Merkel Rebuffs Accusation She Is Putting Off Crisis

German Chancellor Angela Merkel
German Chancellor Angela Merkel's Christian Democratic-led bloc has 40 percent support, with its Free Democratic coalition allies polling at 6.5 percent, according to an Allensbach survey. Photographer: Krisztian Bocsi/Bloomberg

Chancellor Angela Merkel dismissed suggestions that her government is waiting to disclose the cost of resolving the debt crisis until after the German election as fresh turmoil emerged in some indebted euro states.

Merkel, who is seeking a third term, was asked on ARD television whether Germany would “get the bill” for crisis resolution only after the election. Spain, Portugal and probably Greece need credit programs, she said.

“We’re not leaving anybody in the dark on what has to be done, and we’ll keep doing it along these lines,” Merkel said yesterday in an annual summer interview with the broadcaster.

Even with political turbulence in Spain and Portugal and risk of further unrest in Greece over planned firings of government workers, the German election still looms over decision-making in the euro region. With 10 weeks to go before the vote, polls over the weekend showed an increased likelihood that Merkel will secure a third term as chancellor when German voters go to the polls Sept. 22.

Merkel’s Christian Democratic-led bloc has 40 percent support, with its Free Democratic coalition allies polling at 6.5 percent, according to an Allensbach survey. That would be enough to win a majority in the lower house, the Bundestag.

In the ARD interview, Merkel exhorted voters to once again back the almost four-year-old coalition. She said she was confident that the pro-business FDP would exceed the 5 percent threshold required to win seats in the German parliament.

German Coalition

“I’m concentrating on my goal -- I want the Christian-liberal coalition to continue,” Merkel told ARD.

Elsewhere in the euro area, aid-recipient nations threatened to tip back into crisis as European leaders continued to struggle to set up a banking union.

Portugal’s 10-year bond yield jumped 61 basis points on July 12 to 7.51 percent -- up from 5.23 percent on May 21 -- as President Anibal Cavaco Silva called on the country’s two ruling parties and main opposition group to reach an agreement on “national salvation.” The factions are maneuvering to reach an agreement to complete Portugal’s aid program through June 2014 and then hold early elections.

Talks “should be concluded in a very short period of time,” Silva’s office said in a July 12 statement. Political uncertainty threatened to roil markets a year after the European Central Bank doused investor panic with its pledge to buy unlimited sovereign debt if the need arose.

Rajoy Allegations

In Spain, the largest nation in the 17-member single currency to have sought financial aid, the government faced increased pressure over allegations that Prime Minister Mariano Rajoy received illegal payments.

Rajoy’s ruling People’s Party on July 11 blocked an opposition request for the premier to address parliament over a report that he secured side payments while serving as a minister between 1997 and 1999. Rajoy, who denied similar allegations made by El Pais newspaper in January, has not commented on the latest report.

In Athens, Prime Minister Antonis Samaras’s government this week plans to push through a plan to fire 15,000 state employees and put another 25,000 on notice for possible dismissal in the revamped administration’s first parliamentary test. Civil servants held rallies around the country last week while unions have called a 24-hour walkout on July 16.

Samaras’s coalition was shaken last month after the departure of the Democratic Left Party following the closure of state broadcaster ERT. Samaras’s New Democracy party must now rely on its historic rival, the socialist Pasok party. The two control 155 of the Greek parliament’s 300 seats.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE