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Merkel: Germany needs European market

May 20 2012 12:21

Berlin - German Chancellor Angela Merkel said Saturday that Germany's economic health depends on that of the European Union, even though exports to the region are at a 20-year low.

"We have to take advantage of our export opportunities. That means we must protect our markets in the European Union and ensure a stable currency and growth," she said in her weekly podcast address.

"A solid budget policy -- in the form of the budget pact -- must be tied to growth initiatives" in Europe, added Merkel, who is currently in the United States for a Group of Eight summit addressing the euro crisis.

That comment echoes the stance she took in a meeting this week in Berlin with France's new President Francois Hollande, who has called to renegotiate the EU fiscal pact, a treaty pushed through by Merkel that aims to instil greater budgetary discipline in Europe.

German exports to the EU fell to 59.2 percent of its overall exports last year, the lowest level in 20 years after a steady five-year fall.

In 2007, the year before the global financial crisis, 64.6 percent of Germany's exports went to the EU, but the figure has dropped as emerging economies such as Brazil, India, Russia and especially China have shown growing appetite for German imports.

A lawmaker from Merkel's conservative Christian Democratic Union (CDU) party meanwhile called for Greece to exit the eurozone, contradicting the chancellor's position.

"That could open the path to growth," Wolfgang Bosbach, a senior member of the CDU who has been critical of Merkel, said in an interview to be published Monday in weekly economic magazine Wirtschaftswoche.

"We could also negotiate a sort of European Marshall Plan for Greece," he said, referring to the post-World War II economic recovery programme drawn up for Europe and financed by the United States.

Bosbach, who is on the party's right wing, voted against the second multi-billion-euro Greek rescue package, which the German parliament passed by 496 votes to 90 in February.

Bosbach said that a third aid package would only make things "more expensive, not better".

Merkel and Hollande said after their meeting Tuesday they both wanted to keep Greece in the eurozone and were prepared "to study the possibility of additional growth measures in Greece" if Athens asked.

Whatever action the European leaders take must be decided soon, the head of Bundesbank Jens Weidmann in an interview in Frankfurter Allgemeine Sonntagszeitung to appear Sunday.

The leaders "must quickly decide on the path to follow" in Greece, calling the situation "very serious", Weidmann told the newspaper.

Due the uncertainly surrounding Greece's future in the eurozone, financing the Greek banks could lead to higher risks for the European Central Bank and other national central banks which together make up the Eurosystem, he said.

"I would consider it a mistake to increase the risk incurred by the Eurosystem with regard to Greece," he added.

angela merkel  |  european union  |  germany



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