Chancellor Under Fire
By Dr. Jackson Janes

Newsweek Starts a Chain Reaction
Chancellor Merkel came under a wave of journalistic criticism this month in the form of a set of articles in the October 22 edition of Newsweek magazine. The Newsweek pieces had ripple effects in the German press as well.

The thrust of the criticism was that the Chancellor was not stepping up to the political plate in the defense of the reforms she had said were most necessary to get Germany operating on all cylinders.

More than that, she seem to be allowing the reforms which were actually set in motion by her predecessor, Gerhard Schröder, to be rolled back by an increasingly confrontational Social Democratic party and even by some her own fellow party leaders. The SPD has been clearly moving its coordinates to the left in order to stave off inroads from the new Left Party (Die Linke) led by former SPD Chairman Oskar Lafontaine. The Left Party is cruising along in the polls at a level which could make them very competitive both in the state elections coming up in 2008 and 2009, before the national elections are held in the fall of 2009. The SPD has been trying to stop the membership bleeding by moving its agenda to recapture those voters who have deserted the party in the wake of the reforms, reforms which increased the retirement age.

International Success to Date
Half-time during any administration is an opportunity to see what the government has been able to accomplish. Merkel has been in command of a coalition in which her party has a two-vote majority. Trying to manage such a large and unwieldy set of interests under one roof is going to be difficult, adding to the mix the challenge of keeping the respective ranks of the parties in the coalition in check. Neither side has been totally successful at that level.

Merkel's initial success in her first two years in office has been on the foreign policy stage, given the opportunities she had to shine, particularly with the presidency of the European Union and the G8. Here she was able to gain record high popularity in the polls, which she still enjoys. That said, she has some difficult challenges to confront in the coming months and years, including a decision on how to handle the Kosovo question and the ongoing debate over how to deal with Iran.

Yet, the domestic wrestling matches over taxes, pension plans or health care are far more difficult to forge a consensus around. The criticism that she has been avoiding confrontations with the Social Democrats or simply not standing up for her own policy convictions has come from the corporate sector, which has been seeing an upswing in the economy as the results of the reforms put in place. Any talk of reversing the engines is seen as a sign of caving in to the SPD.

A bit of perspective on the process of steering the second grand coalition in the history of the Republic might be useful. Germany is a country which derives a good deal of its cohesion from the belief in consensus building. That means compromises need to be made.

In the framework of a grand coalition, there is a much greater spectrum of voices on both ends competing for the stage. Merkel does not enjoy the power positions of French President Sarkozy or British Prime Minister Brown, both of whom have greater leeway in their majorities. She has always said that her tactics are those of small steps, along the lines of boring through thick boards as Max Weber once called it.

A Reinvigorated SPD?
The primary concerns among those in the CDU who are critical of Merkel is that she is not allowing sufficient room for her troops to challenge the Social Democrats, even if she is not doing it herself. The SPD has been so weak of late internally that the idea of being able to stare down a popular Chancellor on domestic issues serves to induce some adrenalin among the party members. SPD leader Kurt Beck came out of the SPD party convention last week full of confidence and loaded with demands for the Chancellor the next time they meet over the policy debates. The CDU team will be watching to see what red lines she sets down and to what extent the SPD is successful in setting the agenda for its own purposes.

How successful the Chancellor will be can be measured in 2008 when three Land level elections will let her know how her party is positioned. In each case, Hamburg, Lower Saxony and Hessen, the CDU is head of government. In Hessen, the CDU under Roland Koch has an absolute majority. Should there be significant losses by the CDU in these races, it could spell trouble for the Chancellor further down the road.

Yet, she is dealing with a public which is also easy to rattle with fears of globalization, locust-like hedge funds, and fears of terrorist attacks. The SPD is aware of that and is seeking to steer through with a populist platform. Yet both the SPD and the CDU have been losing ground among the voters for some time now. As a recent Deutsche Bank Research study (click here for study) concludes, "the greatest threat to the medium-range growth outlook lies in an undercurrent in politics and society, namely the misplaced desire for greater government... Surveys show topics such as social justice and distributional concerns moving to the fore, and government is expected to come up with answers. But the political parties in Germany still have a long way to go on producing convincing growth and distribution strategies."

As we recall, the last grand coalition lasted three years. As this current one goes into its third year, it will need to do some convincing that it is working and not simply biding time for the next national election in 2009. The responsibility lies on both sides of the coalition. The next national meeting of the CDU in early December will offer a platform for Merkel to set the bar for the CDU and the coalition. The ball is in her court.

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This essay appeared in the November 2, 2007, AICGS Advisor.

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Want to know more? Check out these links for more information.

The Articles from Newsweek:

"Calculating to A Fault," by Stefan Theil, Newsweek, October 29, 2007.

"Her Anthem Is a Soothing Lullaby," by Josef Joffe, Newsweek, October 29, 2007.

"Following a Risk-Avoidance Strategy," by Joschka Fischer, Newsweek, October 29, 2007.

"Was She Ever Really a Reformer?" by Hugo Müller-Vogg, Newsweek, October 29, 2007.

"She Has Shown She Is Not Afraid," by William Drozdiak, Newsweek, October 29, 2007.

Other Coverage:

"Die Okay-Kanzlerin," by Dirk Kurbjuweit, Alexander Neubacher, and Ralf Neukirch, Der Spiegel, October 2007 (PDF).

"Göttinnendämmerung," by Christian Günther, Die Zeit, October 26, 2007.

"Mrs. Feelgoods Angst vor dem Risiko," by Christina Neuhaus, Die Welt, October 23, 2007.

"Frau Merkel und der Zufall," by Christopher Keil, Süddeutsche Zeitung, October 23, 2007.