Angela Merkel not very clever, says former chancellor Helmut Schmidt

Former German chancellor Helmut Schmidt has criticised his country's handling of the European sovereign debt crisis, calling the Bundesbank "reactionary" and Chancellor Angela Merkel's policies "not very clever".

In an interview with the business daily Handelsblatt, Mr Schmidt, who frequently tops polls as Germany's most respected politician, said Europe lacked leaders who understood the international ramifications of the crisis.

Mr Schmidt, a Social Democrat who served as West German chancellor between 1974 and 1982, singled out Luxembourg's prime minister Jean-Claude Juncker and European Central Bank president Jean-Claude Trichet for praise among EU leaders.

The 91-year-old, whose opinions are still regularly sought by the media, said Germany and France had helped to create problems by repeatedly running up excessive budget deficits over the past decade.

"Merkel would like to put these mistakes right, but her chances of success are pretty small, and she's not acting very cleverly," Mr Schmidt said, noting that the country's central bank, the Bundesbank, was not helping Europe to pull together. "In their heart of hearts, Bundesbankers are reactionaries. They're against European integration. They tend to act and react too much according to national interest."

Critics of German policy say Ms Merkel exacerbated the European debt crisis by waiting too long to help struggling countries like Greece, thereby raising the cost of the rescue.

Mr Schmidt said Ms Merkel and her finance minister, Wolfgang Schaeuble, were not used to dealing with international capital markets, cross-border banking and their supervision.

"That's not a criticism of Merkel or Schaeuble, but we need people in the top jobs who understand how the economy works today," the former chancellor said.

"In general I would say that Europe lacks leaders who have enough of an overview of national and international issues, and who have sufficient ability to judge things."

One of the "few exceptions" was Mr Juncker, Mr Schmidt said, adding that Mr Trichet had also "stood apart" from others during the crisis.

Mr Schmidt also questioned the wisdom of Germany running up big current account surpluses, which some trade partners object to.

"Over the long term, you don't profit from it," he said.