The European Central Bank holds its monthly monetary policy meeting tomorrow amid one of the most overheated political environments for Mario Draghi and his fellow governors since the height of the eurozone crisis. And despite the German government’s long-stated insistence that central banks should jealously guard their independence and not be pressured by elected officials into making decisions that are politically expedient, the most pointed criticism is coming from Berlin.
The most surprising broadside came nearly two weeks ago from Wolfgang Schäuble, the German finance minister, who publicly claimed to have told Mr Draghi that his loose money policy was to blame for about 50 per cent of the votes received by the ascendant anti-immigrant Alternative for Germany party in last month’s regional elections. Mr Schäuble also called on the US, UK and the eurozone to band together in pressuring their central banks to “carefully but slowly exit” their economic stimulus policies. Hardly the model of respecting central bank independence.
Mr Schäuble’s remarks appear to have opened the floodgates. Hans-Peter Friedrich, a former interior minister in Chancellor Angela Merkel’s government and a member of the Bavarian sister party of her governing Christian Democrats, told the mass-market Bild tabloid at the weekend that Mr Draghi’s replacement “must be German” and respect the Bundesbank's tradition of "monetary stability". Axel Weber, the former Bundesbank chief who nearly beat Mr Draghi out for the top ECB job in 2011 before resigning, told the Wall Street Journal this week that more monetary easing would be counterproductive.
The motivation for all the anti-ECB sentiment is twofold: there is an aversion to easy monetary policy in Germany, the flip side of a longstanding fear of inflation that many officials – including those in Berlin – say is the legacy of the interwar Weimar period, where images of men pushing wheelbarrows filled with Marks became seared on people’s memories. But there’s a more immediate political concern, too: Germany has one of the highest savings rates in Europe, and all those savers (who are also voters) are now getting piddling returns for their money. And they're angry.
The other problem Mr Draghi is facing is that, despite two years of negative interest rates, there are few signs they’re having an effect on the broader eurozone economy. Yesterday, the ECB released its quarterly bank lending survey which found some signs that banks were becoming more willing to lend into the real economy. But the report also made it clear that it wasn’t necessarily the ECB’s aggressive policies that were driving the change. If things don’t start improving faster and sooner, the Frankfurt-based central bank will begin resembling a foreign outpost in enemy territory.
What we’re reading
The much-anticipated second EU antitrust case against Google is expected to be announced this morning by European Commission competition chief Margrethe Vestager. This one will accuse the company of abusing its dominant market position in smartphone operating systems by foisting Google's own suite of apps on consumers. The New York Times quotes a Google spokesman insisting that its Android operating system can work "with or without" Google apps, saying that both handset manufacturers and end users themselves can ultimately decide which are included. In an opinion piece, the FT's leader writers argue Ms Vestager is "right to pick this second fight with Google".
Michael Gove, the UK justice minister who is seen as the intellectual heavyweight behind the British campaign to leave the EU, yesterday presented his view of what a post-Brexit trading relationship with Brussels would look like, saying the UK could join “Bosnia, Serbia, Albania and Ukraine”, all European nations with privileged EU trade deals. But as FT Brussels bureau Brexit expert Alex Barker notes, those countries all want to join the EU, not leave it. “It is like comparing a little nut with a big watermelon,” Karel De Gucht, the former EU trade commissioner, told Alex. The Guardian’s take on Mr Gove’s address highlighted his belief that Brexit could spur others to leave the EU, sparking “the democratic liberation of a whole continent”.
Is a deal at hand to free Nadia Savchenko, the Ukrainian military pilot who was sentenced to 22 years in a jail after a Russian court found her guilty of murder last month? Petro Poroshenko, the Ukrainian president, said he had spoken to Russian counterpart Vladimir Putin and the two men had “agreed to a certain algorithm” that would allow her release. The English-language Kyiv Post has reported Ms Savchenko is now in critical condition after a two-week hunger strike. During her detention, which occurred after she was captured by pro-Russian separatists inside Ukraine, Ms Savchenko has emerged as something of a “Joan of Arc persona” in her home country.
The Dutch government yesterday narrowly avoided being forced to repeal its ratification of the EU’s integration treaty with Ukraine after an opposition-led motion failed 75-71, according to the Dutch daily De Telegraaf. Mark Rutte, the Dutch prime minister, has attempted to delay a decision on how to respond to this month's national referendum that rejected the pact. De Volkskrant quotes Mr Rutte as warning MPs the trade deal is likely to go ahead with all other 27 EU countries, leaving the Netherlands isolated. He also said the rest of the EU does not want to engage on the issue until after Britain's June 23 referendum on EU membership.
The founder of Germany's anti-Muslim Pegida movement went on trial yesterday on charges of racial hatred, which carry with them a possible five-year prison sentence. Frankfurter Allgemeine Zeitung reports that Lutz Bachmann denied the charges, and his lawyer insisted the Facebook posts which form the basis of the case – where refugees were referred to as "cattle", "scumbag" and "filth" – were written by someone else. Süddeutsche Zeitung reports Mr Bachmann appeared in the Dresden court with his wife and about 50 supporters.