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Angela Merkel, Chancellor of Germany

Monday 17 January 2011 – by Andrew Hickley


The ‘Iron Frau’ has been at the centre of the biggest discussions, decisions and disagreements of European financial governance over the past year, placing her fifth in the GFS Power 50.

Controlling Europe’s most influential and fastest recovering economy, Merkel’s eventual support was vital in providing a bailout to the endangered Greek economy.

After a two month standoff, she was finally persuaded to lend German money to save the banks, though the dithering did little to help her politically – as the CDU-led coalition lost control of the parliament’s upper house in May with voters protesting against the use of taxpayer funds being used to prop up another country.

A combination of this inability to form a universal European-wide decision and the shock banning of naked short selling led to criticism of the very dynamics of the eurozone.

Critics argued that Merkel’s seemingly autonomous decisions were a key detractor from Europe’s ability to “sing from the same hymn sheet”, though a close friendship on the policy front has been cemented with French president Nicolas Sarkozy.

Over the past year, she has teamed up with France to propose a watering down of EU governance policy, brushing aside issues of automaticity when proposing that finance ministers should be in charge of the finances of states that disobey the stability and growth pact, in a move derided by more northern member states that wanted to stick with tougher punishments.

Related articles:
Bowles slams ‘holier than thou’ Merkel
Merkel prepared to bargain with Greece
Ireland will reject corp tax hikes
France and Germany reject euro bond
Germany cools e-bond talk as mins meet

Merkel’s boldness in standing against other European countries has made her unpopular in many areas – demonstrated again through a firm rebuff of the ‘eurobond’ backed by Eurogroup president Jean-Claude Juncker, which he argued could finally let the bloc escape the last effects of recession.

As stubborn as she has been unpredictable, Merkel also spent the back-end of the year campaigning for a European-wide system of bail-ins which would force bondholders to bear the brunt of future bank failures – an area she found success in, with the popular proposal mooted in the first week of 2011.

She found herself at the centre of one of the regulatory surprises of the year with a ban on naked short-selling imposed out of the blue between 19 May 2010 and 31 March 2011.


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