Merkel rival urges more help for Greece, lags in polls

BERLIN Sun Sep 30, 2012 8:45pm BST

1 of 2. Former German Finance Minister and Social Democrat (SPD) member Peer Steinbrueck gestures during a speech at a North Rhine-Westphalia SPD party convention in the western German city of Muenster September 29, 2012.

Credit: Reuters/Ina Fassbender

BERLIN (Reuters) - The main opposition's candidate for German chancellor, Peer Steinbrueck, laid out a gentler stance on Greece than Angela Merkel on Sunday, saying Athens needs more time to reform and should not be thrown out of the euro zone.

The opposition Social Democrats (SPD) named Steinbrueck on Friday as their candidate for chancellor, launching a year-long election campaign sure to be dominated by the euro zone crisis and its growing costs for German taxpayers.

Opinion polls have shown Germans are opposed to throwing more money at countries like Greece but feel broadly confident in Merkel's handling of the crisis, making it hard for the opposition to attack her on Berlin's biggest policy challenge.

Steinbrueck, who served as finance minister in a coalition government led by the conservative Merkel in 2005-09, told Die Welt Am Sonntag newspaper Germans should be ready to provide aid to Greece for some time to come.

"In the case of Greece, we cannot tighten the screws any further. The Greeks must stand by their commitments, but we must also give them more time," he said.

"And the chancellor must finally tell the German people the truth: Greece will not be able to borrow money on the capital markets in the coming seven or eight years. We will have to help it until then," he added.

Merkel's government has been publicly cool on the idea of giving Greece more time or providing further international aid.

Greece, now in its fifth year of recession and kept afloat only by international loans, was supposed to return to international capital markets after its second bailout programme ends, but many economists now say it will need a third bailout.

Steinbrueck said the SPD's support in parliament for a third bailout for Greece would depend on the conditions attached, adding that a Greek exit from the common currency would have "devastating reverberations".

The budget spokesman for Merkel's conservatives in parliament, Norbert Barthle, came out strongly against a third Greek bailout in comments to be published in Monday's edition of the Tagesspiegel newspaper.

Barthle was quoted as saying the Greeks had not yet used even half of the funds available under the two earlier bailouts.

TRAILING MERKEL

The SPD has broadly backed Merkel's efforts to tackle the nearly three-year-old euro crisis but has also accused her of lacking boldness and vision and has called for some form of debt mutualisation, an unpopular stance among jittery German voters.

"Mr Steinbrueck represents views today that a majority in Germany do not want - the introduction of eurobonds and the creation of a debt union in Europe," Volker Kauder, parliamentary floor leader for Merkel's Christian Democrats (CDU), said in the Bild Am Sonntag newspaper.

An Emnid opinion poll published in Bild showed Merkel's conservatives 10 percentage points ahead of the SPD with 37 percent. Nearly two thirds of respondents also said they did not expect Steinbrueck to replace Merkel as chancellor next year.

But Steinbrueck has a chance to form the next government if Merkel's current coalition partner, the liberal Free Democrats, fail to clear the 5 percent threshold to enter parliament - or they get in but then join a 'traffic light' coalition with the SPD and Greens, leaving the conservatives out in the cold.

The Spiegel weekly said Steinbrueck - who has ruled out joining a second coalition led by Merkel - might try to focus in the election campaign on domestic issues such as social justice.

"He knows it makes little sense to attack Merkel on euro policy. He knows that Germans generally trust Merkel's crisis management," the magazine said.

Some analysts said there was not really much difference between Merkel and Steinbrueck on the euro crisis but said the chancellor had proven skilful at carrying public opinion with her by only yielding ground reluctantly and under duress.

"Merkel can always say she is the safest pair of hands in the euro crisis and the most likely to be a tough negotiator," said Gunnar Beck, an expert on German politics and EU law at the University of London.

Despite their sharp criticism of Greece's failure to implement tough reforms, Merkel and senior ministers in her centre-right coalition have also recently stressed the dangers of pushing Athens out of the euro zone, he noted.

"Throughout the crisis, Merkel has been much more cautious than the opposition parties, the SPD and the Greens, who early on called for unpopular measures such as eurobonds and bailouts," said Beck.

"Steinbrueck has a good understanding of economics... He is by far the best candidate the SPD could muster to lead them but he is unlikely to beat Merkel."

(Reporting by Gareth Jones; Editing by Patrick Graham)

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