Sunday, July 17, 2005

Merkel again

Angela Merkel has been talking a bit more about her plans, this time to the Berliner Zeitung yesterday. She has repeated that she wants to have better relations with the United States but will not, should she become Chancellor, send troops to Iraq. On the other hand, Germany will continue with training of Iraqi troops in the United Arab Emirates. (It is actually not clear how many they are training but the programme is in place.)

Curiously, she seems to have caught the French disease of assuming that whatever she does in Germany is actually for the whole of Europe. We have already quoted her sayings about European economic problems (and her non-solutions). Now, she has announced that she intends to
“…put Europe's relations with the United States on a proper footing again”.
Well, how nice. But, of course, Europe has no relations with the United States. Individual countries do. Some of them are good and some bad. Recently, Germany’s relations have been bad and clearly Frau Doktor Merkel wants to change this. An admirable aim but it has little to do with Europe.

She has also announced that her proposed increase of VAT will be an excellent idea as it would cut labour costs, boost economic growth and create jobs.
“By raising VAT by two percentage points we'll be able to quickly cut the supplemental wage costs by two points. You can't look at only the increase. Looking at the whole picture you can see clearly why we're doing it.”
It seems not everyone in Germany shares her rather curious view of economic development. Ludolf von Wartenberg, head of the BDI German industry federation, wondered:
“Why do they have to start off by raising the VAT? Cutting spending should take priority. There are huge potential savings to be found by reforming the social welfare system.”
The FDP, the CDU/CSU’s potential coalition partner, has criticized the plan as one that is likely to have a negative impact on growth and spending. Even the SDP party leader, Franz M√ľntefering, has called the plan “a killer” that would damage the economy.

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