Germany's unfinished business

Michael Naumann
21 June 2005

It is a strange moment in Germany. Summer has arrived with a vengeance, and millions of the country’s citizens are spending billions of euros on Mediterranean, Thai, Florida, or Seychelles beaches - to name just a few of the resorts that seem to be in the firm hand of an outwardly depressed nation suffering from insatiable Wanderlust.

Meanwhile, political life in the Heimat is adapting to the sultry weather. Just as Daimler-Chrysler recalled a million cars affected by a technical problem, Chancellor Gerhard Schröder – only two years into his second four-year term – has responded to political setbacks by recalling his whole government and appealing to the Bundestag to allow him to fight a premature national election in September. The country is waiting for the vote, now scheduled for 1 July, to see if he will succeed. The media is desperately groping for news amidst utter political standstill.

After seven years in power, the Social Democratic Party (SPD)-Green Party coalition has run out of steam, losing nine Länder (state) by-elections to the conservative, Christian Democratic Union (CDU) opposition. The public approval ratings for the coalition have collapsed; the SPD has lost more than ten percentage points in the opinion polls in the last two years, and approximately 200,000 members have left the party.

The SPD has existed for more than 140 years and has always embodied the better part of German history – its leading members returned from concentration camps (or, like Willy Brandt, emigration) after 1945 to help rebuild a truly failed state on the foundation of social justice and freedom. But in recent years, the interests of its clientele – mostly workers and “the small people” invisible on the surface of a society bent on continuous growth and industrial modernisation – have presented increasing problems to the SPD’s political project. These groups have come to depend on an elaborate and hellishly expensive social system with an average retirement age of 59 and social-security payments continuously growing in accordance with growth in average incomes.

The burden rests not only on the shoulders of Gerhard Schröder’s cabinet, but of the whole nation during years of low growth and diminishing tax income. Three years in a row, Germany failed to limit its state debts to the 3% ceiling agreed under the “Maastricht criteria” – all the more painful as this was part of the European Union’s stability pact pioneered by a German government under Helmut Kohl, one designed to discipline the notoriously volatile fiscal policies of the Italians, the Greeks and all those other folks who joined the eurozone in January 2002.

When Schröder initiated the process of re-election, a complicated one in constitutional terms, his primary motive was to re-establish the legitimacy of his government, within his own party even more than among the wider electorate.

After his re-election in 2002, the Chancellor introduced a package of new laws designed by the chief of personnel of Volkswagen, Peter Hartz. Their core aim was to curb joblessness by luring back into the labour force those Germans who had discovered that life on welfare was quite comfortable; their main method was severely reducing unemployment payments.

After a long parliamentary debate, the “Hartz laws” lost their teeth. Their effects may become visible in two or three years, if at all. In the meantime, migrant workers from Poland continue to toil in Mosel vineyards and other areas of seasonal agricultural labour – for a handful of euros per hour.

Gerhard Schröder: promise and performance

When Schröder was elected in October 1998, he had promised to reduce unemployment from 3 million to 2 million (if not below); instead there were 5 million people without jobs at the beginning of 2005. This came as a shock to the whole nation – especially to those who remembered the Weimar years. There are four evident reasons for this persistently high unemployment:

  • the opportunities of globalisation led German industry to relocate investments (and thus employment) to east-central Europe, Asia and indeed the United States. By now, more “German” cars are produced outside Germany than inside.
  • the process of automation in Germany’s industrial field of excellence – the production of machinery – has accelerated. The increasing rate of productivity in the last two years has again made Germany the leading export-nation of the world, exceeding Japan and the United States. In the meantime, robots continue to displace workers – and underqualified engineers. 100,000 of them are unemployed, most of them in the 50-plus age bracket.
  • the labour situation in eastern Germany has proved to be incorrigible. Unemployment rates are more than 10% in most eastern cities, and the transfer of social-welfare benefits from west to east amount to more than 60 billion euros every year. This can be seen as a significant symbol of German solidarity, but it is also enormously costly; the country’s growth rate might be boosted by 2% without this constant strain. The ensuing tax revenues could be invested in the economy – improved infrastructure, research and development in state universities, better child-care, creating more jobs. A big “could”, indeed ...
  • a huge corpus of state regulations handicaps Germany’s economy. The complex German tax laws outnumber those of all other European nations put together. The “red-green” government has failed utterly to clarify this mess – but so have local and state governments in relation to (for example) wearily burdensome ecological regulations. When the construction of new Autobahns or railway tracks can be stopped by the discovery of rare birds (or, in a case in North Rhine-Westphalia, a family of rare hamsters), the absurdity is plain. Such regulations stifle economic creativity; the result – more jobs lost.
  • After the shock of the SPD’s election defeat in North Rhine-Westphalia, Schröder attempted to restart his stuttering governmental motor by calling for a vote of confidence in the Bundestag. In what seems like voluntary political suicide, at least four members of Schröder’s cabinet or his SPD contingent have either to abstain or tell their boss that he has lost their confidence. Only by “losing” does Schröder have a chance of “succeeding” in his aim of fighting a premature general election.

    It looks like a constitutional gimmick – and it may in fact be unconstitutional. The final decision to call for re-elections rests with Germany’s president, Horst Köhler, a man installed by the majority votes of the conservative members of an assembly made up of representatives from the Bundestag and all Länder parliaments. It is the only political power of relevance the president possesses. He may in fact decide, that in reality, Schröder’s majority in the Bundestag is stable, which would prolong the government’s life until scheduled elections in September 2006.

    Against this constitutional reality is a psychological one: the vast majority of Germans seem already to be getting used to the prospect of the CDU’s candidate for chancellor, Angela Merkel, becoming Germany’s first female head of government by the end of 2005. The likelihood is a short campaign of four to five weeks, with voting in mid-September.

    Angela Merkel: waiting for a miracle

    Gerhard Schröder’s attempt to arrange early elections surprised Angela Merkel’s party as well as his own. The CDU had invested its recent energies in neutering and blocking a number of health and constitutional reforms, and are now facing problems in presenting a coherent election platform. For weeks, Merkel has solely resorted to an incantation of vacuous political slogans like “improvement” and “security” as a way of consolidating her support.

    The powerful men in the CDU – the governors of Bavaria, Hesse and Lower Saxony – still observe Merkel’s amazing political rise with bafflement and, at best, lukewarm approval. It is an impressive achievement: from a young, unobtrusive (and East German) member of Helmut Kohl’s government after re-unification, who then used her unmitigated personal ambition and sharp political mind to evict Kohl from the CDU leadership and eliminate rivals for the party leadership.

    Angela Merkel is witty and self-ironic in private discussions, sharp as a knife in public debates. She does indeed represent a change in Germany’s political culture. A Margaret Thatcher she is not – there will be no “Falklands” for Germany. But she does resemble Thatcher in combining vagueness on the European Union with unwavering support for the Atlantic alliance.

    There is no alternative

    Whether or not Schröder’s gamble succeeds, the task of modernising the social, institutional and political structures of Germany remains enormous, and the political barriers high. The trade unions, themselves suffering a rapid loss of membership, have lost their automatic loyalty to the Social Democrats, but neither will they support Angela Merkel: if anything, they would regain a sense of their central purpose with a conservative government in power.

    Meanwhile, the Schröder government’s political nemesis, Oskar Lafontaine – who resigned from his position as minister of finance in 1999 after only five months in office – has left the SDP he once chaired and joined a new leftist fusion that incorporates the post-socialist, East German PDS. The new party hopes to grab at least 8% of the voters, thus passing the 5% qualification to enter parliament.

    Such an outcome would undoubtedly help cement a future Germany under conservative rule. Such are the schizophrenic ways of the “left” in Germany, as across Europe. They provide entertainment, but progress is not really on their mind anymore. The very notion of political power seems to represent a burden to the left, one that compromises and plodding footwork are seen only to contaminate further.

    Aah, the good life of the opposition! Well, on present form the centre-left as well as the “left” will be spending the next fifteen years in it – unless a political miracle intervenes. The last miracle to save Gerhard Schröder was the Iraq war. He was against it, like most Germans; Angela Merkel wanted to go along with George W Bush and Tony Blair. Schröder will remind the voters of this. But no one has ever won a democratic election because the voters gratefully remembered a past and wise decision – as Winston Churchill found out in 1945.

    Further Links:

    German government & institutions

    Contemporary German Politics


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