By Sarah Marsh, Thomas Escritt and Matthias Williams
BERLIN (Reuters) -Chancellor-in-waiting Friedrich Merz urged sceptical lawmakers on Thursday to back his proposals for a massive increase in state borrowing, framing them as a test for Germany to stand tall on the world stage and safeguard European security.
Merz is in a race against time to persuade the outgoing parliament to approve a 500 billion euro fund for infrastructure and sweeping changes to borrowing rules to revive growth and ramp up military spending in Europe’s largest economy.
The conservative leader has struck a note of urgency over hiking defence spending. After winning Germany’s February 23 election, he said it was “five minutes to midnight” for Europe, warning that a hostile Russia and an unreliable U.S. could leave the continent exposed.
Merz wants to secure the funds before a new parliament convenes on March 25, where they risk being blocked by an expanded contingent of far-right and far-left lawmakers.
Acknowledging that his plans could fail, Merz told lawmakers that Germany’s credibility was at stake.
“The whole world is watching Germany these days and weeks. We have a task… that goes far beyond the borders of our own country and the well-being of our own people,” he said.
“We must live up to this responsibility…”
The prospect of a major spending shift in a country better known for its frugality has rocked markets over the past week, helping lift the euro to five month highs against the dollar.
But the financial package is far from a done deal, with Merz’s conservatives and his likely future coalition partner, the Social Democrats (SPD), needing to win over the Greens to secure the two thirds majority required to change the constitution.
The plans may also get knocked back by the Constitutional Court, which could deliver its verdict as early as Thursday on challenges lodged by the far-right Alternative for Germany (AfD) and the far-left Left party.
‘WHAT MORE DO YOU WANT?’
The Greens have refused to back Merz’s proposals in their current form and on Thursday its leaders and those of other parties angrily rounded on him.
The Greens accused Merz of dishonesty, using the threat to Europe’s security as an excuse for a borrowing binge to fund policies to please his own voter base, such as tax cuts, while neglecting issues such as tackling climate change and poverty.
They also reminded Merz of his criticism while in opposition of the outgoing SPD-led government’s supposed profligacy, only to change his mind on debt after winning the election.
“You have never been able to put the interests of this country first and not your own,” Greens parliamentary co-leader Katharina Droege told Merz.
A visibly frustrated Merz said he had tried to address the Greens’ concerns by offering to expand the scope of defence spending to include civil defence and intelligence spending.
“What more do you want from us in so short a time?” he said.
The far-right AfD accused Merz of ignoring the democratic will of the people by ramming his proposals through the outgoing parliament and of putting Germany’s strong credit rating at risk.
“Give up trying to become chancellor because you can’t,” AfD leader Alice Weidel said. “Your time is up before it even began.”
Some economists also criticised Merz’s tactics.
“(In my opinion) any shock and awe effect from Germany’s fiscal bazooka towards foreign adversaries is increasingly being eroded by the chancellor-to-be’s inability to manage this process in a less noisy way and the growing risk of failure to get anything passed in the old parliament,” said Oliver Rakau, chief Germany economist at Oxford Economics.
(Reporting by Sarah Marsh, Holger Hansen, Andreas Rinke, Ludwig Burger, Rachel More, Rae Wee, Lucy Raitano, Thomas Escritt; writing by Sarah Marsh and Matthias Williams; Editing by Michael Perry and Gareth Jones)
