It’s the morning after in Germany. All through the campaign, the chattering and writing classes moaned that the election was a bore — we were going to get Angie as chancellor no matter how the election turned out.
Well, Angie we got. But the country has woken up to the fact that MerkelII is going to lead a very different coalition to that led by MerkelI. And given her chameleon-like capacity for adapting, Angela Merkel could yet turn out to be Germany’s Maggie Thatcher.
Goodness knows, the country needs a shake-up. The economic crisis has exposed Germany’s vulnerability to world markets. The social safety net may have cushioned the effects of the downturn, but the costs are horrific and the dangers of relying too much on engineering skills and industrial prowess are clear. Anything we can do, the Chinese can do better. And more cheaply. Yet the whole system, from education to immigration to taxation, is geared to producing, protecting and pampering the Facharbeiter, the skilled industrial worker, and the mammoth companies that employ him.
Smaller entrepreneurs and professionals have been squeezed from all sides: overtaxed, burdened by high payments for the social system, strict rules on hiring and firing and minimum wages, and the inability to get credit. The resulting frustration has led to the rise of the liberal Free Democrats, Merkel’s new partners in government.
As well as lower taxes, a reform of costly healthcare and a more Anglo-Saxon approach to the labour market, the new government will probably want to keep Germany’s nuclear plants running longer to keep energy prices down and meet carbon targets.
Look for an emphasis on competitiveness rather than consensus; growth rather than greenery; smart social systems rather than solidarity.
MerkelII, as Germans are realising, means the end of an era: 11 years of Social Democrats in power (seven with the Greens, four with Merkel’s Christian Democrats).
It’s not far-fetched to say that the era of New Labour is coming to an end in Europe. Tony Blair hijacked Conservative positions and profited from capitalism’s 20-year boom. In Germany, Gerhard Schröder did much the same. Now the British Conservative leader, David Cameron, is hijacking New Labour’s positions, as Merkel has been hijacking Social Democrat positions, with devastating effect.
In opposition, Labour and the Social Democrats will drift to the left. In Germany, this will include some kind of rapprochement with the ex-Communist Left Party, which should make them unelectable for the next decade.
In Europe a triumvirate of Merkel, French President Nicolas Sarkozy and Cameron — backed by Jóse Manuel Barroso, the newly elected European Commission president — should ensure that the European Union becomes leaner, meaner and more competitive.
Germany’s incoming foreign minister, Guido Westerwelle, is inexperienced, but Merkel has always been her own foreign minister, so don’t expect major changes.
The foreign policy challenges, however, are huge. It’s becoming increasingly apparent that US President Barack Obama is determined not to let foreign entanglements get in the way of his domestic agenda. In this, he is more like George Bush before 9/11 than Europeans care to recognise.
Similarly, Obama seems to reason that the best way to get the Europeans to do more for international security is for the US to do less. That could backfire.
Europeans love to complain about the US as the world’s sheriff, but they are reluctant to pin on the deputy’s star. If Merkel can help Europe rise to the occasion, she may earn herself a place in history. —