Merkel being pressed on all sides

FOR several years, a semi-permanent American criticism of Germany in the monetary and economic sphere has been that Europe's largest economy is not living up to its potential. At the beginning of what promises to be a bruising year for Chancellor Angela Merkel, the reality may be starting to sink in. At least in its efforts to resolve the festering problems within the euro area, Germany has reached the limits of that potential.

From now on, particularly as far as difficulties with Europe's debt-strapped Mediterranean countries are concerned, the road for the German chancellor, and for Europe, will be getting steeper and thornier.

Greece has been off investors' radar screens for the past few months following last summer's agreement on an 86 billion euro (S$134.4 billion) bailout package. But indications from Athens over the Christmas period have been that the Greek imbroglio will soon return as a force for drama and doubt.