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New man at the ECB, SPD Ukraine talks, Covid demos
The week in brief
This week is going to bring some interesting developments on various key fronts in German politics.
Germany’s new man at the ECB
The European Central Bank is meeting on Thursday to decide on whether to combat inflation by announcing a hike in interest rates. Pressure has grown on the Eurozone central bank to react since the Fed announced similar measures for the US last week.
It will be the first time that new Bundesbank head Joachim Nagel takes part alongside central bank heads from the other 18 Euro states. As a reminder, his predecessor Jens Weidmann unexpectedly announced his resignation last autumn. Although Weidmann said he was moving on for private reasons, his exasperation at the ECB’s expansive monetary policy was no secret.
With inflation rising sharply in Germany, the credibility of the ECB - which long said that the prices rises were a temporary phenomenon - is being called into question. Monetary hawks fear that southern Europe will block a rise in interest rates so as not to raise the cost of paying back their mountainous debts.
Der Spiegel sums up the Catch-22 that Nagel is walking in on:
“The ECB is walking a fine line: it must prevent both runaway inflation and a renewed sovereign debt crisis. If individual countries were to slide into depression again - as Greece and Italy did in the course of the financial and euro crisis - the economic and political consequences would become incalculable. On the other hand, permanent inflation and government financing by the central bank would erode support in the northern Euro countries. A compromise is needed between the two extremes. It is possible, but it won’t be easy.”
Nagel is a well known hawk on monetary policy and his nomination as Bundesbank boss was applauded by economists who are urging Germany to lead a north European push for price stability.
This afternoon, the Federal Statistics office will publish its inflation figures for January. Another five before the point will amp up the pressure for Nagel to make a strong impression on Thursday.
SPD to hash out Russia stance
Key leaders inside the Social Democrats are meeting today for confidential talks aimed at reaching a common position on the Ukraine crisis. The talks have been organised by new party leader Lars Klingbeil after the party’s dithering on Ukraine has become a source of international embarrassment.
Former party leaders Gerhard Schröder and Sigmar Gabriel have both weighed in from the side lines, offering very different advice. Schröder, who is on the board of Russia’s state energy company Rosneft, has accused Kiew of “sabre rattling” and is avowedly opposed to arms deliveries to Ukraine. Gabriel, leader of the SPD between 2009 and 2017, has said that the SPD should be prepared to breach taboos, this implicitly supporting arms deliveries.
Those two positions highlight the deep divisions within the party between old-school accommodationists, who see Russia as having a right to a buffer zone, and transatlanticists, who are pushing for a more values-based foreign policy.
Klingbeil claims that the party is unified in its opposition to arms deliveries. Thus, Monday’s meeting likely to be more about communicating a unified line than any great change in strategy.
The ambivalence over the crisis is, by the way, not a purely left-wing phenomenon. The business paper Handelsblatt seems to publish a new article every day suggesting that the US is looking to profit from it by selling Germany shale gas.
Pointing to the fact that Germany’s gas reserves have already dropped to the level they are normally at in late April, Handelsblatt comments in its Monday newsletter that: “the bad way out of this is based on shale gas, which the Americans would love to sell us as a dollar-adorned sign of Western solidarity should Gazprom deliveries through the Ukraine stop.”
Escalating tensions at Covid protests
Every Monday evening, opponents of Covid restrictions have been taking to the streets for Spaziergänge (walks). These are often unregistered but are in essence demonstrations.
If they would all walk together, their numbers would be huge. In Baden-Württemberg alone, some 80,000 took to the streets last Monday at 400 different locations. The Spaziergänge began after courts started banning registered anti-lockdown protests. The courts justified the bans by saying that demonstrators weren’t observing social distancing rules.
Ostfildern, a town in Baden-Württemberg, has now taken the scarcely believable step of threatening to prevent any further unregistered demos through “force of arms”. Town mayor Christof Boley (SPD) said he had been left with “no choice” due to the repeated breach of the rules.
Baden-Württemberg state interior minister, Thomas Strobl, has also upped the rhetoric against the demonstrators saying that “respectable people don’t go to banned demonstrations.”
The draconian approach in B-W has met with criticism at the federal level.
Jan Korte, parliamentary secretary for Die Linke, told Die Welt that the threat to use arms was “unlawful, completely disproportionate and characterised by an authoritarian understanding of the state. A case for the courts.”