Berlin: An interruption from the floor briefly flustered Angela Merkel in a Parliamentary debate on November 23. Had the German chancellor told the Bundesbank she wanted growth in Europe, challenged an opposition deputy - a jibe at the apparent policy contradiction with the Bundesbank's mandate to fight inflation.

Merkel hesitated momentarily, then answered: "It's in my character to be consistent, whether I'm speaking with you, with party colleagues, with the Bundesbank or with my European partners. I am not duplicitous. That is my advantage."

That response, delivered in the midst of Europe's debt crisis, revealed simultaneously Merkel's biggest difficulty and her core strategy. Germany's 26 EU partners are impatiently urging Merkel to take a lead and act fast. Wherever she travels outside Europe, she is faced with the expectation that Germany, Europe's economic power, should fix the euro zone.

The weight of expectation is particularly immense before an EU summit this Thursday and Friday. Poland's Foreign Minister Radoslaw Sikorski captured the wider mood in a speech in the shadow of Berlin's Brandenburg Gate on November 28.

"I will probably be the first Polish foreign minister in history to say so but here it is: I fear German power less than I am beginning to fear German inactivity," he said, alluding to Germany's 1939 invasion of Poland that began World War Two.

But every foreign partner wants something different.
And within Germany, Merkel's coalition partners are watching closely to make sure she doesn't agree to measures being sought by the United States and Britain and by many financial market participants - common euro zone bonds and a financial backstop role for the European Central Bank as lender of last resort.

The 57-year-old chancellor finds herself in a position that she didn't choose but is beginning to enjoy, those close to her say. She must decide.

German politics, based on consensus and with many inbuilt checks and balances, does not encourage bold action. Merkel must constantly find compromises within her coalition, with parliament, with regional governments and with the constitutional court. All of them are part of the debate. So too is the German central bank, the Bundesbank, over which she has no control.

Merkel's style has a lot to do with her background, insiders say. A Protestant from East Germany, she has never had a strong regional power base. Her biographer Gerd Langguth traced her success to her ability to network and build compromise. These skills are beginning to yield some success in complex European negotiations, Merkel's allies say.

This week, she and French President Nicolas Sarkozy agreed on the need to bind euro zone economies more closely together, brushing over their differences. Merkel spoke by telephone with British Prime Minister David Cameron and held talks with Austrian Chancellor Werner Faymann. All three men represent different views of Europe. Merkel manages to find common ground with all of them, some observers say, because she isn't as concerned about making an impression as some of her male colleagues.

"That helps to focus the conversation on the issues that matter," said one member of Merkel's team.
With Sarkozy, her most important but often difficult European partner, Merkel has endured his showmanship and restless activism with patience but without yielding to his pressure for quick-fix crisis action that she fears could have harmful longer-term consequences.

Her critics say Merkel has procrastinated, dithered and shifted her ground during the crisis. If she had reacted swiftly to support Greece in early 2010, the whole euro zone crisis might have been nipped in the bud for a fraction of what it has cost so far, they argue. Merkel says that if she had followed such advice indebted countries would have evaded reforms.

But fast-moving financial markets and criticism of her style of leadership have pushed Merkel to realize she must be seen to be decisive. Since the summer recess she has radically changed her approach, switching from defense to attack. It's a shift international partners have been slow to notice, they are so fixated on her resistance to swift financial solutions.

"We need more not less Europe," has been her mantra in recent months, coupled with: "If the euro fails, Europe fails." The solution lies in binding Europe closer together through strict budget discipline, she insists. The message is the same whether Merkel is speaking to employers, EU partners or her CDU party.

The change in tactics has been forced upon Merkel. Forbes may have named her the most powerful woman in the world, but she is under tremendous pressure at home over the compromises she has made thus far in bailing out countries that have lived beyond their means. The more Merkel tries to accommodate German public opinion, the bigger the gap with the United States and other international partners who accuse her of mishandling the crisis. As a result she is fighting the most decisive fight of her career largely alone.

Her mentor Helmut Kohl's legacy was the reunification of Germany, her predecessor Gerhard Schroeder is remembered for his social reforms. Merkel sees her historic task as rectifying the structural flaws of the euro.

"Our great challenge is to stabilize the euro," she told a CDU party gathering in September. For Merkel, opportunity comes from crisis. "To implement reforms one needs conviction and the right moment."

Because she sees the crisis as an opportunity and the risk premium on Italian debt as an impetus for reform, a strange disconnect has emerged between the sense of panic in international financial markets and the relatively relaxed mood in Berlin. German government officials point with satisfaction to the drop in Italian bond yields this week after the government approved a new austerity package.

In purely domestic political terms, Merkel has benefited from her more decisive, determined approach to Europe. Voters are crediting her with strong leadership precisely because of her refusal to print money. In an Emnid opinion poll conducted at the start of December a majority of those surveyed rated Merkel by far the best performing leader in the crisis.

Her party is also benefiting. The closely watched ARD-Deutschlandtrend poll found 51 percent of respondents thought Merkel's CDU was the best equipped to handle the crisis. Some observers are predicting the poll boost will help Merkel in her reelection bid in 2013.

Merkel knows she can't please everyone. She will have to choose between her political power base in Germany, German national interest and the wishes of powerful international partners.

In private, she is trying to build bridges. She and Sarkozy agreed on almost identical wording to describe the role of the European Central Bank, and both governments promised to refrain from criticizing the ECB's action or inaction - leaving wiggle room for some intervention on markets. If her strategy holds good, political reforms will calm markets to such an extent that the ECB will not need to help for too long. If the calculation proves to be wrong, she'll have to think again.

Merkel does seem to be avoiding major missteps. She quickly distanced herself from party colleague Volker Kauder's undiplomatic boast that Europe is starting to speak German. "I have reassured my international colleagues that I enjoy speaking English, I must improve my Russian, unfortunately don't speak any French and always converse in a true European spirit," Merkel joked after a recent meeting with Cameron.

But she has shed any desire to be universally popular. Germany's new philosophy is best summarized by Foreign Minister Guido Westerwelle: "When you take the lead, some people criticize you. If you don't take the lead, everyone criticizes you. So it's better to lead."

(Agencies)