Challenger: Merkel isolating Germany in Europe

[December 10, 2012]  BERLIN (AP) -- Chancellor Angela Merkel's center-left challenger accused the German leader of isolating the country in Europe as he sought Sunday to kick-start his campaign for next year's elections, pledging to make social policy and promises of tougher financial regulation central issues.

Former Finance Minister Peer Steinbrueck's Social Democrats rallied around him after a difficult start to his quest to unseat Merkel. About 93 percent of delegates at a special party convention endorsed the 65-year-old Steinbrueck, who ran unopposed, as her challenger in parliamentary elections expected in September.

Merkel's conservatives lead polls, helped by the chancellor's personal popularity -- itself bolstered by her hard-nosed approach to Europe's debt crisis. But the outcome remains far from certain, with surveys showing a majority neither for her center-right coalition nor for Steinbrueck's hoped-for alliance with the Green party.

The center-left parties have criticized Merkel for what they decry as a too-little, too-late response to the eurozone's debt crisis, but have supported her rescue plans in parliament. They have argued more needs to be done to foster economic growth, and lack her aversion to any kind of pooling of European countries' debt.

"We must show the flag and go into this election with a clear pro-European position -- not fearing the resentments that exist, not fearing the position of some that `we don't want to pay for other countries,'" Steinbrueck said in a televised speech to the party convention in Hannover.

"In the eyes of our neighbors, we are acting in a pretty schoolmasterly way at the moment -- a good neighbor doesn't do that," he said. "My main accusation is that Mrs. Merkel has (led) Germany into isolation in Europe."

Steinbrueck didn't go into details of European policy in a speech that hammered home his party's center-left credentials. He declared it will make the election "a face-off about social policy," with promises of a mandatory minimum wage and a quota for women in management positions, among other things.

Steinbrueck has called for big European banks to build up a rescue fund of their own rather than relying on taxpayer-funded aid. He pledged "instead of capitulation in the face of financial markets' potential for blackmail, more rigid regulation and supervision of financial markets."

Taxes for top earners need to rise to finance spending on education, infrastructure and Germany's transition from nuclear to renewable energy, he said, while stressing that keeping down debt is essential.

Party leaders nominated Steinbrueck in September. His start was marred by criticism of his high earnings for lectures -- about euro1.25 million ($1.6 million) for speaking to audiences including financial institutions -- that he gave after leaving government in 2009.

"My speaking fees were stones that I have in my luggage and unfortunately put on your shoulders too," Steinbrueck said, thanking his party for "carrying and bearing this burden with me."

[Associated Press; By GEIR MOULSON]

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