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Merkel Third Term Offers Vision to Keep Cameron’s U.K. in EU

With opinion polls suggesting Chancellor Angela Merkel will win a third term in Sept. 22 elections, she’s likely to air proposals to return some commission powers to national capitals and streamline others once the vote is out the way, according to officials and lawmakers in Berlin and Brussels. Photographer: Thomas Frey/AFP via Getty Images
With opinion polls suggesting Chancellor Angela Merkel will win a third term in Sept. 22 elections, she’s likely to air proposals to return some commission powers to national capitals and streamline others once the vote is out the way, according to officials and lawmakers in Berlin and Brussels. Photographer: Thomas Frey/AFP via Getty Images

Sept. 5 (Bloomberg) -- German Chancellor Angela Merkel is preparing a push to curtail the reach of European Union rulemakers, aligning her with British Prime Minister David Cameron’s fight to claw back powers.

“Regulation is being overstretched,” Michael Link, the European affairs minister from Merkel’s Free Democrat coalition partners, said in an Aug. 26 interview in Berlin. Germany wants to shift “the focus of the commission to fundamental policy areas such as energy and the internal market.”

Merkel and German Finance Minister Wolfgang Schaeuble have grown increasingly unhappy with the Brussels-based commission, the EU’s executive arm, over its handling of the euro crisis. The latest conflict area surrounds plans for a Europe-wide bank restructuring fund that could see German taxpayers footing the bill for bailing out foreign banks.

The German chancellor has softened her initial rebuff of Cameron’s call for a shakeup of the bloc. With opinion polls suggesting she’ll win a third term in Sept. 22 elections, she’s likely to air proposals to return some commission powers to national capitals and streamline others once the vote is out the way, according to officials and lawmakers in Berlin and Brussels. The intention would be to put economic growth at the top of the EU agenda, in line with Cameron’s stated aims.

“Merkel’s playing a new tune,” Markus Ferber, a European Parliament lawmaker from Merkel’s Christian Social Union allies, said in a telephone interview yesterday. “It’s about keeping the U.K. in the EU by returning some commission powers and that overlaps with Germany’s aim to forge a stronger euro area.”

Referendum Plan

Cameron said in January he wanted to renegotiate the U.K.’s membership of the EU and hold a referendum on the results by late 2017. While he’s yet to spell out precise demands, lawmakers said they want powers to be returned to national capitals to include justice, policing and worker protections. He said he wants the 28-nation bloc to focus on its single-market aspects to help growth.

The repatriation of powers is “a sensible idea,” Merkel’s spokesman, Steffen Seibert, said in an interview in Berlin yesterday, citing a need to look again at the “high degree of concentration of regulation” in the hands of the commission. He noted that the Netherlands is another country with similar aims.

Dutch Foreign Minister Frans Timmermans set out a plan in June to take back some powers for governments under the slogan “European where necessary, national where possible.”

‘Across Europe’

“The importance of considering this is something that resonates across Europe,” Cameron’s spokesman, Jean-Christophe Gray, told reporters in London today, when asked about Merkel’s move. “It highlights a challenge that faces lots of EU countries and a case the prime minister has been at the forefront of making.”

Merkel sees an overlap between Cameron’s broad demands and her plan to make EU states -- above all euro members -- more competitive and committed to budget discipline, Carsten Brzeski, an economist at ING Groep NV in Brussels, said in an interview Aug. 30. Even so, “Merkel expects the commission to put up resistance to having its wings clipped.”

German disgruntlement over the commission’s record intensified this year with spats over chemical coolants in car air-conditioning as well as the plans for a banking union. EU Financial Services Commissioner Michel Barnier said in an interview on Aug. 29 he has “no plan B” in his proposal for a single system for handling failing banks.

Radio Comments

Merkel hinted last month at her readiness to align with Cameron. “Do we need more competencies for Europe or should we give some back?” she said on Deutschlandfunk radio on Aug. 13. “We’ll talk about this after the parliamentary election.”

In her initial response to Cameron’s speech in January, she said the U.K. must realize that “other countries have their own wishes and we always have to come to a fair compromise in the end.”

Merkel’s radio comments this month marked her first explicit backing for returning powers from Brussels, EU research group Open Europe said in a blog. “Merkel is convinced that Cameron is one of the few EU leaders who understands the ‘global race’” for economic growth, it said.

Chris Heaton-Harris, who helped found the “Fresh Start” group of Conservative lawmakers who’ve been co-opted by Cameron to negotiate on his behalf, said they’d found Germany very supportive of their ideas.

‘Rapid Focus’

“The Germans have been amazingly helpful. They’ve gone out of their way to be helpful. I sense almost a coalescing of our positions,” said Heaton-Harris in an interview Aug. 28. “When Merkel gets re-elected, there’s going to be a quite big and rapid focus on achieving the goals she’s set for Europe.”

Tory lawmakers “found that small business people in Germany have exactly the same gripe about European red tape as every small business in Britain,” he said.

Germany’s seeking to push changes to the way the commission does its business without recourse to legal changes that would require unanimity among the EU’s 28 members. “There’s no plan for a treaty change,” said Link of the Foreign Ministry.

Intra-government cooperation forged in the euro debt crisis may be a “blueprint” for pushing Germany’s agenda, said Ferber.

Still, in seeking the changes, Merkel won’t have it all her way, said Brzeski. “Sparks are inevitable,” he said in a telephone interview. “British politicians shouldn’t be too optimistic about Merkel’s plans.”

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To contact the reporters on this story: Brian Parkin in Berlin at bparkin@bloomberg.net; Birgit Jennen in Berlin at bjennen1@bloomberg.net; Robert Hutton in London at rhutton1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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