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Half-term Report for the German Government

With the current parliament in Germany half way through its normal lifespan of four years, now is as opportune a moment as any to review the performance of the federal coalition of CDU/CSU and FDP under Chancellor Angela Merkel.

Perhaps inevitably, much of the euphoric talk of a Wunschkoalition, which both parties succumbed to following the 2009 federal election, has since dissipated, although the degree to which this has happened has taken most observers by surprise. The CDU/CSU has remained stubbornly stuck on around 34 per cent in the opinion polls, while the FDP’s fall from electoral grace has been nothing short of spectacular: from 14.6 per cent at the 2009 elections to around 3 per cent in the polls today. Indeed, there is mounting speculation (although it remains for the moment nothing more than that) that the coalition will fall apart before the next regular federal election date in September 2013. Were this to happen, it would likely trigger the second premature elections in less than eight years.

What accounts for this dramatic decline in the government’s fortunes? Inevitably, no single factor can be identified, but as is often the case with governments running out of steam, it is instructive to focus in particular on policies, personalities and externalities.

In terms of policies, the government’s record is at best mixed. Its flagship policy, in that it was supposed to embody the new government’s commitment to fiscal responsibility, was the so-called ‘debt brake’ (Schuldenbremse), under which new structural debt is limited to 0.35 per cent of GDP for the federal government from 2016, while the Länder will be required to balance their budgets annually from 2020. To reach this ambitious target, the federal government in 2010 agreed a savings package of no less than €80 billion by 2014. However, with the clock ticking, it is by no means clear how this goal will be achieved and which programmes will be cut. Crucially, in order to realise savings of this magnitude, the government has to take the axe to the welfare budget, simply because this constitutes the single largest element of expenditure. Yet that will be politically unpopular, especially in the run-up to the next election.

Other policy changes have been less ambitious, but no less controversial. The decision to suspend conscription, the withdrawal from nuclear energy shortly after having agreed an extension in the lifespan of Germany’s existing nuclear reactors, the abstention on the UN Security Council vote on military action in Libya and the plan to abolish the Hauptschule, the lowest level in Germany’s three-tiered school system, may have been rational in themselves, but each has created serious disenchantment among especially the CDU grassroots. Meanwhile, the FDP has been nothing short of gauche in its approach to policy, first by consistently demanding general tax cuts when the Schuldenbremse means there is little prospect of being able to finance them and then by pushing through tax breaks and regulatory benefits for the hospitality and private health insurance industries. This has done little to help the FDP shake its image as an essentially clientilistic party.

The coalition has also been bedevilled by the question of personalities. Already under the Grand Coalition from 2005-9, Chancellor Merkel had not gained a reputation as a decisive leader, and this trend has continued under the current government. Under its new leader Horst Seehofer, the CSU has also struggled to find a consistent line, a situation not helped by the sudden departure from public life in early 2011 of its biggest hope for the future and the star of politics in Germany, Karl-Theodor zu Guttenberg, over the plagiarism of his doctoral thesis. Once again, it is the FDP which has suffered most: its leader, Guido Westerwelle, clearly found it impossible to make the change from being a profile-seeking opposition politician to being a pillar of government and, as Foreign Minister, an international statesman. Shortly after taking office, he was also accused of blurring the boundaries between public and party by inviting party donors to accompany him on official visits abroad. Combined with a penchant for polarising rhetoric (famously referring to Germany’s welfare state as an example of spätromische Dekadenz), it is little surprise that he had the dubious distinction of Germany’s least popular politician – an unheard-of position for a Foreign Minister. Westerwelle was of course encouraged not to seek reelection as party leader in 2011, although he remains (a largely ineffectual) Foreign Minister. It remains to be seen whether his successor, the untested Phillipp Rösler, will be able to transform his party’s fortunes.

Yet it is of course the appearance of unforeseen events which has arguably affected this government most of all. For one thing, the nuclear accident in Fukushima, although thousands of miles away and having no direct effect on Germany itself, has helped to change the country’s policy and political landscape, first by forcing the government into an embarrassing volte-face on nuclear energy and second by leading to the election of Germany’s first Green Minister-President in Baden-Württemberg.

But most obviously, it is the crisis of the Eurozone following Greece’s mea culpa in late 2009 which has dominated the political agenda both domestically and in the EU, and which has unsurprisingly sapped the government’s political energies. Much has of course already been written on Germany’s response to this crisis, and I therefore limit myself to referring the reader to William Paterson’s recent characterisation of Germany as a ‘reluctant hegemon’ (see Journal of Common Market Studies 49 Annual Review, pp. 57-75) as a particularly compelling contribution to this debate.

However, one issue in this context which merits further reflection is the question of Chancellor Merkel’s leadership, for which (or rather for the lack of which) she has come under sustained criticism. Yet this criticism runs the risk of being somewhat facile: faced with a domestic audience reluctant to carry the can for perceived profligacy amongst other Eurozone states, the need to find a consensus with up to 16 other governments, a 24/7 scrutiny by the media and markets of every word and statement the federal government makes, plus the fact that crisis has already dragged on for almost two years, what realistically was the alternative to moving forward in a relatively cautious fashion?

And in many ways, this is the key point: if the crisis of the Euro is resolved and contagion thereby avoided, Chancellor Merkel will surely be elevated to the position of ‘saviour of the European project’ and go down in history as one of the greatest European statespersons of the modern era. It would also make her, and the CDU, politically unassailable.

So, where does this leave the government’s half-term verdict? ‘Could do better’ is clearly putting it mildly, although with just one Land election (Schleswig-Holstein) scheduled until early 2013, Chancellor Merkel now has some much-needed political breathing space. What is more, and with apologies for the mixed metaphor, government is a game of two halves, and if the second half brings a successful stabilisation of the Euro, Ms Merkel’s position would be transformed. The stakes are therefore high – but then, that’s politics.

This piece draws in part on a research project on the CDU funded by the ‘Promoting German Studies in the UK’ programme of the German Academic Exchange Service (DAAD), whose generous support I gratefully acknowledge.