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Germany's Merkel: Will she save the euro or seal its demise?

German Chancellor Angela Merkel has opposed many of the moves to stabilize the eurozone that her European colleagues favor. Is she the steady hand Europe needs now, or does she lack political courage?

By Correspondent / December 9, 2011

German Chancellor Angela Merkel in Marseille, France, Dec. 8, 2011. The leaders of France and Germany hoped to rally fellow European conservatives around their latest bid to save the euro.

(AP Photo/Lionel Cironneau, Pool)

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Berlin, Germany

German Chancellor Angela Merkel might not be the most popular person in Europe these days.The reason? Her steadfast opposition to a whole range of measures that European leaders and economic experts see as crucial to prevent Europe’s sovereign debt crisis from becoming a global financial one.

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But more than ever in this two-year crisis, Ms. Merkel is seen as the sole individual who can save the common currency – or seal its demise.

At the EU summit in Brussels Friday, leaders failed to unite all 27 members on a proposed intergovernmental treaty to require greater fiscal discipline in EU member nations, though all 17 members that use the euro currency support the pact. Such a pact can be ratified more quickly than a treaty amendment. 

Merkel said the development will help stabilize the troubled eurozone. "We will achieve the new fiscal union. We will have a euro currency within a stable union, she said. "We will have stronger budget deficit regulations for eurozone members."

Merkel's firm stances are playing well at home, where 63 percent of Germans strongly support their chancellor, according to pollsters Forschungsgruppe Wahlen, saying she is doing well in steering the country through the crisis.

A member of her party says Merkel has provided a much-needed steady hand: “Throughout this crisis she has managed to maintain the all-important balance of principles that rule the European Union: solidarity with each other, responsibility for your own affairs, particularly your finances, and the freedom to chose your own way to arrive at common European goals,” says Michael Meister, deputy parliamentary leader for Merkel’s CDU party. 

But many economists see her leadership differently.

“She lacks political courage,” argues Peter Bofinger, who is one of the five-member council that advises the chancellor on economic questions – the so-called five wise men. “She is not courageous enough to explain to her country that what is needed most, and immediately, is solidarity within the eurozone. In other words, eurobonds.”

Many EU leaders, including the European Commission, agree with Mr. Bofinger. EU president Herman van Rompuy, EU commission chief Manuel Barroso, and Jean-Claude Juncker, Luxembourg's prime minister and head of the eurozone group, have been pushing for measures like eurobonds – which would replace sovereign bonds of individual eurozone members, thus having the whole of the currency union guaranteeing debts of single members. They also want to turn the future bailout fund ESM into a bank that can borrow money from the European Central Bank (ECB).

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