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Portfolio > Economy & Markets

Merkel Won’t Budge, Says Ally

By Marlene Y. Satter

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Despite the continuance of the euro zone debt crisis and three additional governments in turmoil over austerity measures, Chancellor Angela Merkel of Germany won’t be dissuaded from her view that austerity is the way to go, says one of her political allies, who adds that she is “pretty resistant to pressure” to change her stance.

German Chancellor Angela MerkelBloomberg reported Tuesday that Peter Altmaier, the chief whip of Merkel’s Christian Democratic Union party, said that despite the defeat of President Nicolas Sarkozy of France by a Socialist in the first round of elections and the fall of the Dutch government, Merkel (left) had not changed her mind about the best way to combat the debt crisis. Those events, said Altmaier, did not change the fact that “there’s no money in Europe, only deficits everywhere you look.”

Francois Hollande, who bested Sarkozy in the first round of voting, is expected to win the final round on May 6, according to polls. Hollande, a Socialist, said Monday that European austerity measures are causing “desperation” and that he plans to turn France in the direction of growth instead. France has the euro zone’s second largest economy.

However, Altmaier was critical of such a course, and said Hollande could alienate investors if he abandoned the course of austerity in favor of promoting a growth economy.

“If Mr. Hollande were to say that he wants to increase government spending and save less, he’ll lose the confidence of the financial markets,” Altmaier said in the report. “The same financial markets that say they’re concerned about austerity will say, ‘My God, this is not serious,’ if Hollande stops austerity and does deficit spending.”

Merkel, on the other hand, according to Altmaier, is still committed to austerity policies. “The chancellor is pretty resistant to pressure,” he said, adding that she will wait to see who comes out the winner in the French election and then will “try to come to an understanding with the new government, regardless of who leads it. We will stick to our fundamental principles because there’s really no alternative.”

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