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Germany’s Merkel Faces Big Challenges Over Bailouts, Libya, E. Coli

June 8, 2011 at 12:00 AM EDT
As German Chancellor Angela Merkel visits the U.S., her nation -- the richest in Europe -- is facing some daunting challenges. Ray Suarez reports.
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JUDY WOODRUFF: Next, the leader who will have the decisive voice in future European financial rescues calls on President Obama.

Ray Suarez has that story.

RAY SUAREZ: The German chancellor’s red carpet visit to the White House came at a critical time for the European power. Angela Merkel’s country, the biggest and richest in Europe, is dealing with the European debt crisis that threatens the very future of the common currency, as well as a deadly E. coli outbreak, and conflict with its European and U.S. partners over action in Libya.

And while President Obama gave the chancellor a warm welcome, he also delivered blunt words at a joint news conference about the European economy, mindful that the Greek debt crisis last spring helped stall the U.S. economic recovery.

PRESIDENT BARACK OBAMA: What we’ve done is to say to Germany and other countries that are involved, we will be there for you. We are interested in being supportive. We think that America’s economic growth depends on a sensible resolution of this issue. We think it would be disastrous for us to see an uncontrolled spiral and default in Europe, because that could trigger a whole range of other events. And I think Angela shares that same view.

RAY SUAREZ: But Merkel has her own political problems. Her coalition parties have lost local elections. Voters are angry that Germany is expected to pay for repeated rescues of what they see as irresponsible European economies, according to Charles Kupchan of the Council on Foreign Relations.

CHARLES KUPCHAN, former National Security Council official: She faces a lot of opposition in the street to the idea that Germany should be bailing out Greece, Portugal, Ireland. The Germans are saying, why is this our problem? We’re running a tight ship. Why shouldn’t they?

RAY SUAREZ: Germany’s foreign minister, Guido Westerwelle, who traveled to Washington with Merkel, concedes euro bailouts are a tough sell at home.

GUIDO WESTERWELLE, German foreign minister: To be very frank, it is a difficult discussion at home, because we have many people in German who ask, why we should spend so much money for this or that country?

But we think it is in our own national interest, because our economic strength is depending on our export and our international network. And, therefore, we need the single market in the European Union. That is in the interest of all member states, and especially in the interest of Germany. But, I mean, it will be hard work.

RAY SUAREZ: Merkel’s visit also comes on the heels of a German break with the U.S. and its strongest European allies over Libya.

Germany chose to abstain from the U.N. resolution backed by France and Britain authorizing NATO intervention, and didn’t offer any military help. But the chancellor insisted yesterday that Germany supports the goal of getting rid of Moammar Gadhafi, and a democratic Libya.

ANGELA MERKEL, German chancellor (through translator): It is our joint will that this NATO mission is successful. This is important for the people in Libya, but it’s also important for NATO, for the alliance at large. And here we have one heart of allies that beats with the other allies.

RAY SUAREZ: And the foreign minister says his country sees itself as a more important player down the line.

So, Germany is contemplating a big role in post-Gadhafi Libya?

GUIDO WESTERWELLE: I think so. I think so. Well, German — the German economy is very well-recognized in North Africa, and especially in Libya. We have many companies there. And the Libyan people know that Germany is a reliable country and that our — our strength of the economy could be a very important part for their rebuilding. And we will do so.

RAY SUAREZ: But Kupchan believes Merkel made a misstep with the approach to Libya.

CHARLES KUPCHAN: I think if Merkel could have a do-over, she would have played Libya differently. I think she’s paid a price for it at home and paid a price for it abroad.

The Americans, the European partners of Germany have raised their eyebrows about this decision. And she was quite isolated at home.

RAY SUAREZ: There have also been questions over Merkel’s leadership when, in the aftermath of the Fukushima nuclear disaster in Japan earlier this year, she first decided to phase out nuclear power, and then, just last week, doubled down on that decision, announcing Germany would get rid of all nuclear reactors by 2022, even though nuclear provides almost a quarter of the country’s electricity.

And there has been more trouble in just the past week, when the German government mistakenly blamed Spanish produce, then homegrown bean sprouts as the cause of a deadly E. coli outbreak. So far, at least 25 people have died, and more than 2,500 have gotten sick.

But those issues were largely downplayed at the White House events. The German chancellor is not a head of state, but the White House not only honored her with the full pageantry of a state dinner, but with the nation’s highest civilian honor as well.

MAN: Presidential Medal of Freedom to Dr. Angela Merkel.

RAY SUAREZ: A child of the Cold War who grew up in East Germany, Angela Merkel joined a select few foreign dignitaries who have received that award at the state dinner in the Rose Garden.

BARACK OBAMA: Tonight, we honor Angela Merkel not for being denied her freedom, or even for attaining her freedom, but for what she achieved when she gained her freedom. Determined to finally have her say, she entered politics, rising to become the first East German to lead a united Germany, the first woman chancellor in German history, and an eloquent voice for human rights and dignity around the world.

RAY SUAREZ: Mr. Obama said he hopes to make a return trip to Berlin as president.

At the end of this visit, though, both leaders said their meetings helped strengthen the German-American relationship at a very challenging time.