Merkel Lays Down Marker on Euro-Area Discipline for Re-Election

Chancellor Angela Merkel said she will stand firm against pooling Germany’s debt with the rest of the euro area and won’t raise taxes if voters elect her for another four years in the fall.

Presenting her Christian Democratic Union bloc’s campaign platform for the Sept. 22 election, Merkel said European Union countries should agree on ways to boost competitiveness, not “always look for the next pot” of aid money, and pledged to increase Germany’s economic strength.

“The first thing is to figure out how all of us become more competitive, how we can do our homework,” Merkel said in a speech to national Christian Democratic leaders in Berlin today. “We don’t just need more fiscal stability. We don’t just need more oversight over the banks.”

Merkel is running for a third term on her handling of the euro area’s debt crisis, which includes financial rescues for five of 17 euro countries and a commitment to preventing the joint currency’s breakup in return for austerity programs. The 127-page platform suggests more of the same if Germans re-elect her as head of Europe’s biggest economy.

Merkel maintained her rejection of joint euro-area debt issuance or pooling of existing debt, saying a government of the opposition Social Democrats and Greens would raise business taxes and put Germany on the hook for the euro area’s debt.

“That is the wrong way to go,” she said.

Poll Lead

While Merkel, 58, is the front-runner, polls suggest she may not be able to extend her Christian Democratic bloc’s alliance with the Free Democratic Party. The Christian Democrats and their Christian Social Union Bavarian allies have 41 percent and the FDP 4 percent, according to an Emnid poll of 2,755 people for Bild am Sonntag published yesterday. The opposition Social Democrats have 25 percent and the Greens 14 percent, meaning neither camp would have enough support to form a government if elections were held now. No margin of error was given.

The CDU platform says the euro is “indispensable” for German exports and defending the currency requires deficit reduction and balanced budgets across the EU. While backing procedures to restructure European banks, it rejects EU-wide deposit insurance.

National executives of the CDU/CSU, approved the program at a meeting in Berlin yesterday.

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