There was some surprise when during the European Summit, Germany agreed to the EMS given the statements given by German Chancellor Angela Merkel. As posted earlier it was seen as a victory by Italian Prime Minister Mario Monti. Merkel was seen to be on the defensive this time as the anti-austerity movement was boosted by the defeat of her austerity ally Sarkozy by Francois Hollande.
Merkel’s combative tone was almost abscent during the European Summit and now that which boosted the EUR versus the USD is coming back to haunt the Chancellor. The Bavarian CSU, is the sister party of the Chancellor’s CDU and is threatening to quit the coalition formed by Angela Merkel if other eurozone states secure additional bailout funds.
It might all add up to rethoric, but the fact remains that in the German public’s mind Merkel came out of the European Summit defetead and the clear winners were Italy and Spain. Germany does not hold another election until September 2013, but the largest opposition party is gaining ground by pushing a no support for the banking bailouts in Europe.
The Euro crisis has made Merkel’s national star rise and cemented her position as Germany’s leader, but it can also be her ruin as the opposition party SPD continues to regain the foothoold it lost in the 2009 elections. The third most popular politician is Hannelore Kraft premier of North Rhine-Westphalia a member of the SPD.