Like the coming of the messiah, depressed southern Europe nations await Angela Merkel’s likely victory in Germany’s September election with a mixture of hope and trepidation. Four years into the euro zone debt crisis, people in debt-laden Spain, Italy, Greece, Portugal and Cyprus are deeply worried that a third term in power for the conservative chancellor may only bring them more austerity and pain. The five countries that implemented Merkel’s anti-crisis recipes and cut spending massively in areas such as health and education, have been in or close to recession since 2008. Unemployment tops 27 percent in Spain and Greece. Their leaders, however, disagree. Confident that Merkel will tone down her budget cutting mantra and accept more burden-sharing within the euro zone, they are positioning themselves as close allies of Europe’s main paymaster.
“I think we will see a different Mrs Merkel after the elections,” said Cypriot President Nicos Anastasiades, echoing a view shared by most of his fellow southern European leaders.
In Greece, where crunch time for plugging a budget gap with a third bailout of the country starts at the end of September, hopes are high that debt issues can finally be sorted out after the German election, maybe through a new debt write-off.
In Italy and Portugal, where austerity has not yielded many positive results, policymakers believe Merkel will accept a more balanced model for managing the economic crisis if she wins.
In Spain, where banks were rescued with 42 billion euros of European money, expectations are that the chancellor will lean towards common euro zone debt issuance and accept a full-fledged banking union, unlocking credit in the recession-hit nation.