Merkel stalling on banking union to aid poll chances

German Chancellor Angela Merkel's chief rival in legislative elections next year accused her on Sunday of delaying the creation of a European banking union for political reasons. Social Democrat leader Peer Steinbrueck told public radio that Merkel had a personal interest in pushing the modification of the European banking system back until after elections due in September or October next year. "You can see that the German government with her at its head will do everything to ensure that the banking union will be pushed back at least until after the general election so as not to find itself in the unpopular situation in Germany that would greet a direct recapitalisation," he said. At a European Union summit on Thursday and Friday after a compromise between France and Germany, European leaders agreed to establish in 2013 a banking supervision mechanism in the eurozone, seen as a necessary instrument in their strategy to resolve the financial crisis. It is the first step towards a banking union and a precondition for enabling the firewall, the European Stability Mechanism, to directly recapitalise banks in trouble. Europeans have committed themselves to going ahead in 2013, as France wanted, but gradually, in keeping with Germany's wishes. Steinbrueck, who will be the Social Democrat challenger to Merkel for the job of chancellor, has for some weeks been advocating a different system that could see the banks themselves constituting a bailout fund from their own resources. "It is those who have contributed the most to sparking the crisis who should do the most to help resolve the problems and to finance the solution," he said. "I do not see why taxpayers should be in the front line."