coming Monday (2-20-12), the European finance ministers will regroup to determine the faith of Greece and whether or not to grant a bailout package of at least EURO 130 billion. Germany has not been alone in its resistance. The Netherlands and Finland have voiced similarly critical opinions and perspectives and as a result have been criticized by President Karolos Papoulias. His comments relate specifically to Germany’s questioning of Greece’s ability to conform to budget restrictions and curtailed spending and the request to postpone the upcoming elections. With posters of Angela Merkel in old Nazi uniforms hanging on storefronts in Greece and comparisons to Nazi Germany, tension is high and the crisis is taking on a different level of sensitivity and urgency. And in its anger toward Germany, Greece is not alone. Increasingly, similar rumblings are being heard in Italy, Spain, and Portugal, whose fiscal systems have also been strained and which have felt that their European “partner” Germany had responded unreasonably harsh to their needs. 

A challenging position for Angela Merkel, who seems to be additionally troubled by finding a suitable national president at her side during this time of crisis (Note: President Christan Wulff finally resigned after being tied to ethical and financial scandals. His resignation follows that of President Horst Koehler in May 2010. Anybody out there who can take on this job? See TIME World article.)  The current Chancellor earns an annual salary of approximately $300K and has been named the fourth most powerful person by Forbes and #1 most powerful woman. She has a strong following in Germany today. In a recent poll conducted by ARD, 69% of the participants stated that Angela Merkel was “a good Chancellor” and 85% felt that she “represented the country well”. 55% stated that she does not come across as someone who puts “party over people” but ascends the “party war”. So, within Germany, her actions are applauded; internationally, she has never been under greater pressure. 

The general, national sentiment is that Germany is bailing out a country that does not share the same work ethics and responsibilities, and that for many seems unfair. However, coming across as too harsh and arrogant can significantly hurt Germany’s political image, role, and endanger the European Union. Germany has been very careful with its international policy making in the past 40 years, working in the shadows to lose … not forget or deny… but to lose the image associated with the “Third Reich”. Hard to do and quite frankly I am not sure that this will ever be accomplished based on how quickly nations across the globe like to pull out that card and start labeling again. 

Germany’s economic strength is fascinating. Less than 10 years ago, the situation looked very different with high unemployment rates and the high Euro preventing exports, which for an export-driven economy posed many challenges. Yet the country never lost its relevance in Europe and has regained momentum. Some interesting statistics were published in the recent edition of FOCUS:
  • Unemployment rate (15 to 24-year olds): 8.5% in Germany versus 46.4% in Spain, 32.8% in Greece, 29.2% in Portugal, 27.8% in Italy, and 23.2% in France (2011, Source: EuroStat)
  • Strike days (per 1000 employees): 107 in France, 74.5 in Spain, 52.6 in Italy, 28 in Poland, 2.7 in Germany (2008, Source: ILO)…. Somewhat ironic considering that personnel on the ground at Frankfurt Airport were on strike this past work as I was making my way across Europe!!
  • Patent submissions in 2010: 463,000 in Japan, 420,000 in the U.S., 307,000 in China, 178,000 in South Korea, and Germany is next with 169,000 (Source: WIPO).

Whether hated or loved, Germany will continue to play an important role in the global economy, which is not shocking considering that the U.S. and China are equally hated and loved depending on the circumstance, day, and time J A sensitive situation for all involved. The consequences, political and economic, if Germany decides against supporting the proposed package, are hard to predict. Frankly, I can’t picture Germany declining, but some measures need to be taken to ensure that governments and countries take greater responsibility for their fiscal housekeeping. There is no room for questionable financial management, independent of the country under consideration or debate. So far, Angela Merkel has managed the situation with relative poise, sturdy, but poised. Her now ex-President certainly would not have been the first to throw a stone in this particular situation…

In general, Frau Merkel’s male colleagues have been under fire more frequently for direct insults to the other governments/countries than her. What does that say about women in politics and their ability to lead a country? I wonder where Germany would we be if the current chancellor was a man? At war, still in a recession, fighting over the ethics of favorable personal loans?  Maybe Germany would be one of the stronger allies of China, something that China seemingly wishes to pursue (Financial Times……). While Europe is distracted fighting about its currency and fiscal challenges, China is moving on to acquiring the next natural resource. After years of deals and alliances that allowed China to secure control and access to crude oil, a recent Financial Times highlights that China is expected to surpass India in 2012 as the largest consumer of gold. 

While we argue about who goes bankrupt next and drive our immediate allies away meanwhile threatening our own global strength, good old China just keeps plugging away, step by step, at its own strategy of gaining key stakes in natural resources and solidifying its own economic position. Well played… Welcome to Planet China.

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