Opposition Grows in Germany to Bailout for Greece

By NICHOLAS KULISH
Published: February 15, 2010

BERLIN — As European finance ministers refused Monday to name specific measures to rescue Greece and the Continent’s common currency, opposition grew among Germans to bailing out what they call spendthrifts to the south after years of belt-tightening by workers at home.

Finance ministers meeting Monday in Brussels included, clockwise, Christine Lagarde of France, Jyrki Katainen of Finland, Giulio Tremonti of Italy and Wolfgang Schäuble of Germany.

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Greece Pressed to Take Action on Economic Woes (February 16, 2010)
Times Topics: European UnionThe fiscal crisis, shaking the Greek government while driving down the value of the euro, is forcing taxpayers and voters across Europe to confront the fact that their fortunes are tied together more closely than their politicians confessed in the late 1990s, in the rush to create the common currency over public objections.

In the process it has revealed how deeply national identity, rather than a common European identity, remains the reality on the Continent. Solidarity, at least in the eyes of most voters, still stops at the border.

Despite popular opposition to helping Greece, analysts expect big countries like France and Germany to reach some kind of deal, since the prospect of economic chaos without an agreement is more frightening than even the wrath of voters.

“Just like Obama is not going to let a systemic bank fail, Europe is not going to kick the wayward out of the system,” said Josef Joffe, the publisher of the weekly newspaper Die Zeit. But he added that the reason for that could not be kept from the voters.

“Europe has become a huge welfare state for everybody, for states as well as individuals,” he said.

Greece’s finance minister, George Papaconstantinou, told his counterparts on Monday that a firmer commitment to helping his country was needed to fend off speculators. Other ministers in the euro zone lectured Greece about using complex financial instruments prepared by Wall Street to hide debt and called for a tighter clampdown on spending, rather than outlining the specifics of an aid package that would calm markets.

European leaders want to extract guarantees from the Greeks to put their finances in order before offering any kind of rescue, but their reticence also stems from the fact that any price tag will have to be defended at home.

Here in Germany, opinion surveys show that two-thirds of the people oppose financial assistance for Greece. More ominously, a survey released Sunday by the newspaper Bild showed that a slight majority of Germans, 53 percent, said they favored expelling Greece from the euro group entirely if its mountain of debt threatened the stability of the currency union.

“Every country has its own debts,” said Kristin Lautenschläger, 70, a retiree in Berlin who said she opposed spending German money to save Greece. “Germany is no longer such a rich country anymore, and has its own problems to deal with before it can take care of Greece’s.”

Germans spent the past decade cutting unemployment benefits and freezing pensions, while grudgingly accepting stagnant wages in order to make their economy more competitive. After those years of sacrifice, it is more than just a matter of money that is driving opposition to the bailout, but also a matter of principle, after politicians promised they would never have to prop up their neighbors.

The crisis could not have come at a worse moment for Chancellor Angela Merkel. At the outset of the financial crisis, Mrs. Merkel confidently called it an American problem, and resisted as much as possible calls from across the Atlantic for even more government spending to kick-start economic growth.

Now with the American economy in the midst of a more robust, if still fragile, recovery, the Germany economy has stalled, with no growth in the fourth quarter, according to an announcement Friday by the government statistics office.

“There was a belief in the beginning that this was an American problem. I don’t think the dots were connected across Europe, that you have the unpredictability within the zone itself,” said Jackson Janes, executive director of the American Institute for Contemporary German Studies at Johns Hopkins University.

“Now they have to pay for Greece and everybody’s trying to figure out how you can do that while staying politically viable at home,” Mr. Janes said.

In Germany, the debate over aid to the Greeks intensified last week when the Constitutional Court in Karlsruhe ruled that unpopular labor-market reforms, known as Hartz IV, may have gone too far in cutting benefits for the country’s unemployed. That set off a political fight within the German government over jobless assistance, one that was inevitably framed as helping Germans or saving Greeks.

“I can’t explain to a Hartz IV recipient that he won’t get another cent but some Greek gets to retire at 63,” said Michael Fuchs, a deputy leader in Parliament of Mrs. Merkel’s Christian Democrats, in Sunday’s issue of the newspaper Die Welt.

The lack of common fiscal policies for the bloc meant built-in instability for the euro, but years without a major recession covered it up.

Now it is clear that unlike the United States, where the federal government has the power to help individual states, Europe lacks the mechanisms to steady its struggling nations, and the uncertainty is causing some critics to call the very future of the currency union into question.

“We’re not worried about the U.S. economy disintegrating as a result of California being temporarily ungovernable and needing an austerity plan,” said Adam Posen, a senior fellow at the Peterson Institute for International Economics in Washington.

A bailout for Greece would not be as expensive as the fraught public debate might suggest, Mr. Posen said.

“The amount of additional fiscal aid needed for Greece is not that great,” he said. “Politically it’s sensitive, but economically the costs are vastly overrated versus the benefits accrued to date and to come.”

But voters in Germany see the decision to bail out Greece as just the first step in what will be a long line of countries seeking handouts. “After Greece it will just be other countries like Portugal,” said Patrick Klomfas, 28, an unemployed automotive engineer, who on Monday was visiting the employment office in the Berlin neighborhood of Lichtenberg.

“But you know, the politicians are just going to do what they want to do anyway,” said Mr. Klomfas, who has been out of work since October, but expects to start a new job next month. “No one wanted the euro, but the euro came anyway.”