German Chancellor Angela Merkel appealed to business leaders at the World Economic Forum to give policy makers the space they need to tackle the debt crisis, pledging that Europe will pull together and restore confidence.
“I would like to ask all of you who are here as the representatives of the business community” to recognize how democratic governments work and to “please take the long-drawn-out processes with a degree of acceptance,” Merkel said in a question-and-answer session after opening the forum yesterday in Davos, Switzerland.
Merkel’s comments underscore her shift in approach to taming the debt crisis now in its third year, having ditched rhetoric about conducting a “battle” between markets and politicians. At the same time, Merkel rejected adding any new money to fight the crisis and reiterated the need to curb debt and deficits while boosting competitiveness as the main thrust of her strategy to keep the 17-nation euro area together.
“Europe will become more attractive once we have conquered this crisis, and I’m absolutely convinced that we will be able to master this crisis,” she said. European leaders will discuss measures to raise competitiveness and create growth and jobs at their Jan. 30 summit and again in March, she said.
Merkel was speaking after she held a private meeting with chief executive officers who are members of the World Economic Forum’s International Business Council. Among those to attend were David Rubenstein, co-CEO and co-founder of private equity firm Carlyle Group, and JPMorgan Chase & Co.’s Jamie Dimon. U.K. Prime Minister David Cameron will speak to the same group today, Rubenstein said.
“She is one of the most impressive government leaders,” Cisco Systems Inc. Chief Executive Officer John Chambers said in an interview after Merkel’s speech. “She was even more impressive” in the private session.
In her speech, Merkel said that calls to increase the size of Europe’s “firewall” against the debt crisis go too far, and place the credibility of the rescue measures into question.
“Some say that it has to be double the size, then if that’s not big enough, others will say it has to be three times as big,” Merkel said. “What we don’t want is a situation in which we promise something that we can’t back up.”
“If Germany, as the representative of all European countries, promises something that can’t be kept in the event of a harsh attack by the markets, then Europe would have a wide-open flank,” she said.
European countries must move closer together and be ready to cede more powers to the European Union so the continent is “turned into a Europe that works,” she said.
For all the focus on curbing debt now being carried out across Europe, governments won’t be able to close budget deficits “in one go,” she said. “It will take time to overcome these deficits, we’re determined to do that.”
Alexey Mordashov, the billionaire CEO of Russian steelmaker OAO Severstal, said after Merkel’s speech that he appreciated her “confidence and optimism” on Europe’s ability emerge from the crisis.
“It is clear it will require time, and it is not all easy, but the fact that one of the EU’s largest countries is positive is good,” Mordashov said in an interview in Davos. Merkel displayed “an understanding that it is not enough to declare principles, the means of implementing them have to be worked out to make the EU and its economy stronger and healthier.”