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Merkel's Flawed Attempt

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By:Srdja Trifkovic | September 27, 2013

 

Angela Merkel is not a charismatic leader. She lacks Margaret Thatcher’s zeal, Benazir Bhutto’s looks (Berlusconi once commented on her lack of feminine charms in his inimitably discourteous manner), or Indira Gandhi’s carefully cultivated caring touch. She wears one of her dull jackets with dark trousers every day. When asked about her biggest youthful mistake, she recalled the day she climbed a tree and ruined a new tracksuit. She is buzz-free and speaks like a Gymnasium chemistry teacher. She looks like a Hausfrau next door and seems comfortable about it.

The Germans like her just the way she is: matter-of-fact, pragmatic and reliable, promoting consensus over conflict. The ruling center-right Christian Democratic Union, CDU (together with its Bavarian partner, CSU) took 42 percent of the vote at the general election last Sunday, the party’s best showing since Konrad Adenauer’s heyday in 1957. Such strong showing was largely due to Merkel’s personal appeal to the voters. That is good news for the Federal Republic and for her neighbors: the Chancellor’s popularity indicates that Germans are permanently weary of charismatic leaders with a talent for public speaking. Former Chancellor Helmut Schmidt once said that any politician who says he has a “vision” should see a doctor.

The irony of Merkel’s success is that she has fallen just short of the simple majority, and the likely new coalition will be far less to her liking than the old one. The FDP, her pro-business, socially liberal coalition partners, have suffered a debacle, dropping from 14 percent of the vote in 2009 to under 5 percent now. This means the party will not be represented in the Bundestag for the first time since its founding shortly after World War II, and therefore it will not be able to play its traditional role of the ruling party’s junior partner. Its destiny was sealed by Merkel’s failure to call on CDU/CSU supporters to “donate” their second vote to the FDP (Germans get one vote for an individual parliamentary seat and a second that goes to the national list)—which she probably regrets now.

Theoretically three parties of the left will have a majority, but neither the SPD nor the environmentalist Greens want to join forces with the smallest of the four parties represented in the new Bundestag, the Left (Die Linke); the successors to the East German ruling SED have also ruled out that possibility.

The Social Democrats (SPD) have also done poorly—at just over 27 percent they have barely improved their dismal 2009 score—but they will exact a steep price for agreeing to join another grand coalition led by Merkel. They did so in 2005, and were punished for that by their voters four years later. A party spokesperson said that “the SPD is not waiting in line or competing for this, after Frau Merkel ruined her previous coalition partner.” The SPD will insist on raising tax rates on incomes above 100,000 euros to 49 from 42 percent and on introducing a nationwide minimum wage of 8.50 euros per hour, a key plank of their campaign platform. It is an even bet that the SPD will get at least two key ministries, finance and foreign affairs, when the negotiations are over.

The FDP’s undoing was partly due to the rise of the Euroskeptic Alternative for Germany (AfD), which came one-tenth of one percent short of the 5% parliamentary threshold. Founded only seven months ago, the party advocates dumping the euro, reinstating the Deutschmark, and leaving the Club Med to the tender mercies of the global marketplace. The new party attracted a disproportionate share of FDP votes.

That the AfD did not do even better is due to the fact that most Germans understand (although few will say so openly) that the euro experiment has been very good for Germany. Its economic ascendancy over Europe is beyond challenge. In the old days less efficient economies could devalue their currencies, or manipulate interest rates, or both, to stay competitive. Locked into the German-dominated European Central Bank shackles, they are now permanently dependent on Merkel’s grudging willingness to bail them out when absolutely necessary, while lecturing them on the need to further tighten their belts. Referring to Germany’s ability to keep its unit labor costs low and maintain competitiveness, Merkel said “What we have done, everyone else can do.” This is not so. The southern eurozone countries are now permanently vulnerable to Germany’s domination of their domestic markets for industrial products and permanently unable to kick-start growth by stimulating aggregate demand.

Most Germans agree with Merkel, however, and don’t care that Greece’s economy has shrunk by 25 percent in recent years, that Italy has not grown in a decade, or that Spain’s youth unemployment exceeds 50 percent. It would be in Germany’s interest to rethink the single-minded austerity regime imposed on the southern eurozone for two reasons. Continuing slump would reduce the demand for German goods, and it may enhance anti-EU and anti-German sentiment which would be detrimental to the long-term maintenance of political status quo. Merkel’spax Germanica demands more subtle fine-tuning of the edifice. The Social Democrats understand that much, which may produce another irony of the election result: by making Germany marginally more flexible, the new grand coalition may enhance its open-ended dominance of the Old Continent.

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