Monday, September 19, 2005

Finis Germaniae?

No, not yet, at least. Though the election results will complicate and delay the economic recovery. Political theater junkies will surely enjoy the next few weeks, as all the parties seek to maximize their chances for power. Machiavelli's The Prince will be much consulted.

Roger Cohen of the IHT on the German elections (the swine are charging for access to some content). has his own ideas.

He notes that the political stakes are high. Given that the European social welfare model is doomed, can the Europeans, and Germans in particular, find a way forward?
As well written the piece is--for all the explanations one finds on in blogland, I can't help wondering: what the hell were these guys thinking when they voted for Schroeder et al?

Just when it can least afford it, Germany has entered a period of muddled political maneuvering.

[...] Merkel appeared to be the winner, albeit a weak one. She seemed to have edged out Schröder, but so narrowly that the reformist center-right coalition she had hoped for looks unattainable.

Instead, her Christian Democratic Party, or CDU, may be forced into a "grand coalition" with the Social Democrats, or SPD, an arrangement she has called a recipe for "standstill." With almost five million unemployed and close to zero growth, standstill is the last thing Europe's largest economy needs.

But a bitter ideological dispute playing out across Europe, and between Europe and the United States, has taken on a particular virulence here. It pits free-market reformers, or so-called neo-Liberals, against the defenders of Europe's social welfare system. [...]

Merkel, raised in Communist East Germany, drawn to the United States and a more deregulated economy, campaigned on an explicit free-market platform. Strip away bureaucracy, she said. Lower non-wage labor costs. Make it easier for small companies to hire and fire. Change Germany's risk-shy mentality.

Not too much to ask for. But fear of the future is often more potent than hope for the future. Thus the Left did a fine job of fear mongering as a part of its strategy, while assuring voters that its own program would be enough to put Germany right again. The voters swallowed hook, line and sinker.

The country was not ready for a woman cast by the left as a latter-day Margaret Thatcher flanked by a flat-tax loony as economic adviser. Nor was it enthused by
Merkel's vision of a more Atlanticist Germany, its alliance with the United States invigorated once more. For Merkel, the approximately 35 percent of the vote won by the CDU amounts to a sharp personal setback.

The chancellor called an early election with the professed aim of demonstrating he had the support to govern with vigor. In this aim he was rebuked.

The irony here is that Schroeder engineered these elections via a no-confidence vote. At the time he claimed his own party would not support his initiatives. Now, of course, he claims a mandate, even though his coalition lost seats, and is therefore even less able to push through his program. Balls of steel that, guy.

But Merkel stumbled in her hour of opportunity. Her failure to garner a center-right majority will feel particularly bitter because the business-friendly Free Democrats, her favored partners, did well, advancing to over 9.8 percent of the vote, from 7.4 in 2002 -- a result hailed by its leader, Guido Westewelle, as the "big victory of the election."

The party's performance suggests that a strong reformist current exists in Germany, one that considers Schroder's seven-year failure to dent an unemployment rate of over 11 percent unacceptable.

Almost equally strong, however, is the view that any dismantling of the so-called social market economy that has served Germany since World War II would be a disaster. For many Germans, the unemployment benefits that can make it as attractive not to work as to work amount to a constitutionally guaranteed birthright.

The roughly 8 percent of the vote gained by the new Left Party, made up of disgruntled former Social Democrats and former East German communists, illustrates how powerful such thinking remains.

The idea that the state has to look after people so that they can live decently without working remains entrenched," said Wolfgang Stock, a political scientist close to the Christian Democrats.

So what now? Merkel appears to head the strongest party, but it will be difficult for her to avoid a partnership with the SPD that she disdains. If a grand coalition is formed, any radical reform of the German economy can be safely ruled out.

So, too, would any rapid rapprochement with Washington, of the kind Merkel had outlined.

A more palatable alternative for Merkel might be to seek to lure the Greens into a coalition with the FDP. That would provide a majority, but the differences of view between the parties - on the environment and the eventual admission of Turkey into the European Union - are probably too large to bridge.

Schröder, meanwhile, seems to believe he may yet survive. "Nobody except me is able to govern this country," he declared. That seems a far-fetched claim. In theory, a coalition with the Greens and Left Party would give him a majority, but Schröder would have to swallow awfully hard to ally with ex-Communists and Social Democrat renegades whose views he has denounced.