Germany risks isolation in EU, warns ex-chancellor

BERLIN Sun Dec 4, 2011 9:38pm IST

Former German Chancellor Helmut Schmidt of the Social Democratic Party (SPD) closes his eyes as he listens to a speech at SPD party convention in Berlin, December 4, 2011 REUTERS/Fabian Bimmer

Former German Chancellor Helmut Schmidt of the Social Democratic Party (SPD) closes his eyes as he listens to a speech at SPD party convention in Berlin, December 4, 2011

Credit: Reuters/Fabian Bimmer

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BERLIN (Reuters) - Former Social Democrat Chancellor Helmut Schmidt urged Germans on Sunday to soothe what he said were growing fears of German dominance in Europe and come to the rescue of debt-stricken euro zone partners.

In an hour-long speech to a party conference, the chain-smoking 92-year-old said Berlin risked isolation if it tried to impose its ideas on European partners. Instead, Schmidt argued, Germany should embrace further European integration.

"If we let ourselves be seduced into taking on a leading role in Europe, our neighbours will brace themselves against us," Schmidt said from a wheelchair to a packed hall of opposition SPD members.

"We need to show heart towards our friends and neighbours. And that is especially the case for Greece," he said.

Taking aim at conservative Chancellor Angela Merkel, he said "German national muscle-flexing" was damaging the national interest.

"Considerable doubt has emerged in the last few years about the steadiness of German politics," he said, adding there was "growing concern about German dominance".

Talk of a euro crisis was "idle gossip" by politicians and the media, he said.

Schmidt, who regularly tops national polls of respected politicians, was West German chancellor from 1974 to 1982.

His speech, greeted by a standing ovation, comes just days before a crunch summit of EU leaders who are struggling to find ways to regain investors' confidence in the euro.

Merkel, initially blamed for exacerbating the debt crisis by acting too hesitantly, has doggedly refused to agree to steps that could cost German taxpayers more and fuel inflation.

To the chagrin of countries such as France and Britain, she opposes both a greater role for the European Central Bank in helping debt-ridden euro zone members and common euro zone debt issuance.

Instead, she insists the only way out of the crisis is German-style budget discipline.

JACKBOOTS

To that end, she is pushing EU leaders to agree to new, binding rules giving Brussels greater control over national budgets and automatically punishing states that breach deficit rules. She also wants a financial transaction tax.

Her arguments have triggered accusations that Europe risks turning German. That impression was strengthened when her party ally Volker Kauder said "German is being spoken in Europe."

That unleashed a wave of headlines about jackboots and a "Fourth Reich" in countries including Britain. France is also bristling at Germany's new role in Europe which stems from its economic might.

Conservative German newspaper Die Welt ran an editorial last week arguing that Germany had become as isolated as the U.S. was during the 2003 invasion of Iraq.

Since World War Two, Germany has shied away from showing political muscle internationally to match its economic power due to its Nazi legacy.

Schmidt said Germany could not be a normal country in the foreseeable future due to its "terrible and unique historic burden." He called for further European integration if the continent were to avoid being sidelined.

The SPD has taken a more pro-European stand in the euro zone crisis and its leaders back the idea of euro bonds.

Schmidt has backed former Finance Minister Peer Steinbrueck as the SPD's candidate to fight Merkel in the 2013 election. The party's leaders are due to hold their major speeches on Monday.

(Reporting By Madeline Chambers; Editing by Alessandra Rizzo)

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