German Chancellor Angela Merkel appealed to business leaders at the World Economic Forum to give policy makers the space they need to tackle the debt crisis, pledging that Europe will pull together and restore confidence.
“I would like to ask all of you who are here as the representatives of the business community” to recognize how democratic governments work and to “please take the long-drawn- out processes with a degree of acceptance”, Merkel said in a question-and-answer session after opening the forum today in Davos, Switzerland.
Merkel’s comments underscore her shift in approach to taming the debt crisis now in its third year, having ditched rhetoric about conducting a “battle” between markets and politicians. At the same time, Merkel rejected adding any new money to fight the crisis and reiterated the need to curb debt and deficits while boosting competitiveness as the main thrust of her strategy to keep the 17-nation Euro area together.
“Europe will become more attractive once we have conquered this crisis, and I’m absolutely convinced that we will be able to master this crisis,” she said. European leaders will discuss measures to raise competitiveness and create growth and jobs at their Jan. 30 summit and again in March, she said.
Merkel was speaking after she held a private meeting with chief executive officers who are members of the World Economic Forum’s International Business Council. Among those to attend were David Rubenstein, co-CEO and co-founder of private equity firm Carlyle Group, and JPMorgan Chase & Co.’s Jamie Dimon. U.K. Prime Minister David Cameron will speak to the same group Thursday, Rubenstein said.
“She is one of the most impressive government leaders,” Cisco Systems Inc. Chief Executive Officer John Chambers, said in an interview after Merkel’s speech, “she was even more impressive” in the private session.
In her speech, Merkel said that calls to increase the size of Europe’s “firewall” against the debt crisis go too far, and place the credibility of the rescue measures into question.
“Some say that it has to be double the size and then if that’s not big enough, others will say it has to be three times as big,” Merkel said. “What we don’t want is a situation in which we promise something that we can’t back up.”
“If Germany, as the representative of all European countries, promises something that can’t be kept in the event of a harsh attack by the markets, then Europe would have a wide- open flank” she said.
Merkel said that European countries must move closer together and cede more powers to the European Union.
“Europe must be turned into a Europe that works,” she said. “We have to be ready to transfer more competencies to Europe.”
Governments won’t be able to close budget deficits “in one go,” though leaders are willing to take the time required to scale back debt, she said. “It will take time to overcome these deficits; we’re determined to do that”.