Illustration by Ryan Waller
Illustration by Ryan Waller

During the financial crisis of 2008, German Chancellor Angela Merkel met Nicolas Sarkozy for a private lunch in the Paris house of Sarkozy’s wife, Carla Bruni.

This gesture of friendship didn’t keep the French president from using a news conference shortly thereafter to harangue Merkel for refusing to supplement a 130 billion euro ($175 billion) spending program proposed by the European Union with an additional German spending program. When asked how their countries were reacting to the crisis, Sarkozy said, “France is working at it, while Germany is just thinking about it.”

Every newspaper in Germany interpreted this correctly as a huge slap in the face for Merkel. The German chancellor wasn’t fazed. She had already been pressured by U.S. President George W. Bush and U.K. Prime Minister Gordon Brown, along with Sarkozy, to open the German purse strings and jump-start the economy with a huge spending program when she was in Washington for the Group of 20 summit in November.

“Madame No,” as she was known in the European press for her unwillingness to pump tax money into the German economy, never reacted publicly to Sarkozy’s words. Instead, she took six weeks to think about an adequate reaction to the financial crisis. Only in January 2009 did Germany finally announce an economic program worth 50 billion euros.

In stark contrast to the hastily set up spending programs of the U.S., U.K. and France, the German one was well thought through and delivered: Germany registered far fewer job losses during the crisis, and it was the first Western country to come out of it.

More of Same

Such results only embolden Merkel to find her own solutions to problems. Europe should expect more of the same from her when European Union government leaders and heads of state meet in Brussels later this week. Last week, in an address to the German parliament, she likened Europe’s debt crisis to a marathon. “You can last the whole course if you’re aware of the magnitude of the task from the start,” she said. Her fellow European leaders no doubt hope she means this.

Merkel has been repeatedly called the most powerful woman in politics today. She probably is the person who will decide whether and how the euro will survive. But her decision will come at the last possible moment. Merkel is famous for being able to withstand pressure. She certainly won’t let herself be bullied by markets, banks or her fellow decision makers in Washington, Beijing, Paris or Brussels.

Her standard operating procedure was on display again on May 9, 2010. She began the day in Moscow where she was a guest of honor at the parade commemorating the 65th anniversary of the Russian victory in World War II. Later that day, Merkel was back in Berlin to witness her governing coalition suffer a devastating defeat in an important state election, and also to find out that Finance Minister Wolfgang Schaeuble wouldn’t be able to attend the Brussels summit on the first Greek rescue package in the euro crisis. He had taken ill and had been rushed to the hospital.

So the chancellor called Thomas de Maiziere, then the interior minister, interrupting his Sunday afternoon walk with his wife, and sent him to Brussels. European Central Bank President Jean-Claude Trichet had warned European heads of state that the euro could be doomed if they didn’t agree on a rescue package before Japan’s stock exchange opened at 2 a.m. European time. By the time de Maiziere reached Brussels, the euro area’s finance ministers had agreed on only one thing: Germany should shoulder the bill.

De Maiziere and Merkel spoke by phone on and off as midnight passed. Everyone was afraid of the opening in Tokyo, he told her. “Stay strong,” she replied. “There’re still two hours left.” By the time those two hours had passed, Merkel got what she had wanted from the beginning: The International Monetary Fund would be involved in bailing out Greece, and money for Greece would only be allocated on a pro-rata basis.

Intellectual Involvement

Merkel’s political experience has shown her that when she has the gall to wait until the last minute, she is often able to force the hands of others to get the deal she wants. Her engagement in the euro isn’t emotional, as was the case with former Chancellor Helmut Kohl or Schaeuble. Both of these men spent their formative years in West Germany after World War II and truly believe that the EU is the only instrument to pacify the continent.

Merkel’s involvement is an intellectual one, colored by her analysis of how the world will look in 20 to 30 years. She frequently talks about power shifting from the U.S. and Europe to Asia and the other emerging markets. She is aware that only a united Europe with a dynamic economy stands a chance of playing a significant part in the new arrangement.

“If the euro fails, Europe will fail,” she often says. And that’s the strongest signal she’s likely ever to give of her intent to save the common currency.

(Margaret Heckel is a journalist and author of a best-selling German-language biography of Angela Merkel. The opinions expressed are her own.)

To contact the writer of this article: Margaret Heckel at heckel@margaretheckel.de

To contact the editor responsible for this article: David Henry at dhenry2@bloomberg.net