[It would have been much smarter for the right to support the bold reforms by Schroeder, now there likely won't be any for a while]
Will Leftists and Disenchanted Voters Kill Reforms in Germany?
LETTER FROM BERLIN
service.spiegel.de
By Daryl Lindsey
Germany needs painful economic reforms. That, at least, is what politicians were saying last year. But this year, the emergence of the new Left Party has seen all major parties veer to the left and dramatically soften their rhetoric. Which is grim news for Germany.
Here's a string of un-fun facts about Germany -- not for the sake of feeding Germany's near pathological pessimism, but to foster an honest conversation about the future. Since German reunification in the early 1990s, all growth in the country has been financed by billions in public debt. The national debt has doubled to €1.4 trillion. Unemployment has increased by close to 70 percent and this year the country counted 5 million jobless people for the first time. And in a country with a shrinking population, the day is already in sight when there will only be a single payer for every person receiving retirement benefits. As Spiegel journalist Gabor Steingart recently wrote, it's like witnessing the complete reverse of the economic miracle that turned post-war Germany into an economic powerhouse.
Even though international economists have called Chancellor Gerhard Schroeder's "Agenda 2010" program reform-lite, his is still the first government in post-war German history courageous enough to make any serious attempt at tackling significant structural and economic reforms. His government went far -- most notably through the dramatic cuts to unemployment benefits in the "Hartz IV" law -- but it didn't go far enough and now these efforts are stalled by bickering among political parties and a wide-spread public backlash.
Germans, it seems, are unwilling to suffer in the short term in order to benefit in the longer term through economic growth. Other European countries -- especially Scandinavia -- have turned painful reforms into a winning economic situation, but Germans seem unwilling to scale back a system that has people on social assistance living better than people in many parts of the developed world. Call it chronic luxuritis.
Unfortunately, this recalcitrance, disillusionment, fear and anger is manifesting itself through the rise of the new Left Party, an odd couple that resulted from breeding the successor party to the old East German communists, the Party of Democratic Socialism (PDS), with the new left-wing populist Election Alternative for Work and Social Justice (WASG) party created by disgruntled former Social Democratic Party leader Oskar Lafontaine. Effectively, it marries disenchanted voters in western Germany with extremely disenchanted eastern German voters who suffer under high unemployment and, sometimes it seems, would prefer to have an Erich Honecker at the helm than an Angela Merkel.
The party's early success is forcing both Gerhard Schroeder's party, the SPD, and that of opposition conservative candidate and front-runner Angela Merkel, the Christian Democrats, to veer to the left to recapture voters. If you go by today's polls, neither party stands a chance of scoring a single majority in parliament, and the Left Party threatens to pilfer voters from both the right, with its populist undertones, and the left with its promises of not putting the country's notoriously generous social system under the knife. This, of course, is terrible news for anyone who believes that the only way for Germany to escape its chronic rut is through deep economic reforms and a streamlining of its social system.
The coalition guessing game
Last week, the talk in Germany was of a grand coalition which would put the parties of Angela Merkel and Gerhard Schroeder into a single government, likely with Merkel as its chancellor and Schroeder's SPD as junior partner. But this week, the media and chattering classes are speculating about a possible "Red-Red-Green" coalition that would put the SPD, Left Party and Greens under a single roof. As improbable as the "Red-Red-Green" coalition may be, just the talk of it puts the fear of God in Social and Christian Democratic leaders.
The speculation isn't entirely unfounded. As unpalatable as it may be, the latest public opinion polls suggest a scenario in which neither the Social Democrats and Greens nor the Christian Democrats and neoliberal Free Democratic Party (FDP) would garner enough votes to form majority coalitions.
The largest single percentage of German voters, 42 percent, say they would prefer a grand coalition to a fraying patchwork quilt of pseudo socialist parties with a lot of historical baggage and diverging political interests. And experts like Juergen Falter, a political scientist in Mainz, believe a grand coalition is the "only way to achieve the necessary restructuring of the state." But others, including Georg Milbradt, the CDU governor of the state of Saxony, warn it could lead to a political standstill. "The SPD is already the strongest force in the current government and it is already incapable of governing now."
Bad days for the reformists
Regardless what coalition results after Sept. 18, the Left Party is already proving a major threat to Germany's established parties. The first victim: Germany's badly needed reforms.
The main reason for the dramatic ascent of the Left Party, a combination of Party for Democratic Socialism (PDS) and the Election Alternative for Work and Social Justice (WASG) is pessimism among Germans, who fear for their economic futures and jobs. A recent poll by TNS Emnid found that 85 percent of Germans are concerned about their personal future and 48 percent believe the economic situation will further deteriorate. More than 50 percent of those surveyed said Schroeder's Agenda 2010 is the wrong path for Germany and an astonishing two-thirds strictly rejected any further cuts to the social system.
Since he embarked on his Agenda 2010 program in 2003, Schroeder's star has fallen dramatically, and business scandals have also undermined public trust in the elites pushing for reforms. Peter Hartz, the senior Volkswagen executive who helped Schroeder draft his reforms has fallen in the wake of a sex scandal that had the company procuring prostitutes for its executives during trips to its low-wage plants in the Czech Republic and Brazil. And then there's Deutsche Bank, whose executives announced in February that the company would cut 6,400 jobs -- and in the same breath announced a record profit of close to €2.5 billion. The disenchantment this fosters among voters is fertile ground for politicians like Lafontaine and Gysi.
Further damaging to the Social Democrats is the fact important labor leaders, who once flocked to the party in droves and formed an important voting bloc now have nothing but venom for the government. Juergen Peters, the influential head of the metal and steelworkers union IG Metall, has accused the Social Democrats of abandoning support for the social system that was once the party's core principle. Peters has accused Schroeder's government of following a "neoliberal course whose goal is inequality and the division of society."
In order to ward off critics, both the SPD and CDU are trying to isolate Lafontaine and Gysi as eccentrics who are making empty campaign pledges they could never fulfil if elected. Nevertheless, these isolation tactics do little to assuage voters who feel the current government and the conservatives are going to give them the shaft.
That's why the voices of the reformers in both the Schroeder and Merkel camped have grown a lot quieter in recent days. Just over two years ago, a then still feisty Schroeder said the "overhaul and modernization of the welfare state has become unavoidable." Now, his party is offering more and more concessions to woo leftist voters. The SPD is promising more subsidies to parents with children and the Greens have made retaining a strong social system part of their re-election platform.
For her part, only two years ago, Merkel was also singing a different tune: "A course of (program) eliminations, cuts and savings is essential." Two years later, the Christian Democrats are pledging a €50 a month bonus to families with children, a "strong welfare state," and to give the unemployed a softer landing as their benefits are reduced under the Hartz IV law.
So what happened to reforms, cuts and concessions? The Social Democrats and Christian Democrats still generally discuss the need for greater reforms, but their voices have hushed to a whisper and the platforms issued by both parties are a lot softer than one would expect from a country grappling with huge structural problems.
"We in no way want to question the future of social security," Merkel said just last month. These days, it seems like few political leaders are. |
