These are unhappy days for Europe: Countries are starving for credit, international experts are predicting the slow unraveling of the euro, and the continent's national politicians have felt compelled to defend their honor by way of references to belligerent incidents from the not-so-distant European past. And the unhappiest European at the moment may be the person most trusted to lead the European Union out of its turmoil: Angela Merkel, Germany's chancellor, who, caught between the dual masters of a dissatisfied German public and a roiling EU, lurched in too many directions and finally froze in place as the crisis progressed. Merkel's abdication of Germany's leadership in the EU over the past few months ranks as a catastrophe of the worst order: wreaking maximum political damage on everyone involved, while also risking continued long-term chaos.
"I can't remember a similarly disastrous set of actions since 1949 [the year that the Federal Republic of Germany was formed]," former German foreign minister Joschka Fischer told Der Spiegel magazine when asked to put Merkel's foreign policy in context. "In the past few weeks, Angela Merkel had her rendezvous with history. Unlike Helmut Kohl on November 2, 1989, or Gerhard Schroeder after September 11, 2001, Merkel blew it."
Merkel's fumbled blind date with the history books began in March, when she decided to halt France's early plans to establish an EU mechanism to aid debt-ridden Greece. Convinced that Greece had yet to establish a firm enough commitment to thriftiness, the chancellor stressed that only in the case of "very serious difficulties" could Athens ask for help -- which Merkel ensured would only come in the form of ad hoc bilateral loans from European countries, with contributions and oversight from the IMF. Having set such an unexpectedly nationalist hard line on behalf of Europe's largest economy, Merkel seemed to revel in the subsequent notoriety: The media dubbed her "Frau Germania" and invoked the legacies of Margaret Thatcher ("Maggie Merkel") and Otto von Bismarck ("the Iron Chancellor"). As Greece's credit worsened, Merkel nonetheless fueled the perception that she would rather kick indebted countries out of the currency zone than offer hard-earned German money to spendthrift southern Europeans. As late as the end of April, members of Merkel's political party were telling the press that Greece "must seriously consider leaving the Eurozone." It was also transparent that Merkel was hoping that her tough, populist stance would help her party win an important regional election on May 2.
But Merkel's firm stand didn't last. Toward the end of April, Dominique Straus-Kahn, head of the International Monetary Fund, and Jean-Claude Trichet, chief of the European Central Bank, warned Merkel's government that without the immediate assurance of funds, Greece threatened to collapse at the hands of the bond markets, bringing the whole of Europe down with it. Merkel finally pushed through a 150 billion euro bailout, but it was too little too late. With international investors still too nervous to buy in, the EU ultimately cooked up a sprawling, trillion-dollar aid scheme during an emergency weekend conference: essentially the same deal that Merkel could have had back in March, except more expensive and riskier. And this time, President Nicolas Sarkozy of France had no qualms about declaring that the design was "95 percent French," putting Merkel in an awkward political spot at home.
Germany's leadership over Europe is profoundly fragile, since its foundation is a matter of faith -- it rests on the German public's belief that Germany's national interests are broadly symmetrical with the EU's aggregate interest. Merkel's bends back and forth earned her the dubious distinction of both having lost credibility with other European countries -- who now suspect her of harboring nationalist and protectionist impulses that dramatically raised the cost of a European bailout -- while also losing credibility with the German public, who think that their parliament was hoodwinked into swallowing a plan that was hatched in other capitals and essentially serves other countries' interests. On a foreign-policy issue that conceivably should have compelled a wide consensus, the Bundestag saw on Friday a strict party-line vote on the 750 billion euro rescue deal that suggests a lack of confidence in Merkel's leadership and bodes poorly for the passage of any further emergency measures.