Morning Briefing Merkel Plays Rope-a-Dope With Schulz

The chancellor's motto for the September elections: head down and eyes on the prize. Andrea Enria, the head of the European Banking Authority, has called for the zone to create its own “bad bank’’ to buy and unwind zombie loans.

While Angela Merkel goes about the mechanics of governing seemingly unperturbed, her Christian Democratic lieutenants direct a daily salvo of negativity at Martin Schulz, her Social Democrat challenger in this fall’s election. On tap today for the chancellor: Merkel meets with Tunisian Prime Minister Youssef Chahed to discuss the refugee crisis and security. For an 11-year incumbent, the most effective campaign strategy in a tight race appears to be not campaigning at all. Merkel’s motto: Head down, eyes on the prize.

The question isn’t whether Germany’s economy grew last year, but by how much. Now, we know: By a lot. The Federal Statistics Office today said Europe’s biggest economic motor grew by 1.9 percent in 2016, its fastest in half a decade. Fourth-quarter GDP growth came in lower than expectations, but still at 0.4 percent. Brexit, the euro crisis and Trump’s election didn’t stop the German juggernaut. But maybe they are starting to slow it.

Dark clouds threaten the euro zone again, as our cover story today explains. Eight years after the global financial crisis, European banks are still sitting on more than €1 trillion in bad loans. In a Handelsblatt interview, Andrea Enria, the head of the European Banking Authority, calls for the zone to create its own “bad bank’’ to buy and unwind zombie loans. Used to be they called these eurobonds; today, we speak of “special purpose entities.’’ This institution’s symbol shouldn’t be an eagle, but a vulture.

What do you get when you add a Russian oligarch and Germany’s Tui travel group? Lots of questions. Alexei Mordaschow has been hoovering up Tui shares for weeks. Now he owns 22 percent of the company. His motives are unknown. Even if Tui’s annual shareholders’ meeting today doesn’t deliver answers, investors are hoping for clues. Shareholders, even little ones, shouldn’t be left in the dark. There’s no place for hidden agendas in the age of shareholder democracy.

And Donald Trump? He’s busying putting his foreign policy missteps behind him. The president spent two harmonious days with Japanese Prime Minister Shinzo Abe, including a round of golf in Florida. In a telephone call, he managed not to accuse Chinese President Xi Jinping of currency manipulation and human rights violations, as he had during the campaign. Yesterday, he welcomed Canadian Prime Minister Justin Trudeau, whose country has taken in 40,000 Syrian refugees, with warmth. Maybe there’s another Donald Trump than the poltergeist we know. And maybe we need not only to mistrust him, but our own prejudices too.

Image of the Day

German Chancellor Angela Merkel and French Prime Minister Bernard Cazeneuve shook hands yesterday in Berlin after a joint press conference. Merkel stressed that the two countries wanted to be the engine powering the E.U. forward.