Merkel is optimistic the crisis will strengthen GermanyImage: picture-alliance / dpa
March 11, 2009
The worldwide economic downturn has hit German companies like Opel and Hypo Real Estate hard. But Chancellor Angela Merkel is trying to convince worried Germans that the country will be able to weather the storm.
Germany is experiencing the worst economic crisis in 60 years, said Chancellor Angela Merkel.
"We have never had this kind of a recession, taking place at the same time in all countries of the world, since World War II," Merkel said in an interview with the mass-market daily Bild published Wednesday, March 11. "But I'm certain that Germany is better equipped than most countries to master this crisis."
Merkel pointed out that, at the end of 2008, Germany enjoyed its highest level of employment in decades and its first balanced national budget in years.
This, Merkel argued, meant that the country would not only be able to cope with the current economic difficulties but also use the opportunity to make improvements.
"We want to come out of this crisis stronger than we went into it," Merkel said.
She also cited prominent examples from German history.
"This year, we're celebrating 60 years of the Federal Republic of Germany and 20 years since the fall of the Wall," Merkel said. "Thanks to our social market economy, we managed to rebuild the country after the war and tackle German reunification after 1989."
Clock is ticking for HRE
Merkel also defended plans by Finance Minister Peer Steinbrueck to nationalize troubled mortgage lender Hypo Real Estate (HRE). It's a move that has been criticized by many of the chancellor's fellow conservatives in her party of Christian Democrats.
Steinbrueck, a member of Merkel's coalition partner the Social Democrats, has drafted a draft law allowing the nationalization. It is scheduled to come up for a parliamentary vote later this month.
"The excesses of the markets, which triggered the crisis, force us to cross over boundaries and do things which we otherwise wouldn't," Merkel said.
But the Sueddeutsche Zeitung newspaper reported on Wednesday that HRE's time is running out. The bank's supervisory board is set to review the books on April 24 and is expected to find a loss of several billion euros.
The accounts must be balanced for the bank to prove it has enough equity and stave off nationalization. Various media sources have speculated that the lender may require a capital injection of 10 billion euros ($12.7 billion).
At the moment, HRE is only staying solvent because of some 102 billion euros worth of mainly government-provided guarantees, leading many to believe a government take-over is almost inevitable.
But Merkel reassured critics that any acts of government intervention will be temporary,
"Wherever the state has to become a shareholder in a bank, it will pull out again as soon as this is possible," she said.
Opel's future dependent on clarity about GM
Meanwhile, Merkel said the government would not get involved in troubled carmaker Opel until the future of its parent company GM had been clarified in the US.
"We will support companies like Opel if our help can ensure a good future for these companies and not only just go up in smoke after a company failed in the market," Merkel told the Bild.
She said the German government would only help those companies whose "benefit for all people in Germany is greater than its damage."
"State aid can only act as a bridge for the problems of the financial crisis, after which companies must be successful in the market under their own power," Merkel said.
The German government has been burned in the past by troubled companies -- for example, several years ago, when Berlin pumped funds into construction group Philipp Holzmann only to have it declare bankruptcy shortly thereafter.