Chilly Reception

The slump and the financial turmoil that set it off constitute the worst crisis of her chancellorship, which began in 2005. Indeed, she has never been faced with so much criticism internationally.

Critics claim she has "no concept" of how to deal with the crisis.

There has been talk of a "German rejectionist front" and a "fault line through the euro zone." Those were the relatively nice comments, compared to some of the terms that have been quoted from "government sources" in other capitals.

The critics want Germany, as the European Union's biggest economy and a nation with fairly robust public finances, to act as an economic locomotive and spend heavily to re-inflate the euro zone.

From Berlin's point of view, those demands are coming precisely from those nations which have been lax in the past about budget deficits and are finding it increasingly difficult to borrow now. In short, the Germans feel they are being asked to pay a penalty for having been virtuous.

Suggesting it is better to wait, Merkel has made clear she will not be giving in to the EU demands for an economic stimulus program backed by what she views as unchecked borrowing.

While Berlin could never be described as Europhobic, Merkel has a distaste for the lethargic bureaucracy in Brussels.

The thought of putting eurocrats in charge of massive public spending projects puts her off the idea of an EU package even more.

Merkel to pull the purse strings shut

She has told Brussels the furthest she could go would be to allow money from various EU funds to support poor states that goes unused to be diverted to stimulus spending. Normally, the unused funds are returned to donor countries, like Germany. When she arrives in Brussels on Thursday, she is expected to stress she has no other funds to offer.

Merkel has only left one loophole for herself: she is to meet with leaders of her governing coalition in Berlin on January 5 to see what to do next about the economy.

Some in her coalition have pressed for more spending inside Germany, and her spokesman Ulrich Wilhelm appeared to be widening that loophole when he said this week that governments do need to study "further, targeted action" on the economy.

This week, Germany's most senior judges triggered just such a cash infusion, telling the government to return more than 7 billion euros ($10 billion) to income-tax payers who had been denied an exemption for the cost of commuting to work.

Instead of complaining about losing the tax case in the Constitutional Court, Merkel is expected to trumpet in Brussels the fact that Germany is in fact putting money back into taxpayers' pockets at just the right time.

Protecting German jobs over the climate

On climate-change policy, the EU states are at odds over key parts of European Union proposals to reduce emissions of greenhouse gases. The plan would require that, by 2020, nations cut their emissions by 20 per cent compared to 1990 levels.

Merkel's stance is that the EU should lead the world in aggressive cuts. But Germany is also one of the nations concerned this could disadvantage its own industries if other nations do not take matching steps.

Opposition speakers from the Green Party in the German parliament recently accused her of treading on the brakes, after having egged on the world last year to cut emissions. Some in Brussels would agree that Berlin is shaping up as an obstacle to quick cuts.

She is also making clear that, given a choice between reducing emissions and sacrificing jobs, she would prefer to keep Germans employed.

With the economic crisis and climate change atop the agenda now, less attention is being paid to the tortuous attempts to stop a reform of EU institutions under the Lisbon Treaty from being derailed after Irish voters rejected it earlier this year.

After months of no progress, the Germans no longer seem so confident they can surmount the problem.

Social Democrats, part of Merkel's coalition, have even radically suggested in parliamentary debate that the people of Ireland be summoned to a new referendum with the choice: stay in the EU or go.

If Ireland left, the Lisbon Treaty could be put into effect.

Merkel makes light of mini-summit snub

Merkel has told France's Nicolas Sarkozy, exercising the EU presidency, that she wants to make this week's summit a success.

Unlike Sarkozy, she was not invited to a "mini-summit" hosted in London on Tuesday by British Prime Minister Gordon Brown.

Those close to Merkel have since argued that being left out could prove a benefit strategically to her.

The London group represented the "Old West" of the EU still trying to peddle imprudent economic policies, they suggest. Merkel on the other hand remains a beacon for the smaller EU nations.

"The fact that she was not there in London means her advice will be listened to with greater attention," said one aide.

Instead Merkel spent the day in the Polish capital Warsaw, and appeared to sense she had nothing to ashamed of.

"I am going into the summit to do some tough negotiating, even if some people do sometimes claim that we are often the naysayers," she said.