“There is a margin of flexibility in the application of the Stability and Growth Pact”. These few words uttered by the German Chancellor's spokesman were enough, Steffen seibert, to speak in Italy of a "historic turning point". Anyone who uses triumphal tones, and speaks of the end of German-style austerity, may not know the "Merkel Method". Because in hindsight this is what it is about. A simple application of that political method which made Angela Merkel the only re-elected leader during the crisis.
This time the goal is to reach an agreement with the European socialists and the other heads of state and government on the appointments and work program for the next five years of European government. Again, Merkel tries to achieve her goal by combining pragmatism and strategy, as it has in the past. For example, when he had to find a mediation between the ultra-rigorist position adopted by the president of the Bundesbank, Jens Weidman, with regard to the decision taken by the ECB to implement the new instrument for the purchase of short-term securities, the so-called OMT. On that occasion, the chancellor's goal was clear: on the one hand not to create rifts with the German central bank and on the other to find effective solutions to calm the markets.
He therefore decided to publicly support the position of the German central bank, stating that "the Bundesbank is the first shareholder of the ECB and therefore does well to make its voice heard". A purely formal declaration given that within the ECB each member has the same weight, i.e. one vote. Not without political weight, however. Because reading between the lines, it is clear that Merkel wanted to reiterate the concept, very dear to her, that the room for maneuver must be found in compliance with the agreed rules. In other words, the chancellor supported Weidman's position, in the awareness that with his support she would not have changed the rules and therefore would not have harmed the independence of the ECB.
In Europe, Angela Merkel follows the same logic. Her aim is to bring the European socialists to her side and to calm the anti-European thrusts. Again, use a statement that appears to anticipate a significant opening but, in fact, adds little. Greater flexibility on the timing of the reduction of the public deficit has already been granted to countries such as France and Spain which had abundantly exceeded the 3 per cent threshold. Furthermore, margins of flexibility are provided for by the Treaties, not least by the Fiscal Compact. In assessing compliance with the rules on debt sustainability, one must, in fact, take into account both the existence of "exceptional circumstances" such as periods of severe economic recession and that of "relevant factors" such as the structure of debt maturities, the guarantees given and any liabilities related to population aging and private debt.
On balance, with the statement of her spokesperson, the chancellor does not seem to have made a major breakthrough in terms of fiscal discipline. The invitation is to exploit what already exists, in compliance with the reference regulatory framework. There is no intention to change the rules, which remain essential because, in his view, there is no sustainable growth without public finances in order. After all, from the German point of view, there is no choice between growth and rigor: growth is a goal, rigor is a tool. Putting them on the same level makes no sense.
In conclusion, in applying the Merkel Method, the chancellor also demonstrates a great tactical sense, like a chess player, capable of winning with just a few moves. In a few weeks, in all likelihood, Martin Schultz will be elected to the presidency of the European Parliament and Jean-Claude Junker will be nominated as head of the European Commission. Two successes that Angela Merkel brings home at a low price, simply by stating the obvious.
