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German Opposition Continues To Support Eurobonds

I’m not going to pretend to be an expert in German politics, but I continue to be struck by the contrast between the widespread view in the U.S. that “eurobonds” are politically toxic in Germany and what the basic facts seem to be. The lay of the land in the Budestag, as I understand it, is that Chancellor Angela Merkel, who’s always been regarded as a moderate, is facing a possible revolt from the right-wing of her CDU/CSU party and her (grossly unpopular) FDP coalition partners over what Germany’s already agreed to do. But both the Greens and the SPD are prepared to support her initiatives and are in fact pushing her to do further:

Merkel insists that she will deliver her majority in favour of the deal. If more than 21 supporters refused to back the deal, she would be forced to rely on the opposition SPD and Greens, both of whom are in favour. That would ensure German approval for the eurozone reform package, but it would be politically devastating for the chancellor not to be able to count on majority support from her own ranks, and could cause the government to fall. Sigmar Gabriel, SPD chairman, on Tuesday promised his party’s support once again, and argued that the German government should go further, and allow eurozone bonds to be introduced, ensuring easier borrowing for the most debt-strapped eurozone member states.

It does in fact seem to be the case that German politics are standing in the way of a more aggressive response to the debt crisis. But the mechanism is different here from the one that’s normally posited. The opposition parties, which are outpolling the government, are pushing for a more aggressive response. But the further-right elements of the governing coalition are hamstringing Merkel, who’s appeasing them because she doesn’t want to cause the coalition to collapse precisely because she thinks she would lose an election.

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