By Paul Carrel
BERLIN (Reuters) - Germany is benefiting from a euro exchange rate that is too weak for its economy but too strong for others in the currency bloc, conservative Friedrich Merz, running to replace Chancellor Angela Merkel as leader of her party, said on Thursday.
The businessman, back from the political wilderness, has taken an early lead in the race to succeed Merkel as leader of their Christian Democratic Union (CDU) and secure the chance of running for chancellor - possibly even next year.
In unusually frank comments on currency policy from someone seeking a frontline political position, Merz said Germany had benefited greatly from the euro and as a result had a responsibility to "contribute more" to holding the EU together.
"Let's face it, we are benefiting from the monetary policy which most of the people in this country do not want. But we benefit from it, fundamentally," he told a panel discussion on Europe's Growth Challenge hosted by the Chatham House think tank.
"And this currency, which is in the meantime too weak for our economy, is still too strong for most of the others," he added, speaking English at the event in Berlin.
"We are benefiting within the European Union, within the internal market, but beside that we are benefiting in international trade - toward China, toward the U.S., toward other regions in the world - from this currency policy."
Asked what he would do about the euro's (EUR=) exchange rate, Merz replied that Germany had a "higher responsibility for European cooperation" as a result of what he saw as its gains from the single European currency.
"We have to tell the people in this country that the Germans have to contribute more than others to the success of the European Union," he added, calling for close cooperation with France to find a way forward on European economic policy.
"We have to do more than we are actually doing because if Europe fails - and this is a clear option, no one can deny it, Europe is really at the threshold at the moment - if Europe fails, the Germans will be those who suffer most from that."
BREXIT RISK
Merz, 62, was pushed out of his role as CDU parliamentary leader by Merkel in 2002 - a move that cemented her grip on the party on her way to becoming chancellor in 2005. Now, his bid for power - if successful - could precipitate her demise.
His chief rival in the race for the CDU leadership is the party's secretary general, Annegret Kramp-Karrenbauer, 56, who, as heir to Merkel's centrist cause, could probably cohabit as party leader with Merkel as chancellor, which she wants to remain until the end of the parliamentary term in 2021.
Such an arrangement would prove difficult with Merz, given his past rivalry with Merkel. The upshot could be early elections in 2019, especially as the Social Democrats are unsure whether they want to remain in Merkel's ruling coalition.
Merz, who is chairman of the German arm of the U.S. investment fund BlackRock (N:BLK), described Brexit as "the biggest threat the European Union, at present, could be facing".
"I do not hope that there will be another referendum in the UK to remain. I don't," he said. "If it happened, you will leave back a greater minority who are still in favor for Brexit, and they will become even more radical anti-Europeans."
"My personal view is that Brexit will happen," he added. "Perhaps they (the British) will come back one day, 10 years after, but in the time being we have to have the best agreements we could have."