World Economy

Gabriel: Germany’s Austerity Policy Threatens EU Unity

Breakup of the European Union will undermine the world’s largest collective economy
Chancellor Angela Merkel’s insistence on strict fiscal discipline is said to be harming the EU.
Chancellor Angela Merkel’s insistence on strict fiscal discipline is said to be harming the EU.
Strenuous efforts by France and Italy to reduce their fiscal deficits come with political risks

German Social Democratic leader Sigmar Gabriel said Chancellor Angela Merkel’s austerity policies threaten European cohesion as he laid out options for an SPD-led government coalition that could topple her in an election this year.

Gabriel, who may declare his candidacy this month to challenge Merkel for the chancellorship, told German magazine Der Spiegel that the European Union risks falling apart if fiscal-tightening demands championed by Merkel in recent years prevail, Bloomberg reported

 “It’s obscene that countries like France and Italy, which are carrying out reforms, have to undertake such strenuous measures to be able to have a half-percent gain on a budget deficit,” Gabriel, 57, told Der Spiegel in an interview published on Saturday. “Helmut Kohl would never in his life have treated other European countries that way,” he said, referring to Merkel’s Christian Democratic predecessor.

Germany’s Social Democrats are lagging behind Merkel’s Christian Democratic-led bloc by about 15 percentage points in most polls ahead of the election, which is likely to be held in September. Merkel is seeking a fourth term as German chancellor, pledging to unite the country as it grapples with social polarization, the threat of terrorism and the worst refugee crisis since World War II.

Gabriel, whose SPD has governed as the junior partner in a so-called grand coalition with Merkel’s faction since 2013, told Spiegel that his party would consider forming a three-way coalition with the environmental Greens party and the pro-business Free Democratic Party. The option would be an alternative to an SPD combination with the Greens and the anti-capitalist Left Party, an option favored by the SPD’s left wing.

A Forsa poll published on Jan. 4 shows neither three-way coalition gaining a majority, with Merkel’s CDU-led bloc with 37% support, outstripping all other parties. The SPD was at 21%, the poll showed.

While not ruling out a coalition with the Left Party, a part of which is made up of the successor to East Germany’s communist party, Gabriel questioned whether such a formation would result in a stable government.

“They have to decide whether they want to govern or remain firmly in opposition,” Gabriel, who is Germany’s vice chancellor and economy minister, told Spiegel.

Countless numbers of people cross borders in the 26-country Schengen travel zone every day, due to a 31-year-old system encompassing nearly 400 million people that has dramatically boosted trade and job prospects across the world’s largest collective economy.

It’s a pillar of a system designed to prevent new world wars, yet it is a system under growing strain. While EU countries debated over how to manage an influx of migrants last year, eastern nations rebuilt border fences and exposed EU weaknesses.


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