German Economy Minister Philipp Roesler said he’ll fight attempts across Europe to weaken the euro, pledging that his Free Democratic Party will stand up for central-bank independence before federal elections on Sept. 22.
Roesler, whose FDP is Chancellor Angela Merkel’s junior coalition partner, warned in a speech to a party convention in Berlin of a “new danger” emerging in Europe as governments resist austerity and policies to boost competitiveness and instead discuss artificially devaluing the euro. Such moves risk spurring inflation, hurting those on middle incomes, savers and retirees, he said today.
“That’s why we’re fighting so hard for a stable currency,” Roesler said. “That’s why we view attempts to impose political influence on the independence of the European Central Bank as lethal. That’s a threat to stable money. That is why we as Free Democrats say: ‘Hands off our ECB.’”
Six months before federal elections, Roesler is striving to assert his party’s relevance as polls suggest the FDP will struggle to retain its seats in parliament. The FDP’s woes are a problem for Merkel, who needs a coalition partner to win the majority needed to govern even with her approval ratings at the highest since taking office in 2005 thanks to her handling of the sovereign debt crisis.
The euro has gained almost 8 percent since July 2012, when it dropped to the lowest in more than two years against the dollar and the weakest since 2000 against the yen. Still, the 17-nation currency has dropped 1.4 percent so far this year. It bought $1.3005 at the close yesterday.
By championing a stable euro and ECB independence, the FDP is treading ground already occupied by Merkel’s Christian Democratic Union. Merkel and Finance Minister Wolfgang Schaeuble, a CDU member, stressed the need for financial markets to set a currency’s value after French President Francois Hollande said last month that the euro can’t be allowed to fluctuate at the whim of investors.
As recently as March 3, French Industry Minister Arnaud Montebourg said that ECB President Mario Draghi needed to start signaling that the euro was “overvalued.” The euro should weaken to $1.10 to $1.15 to give “oxygen” to the European economy, Montebourg said in an interview with Europe 1 radio.
The FDP flirted with a euro-skeptic stance through 2011 as a caucus led by lawmaker Frank Schaeffler campaigned against euro-area bailouts during the crisis that emerged in Greece in late 2009. While Schaeffler’s drive was defeated in a referendum of the party membership, the split further undermined voter support already tainted by the party’s failure to deliver on tax-cut pledges and infighting which led to a change of leadership in 2011.
After taking a record 14.6 percent of the vote at the last election in 2009, FDP support has collapsed to between 4 percent and 6 percent in the six regular national opinion polls. The threshold to win seats in the lower house, the Bundestag, is 5 percent.
“Of course, the past few years have not been easy,” Roesler, who is also vice chancellor, told his party today, citing the financial crisis and turmoil in the euro region. All the same, with the lowest unemployment since reunification and the highest employment level, “Germany is doing well.”
As he spoke, Roesler was flanked by his party’s Cabinet ministers and grandees including Hans-Dietrich Genscher, the foreign minister under CDU Chancellor Helmut Kohl who helped negotiate German reunification in 1990.
Roesler is ranked last in a list of the 10 most important German politicians, according to an FG Wahlen poll for ZDF television released yesterday. Roesler’s predecessor as FDP leader, Foreign Minister Guido Westerwelle, placed ninth on the list. Merkel was first, followed by Schaeuble.
Only 14 percent of respondents said they thought Roesler could bring the party success, while 78 percent said he wouldn’t. A majority said that Rainer Bruederle, the former economy minister who is now the FDP’s chief whip, should lead the party into the election, even if only 25 percent said they thought he could deliver a “positive result.”
Mannheim-based FG Wahlen polled 1,345 voters on March 5-7. The margin of error was as much as 3 percentage points.
The FDP is “a party in vertical flight, doing its best to become redundant,” Carsten Brzeski, senior economist at ING Group in Brussels, said in an e-mail. “For Angela Merkel, all of this is not good news. She is caught in a liberal trap,” forced to try and help her traditional ally without alienating other potential coalition partners.