A new Merkel in the making

When Germany's Chancellor Angela Merkel arrives in China today it will be her second visit in a year. The visit takes place against the backdrop of forecasts of a difficult September for the eurozone and Germany's desire to sustain its exports to the lucrative China market. Germany also needs Chinese investments, especially in the bonds it has issued to prop up the euro.

What is interesting about the visit to Beijing is that Merkel spent last week bolstering her political position both at home in Germany and in the eurozone. She sent out a clear message to her ministerial colleagues and political allies that the time had come to halt all loose talk about "Grexit" — the exit of Greece from the eurozone. She then assured visiting Greek Prime Minister Antonis Samaras that Germany remained committed to Greece's membership of the eurozone, even while reminding him that Greece has to do more to regain economic competitiveness and secure fiscal stability.

While it required political courage to take such a tough stance, taking the tough stance itself would help strengthen her position at home and boost her leadership across the eurozone. There is now no doubt that Merkel will work to preserve both the European Union and the eurozone and is willing to commit Germany to that cause. If she succeeds, she will emerge as the first great leader of Europe in the 21st century.

This stance suggests that Merkel appreciates the essence of the argument that Francois Heisbourg, from the International Institute for Strategic Studies (IISS), put forward in a recent essay: a federal arrangement is not thrown asunder because of problems at the periphery but because of "failure at the heart of the system". Merkel has come to terms with the fact that Germany and its chancellor are at that centre and so must act to preserve the unity of the whole. The eurozone, if not the EU, cannot be saved in Greece or Finland if it cannot be saved in Germany and if Germany does not remain committed to that objective. This is precisely what Merkel has defined as her political goal for the rest of her term.

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