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Kupchan: Impasse in German Politics Reflects ‘Political Crisis’ Paralyzing Europe

Interviewee: Charles A. Kupchan, Whitney Shepardson Senior Fellow
Interviewer: Bernard Gwertzman, Consulting Editor
September 28, 2005

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Charles A. Kupchan, the Council’s director of European Studies, says the current political impasse in Germany between the Social Democrats and the Christian Democrats over who should head the next government represents the European Union’s “most significant political crisis since its inception.”

“The stalemate we see in Germany today is in some respects a microcosm of the bigger debate across Europe on whether to hunker down and protect the traditional welfare state and traditional nation-state, with its largely Christian character,” says Kupchan, a professor of international relations at Georgetown University. Kupchan foresees growing problems with Turkey, which he says is unlikely to gain admission to the European Union (EU) in the near future.

Kupchan was interviewed by Bernard Gwertzman, consulting editor for cfr.org, on September 28, 2005.

Nearly two weeks after the parliamentary elections in Germany, the two major parties remain divided over who should be the next chancellor and which parties should be in a new governing coalition. On Wednesday, Chancellor Gerhard Schroeder, leader of the Social Democrats (SPD), and Angela Merkel, head of the Christian Democratic Union (CDU/CSU), met without any known results except for agreeing to talk further. This could lead perhaps to a so-called “Grand Coalition,” but there still is no agreement on who will be chancellor. What’s caused this highly unusual standoff in Germany?

I think there are two different dimensions to the paralysis. One of them is structural and has to do with the nature of the German political system, which, because of recent German history, was designed to produce consensus and to create many blockage points within the system. So even when it works as it is supposed to, German politics tends to produce centrist policies and prevent any single party from running away with the spoils.

That type of system worked reasonably well when there were two hegemonic parties, one of which would end up winning; then the other would play the role of loyal opposition. What’s happened over the last couple of decades—and especially after the fall of the Berlin Wall in 1989 and the integration of eastern Germany into a unified German state—is that the political system has become more fragmented.

You now have a New Left Party, which took votes from both Christian Democrats and Social Democrats. The Greens and the Free Democrats are all substantial parties now. That has created outright paralysis.

The other cause of the stalemate is more circumstantial, and has to do with the fact that Schroeder lost the confidence of many of his supporters because of the reforms he implemented and the sense that they had not yet produced any significant economic growth. That initially led to a 20 point spread in Merkel’s favor. Schroeder, however, is a campaigner par excellence, and in the weeks leading up to the vote, he gained so much ground against Merkel that the final outcome was almost a dead heat between the SPD and the CDU/CSU coalition. I think it is indicative the fact that no one really captured the imagination of the German electorate, and even though there was a sense that, “We had enough with Schroeder,” Merkel was not charismatic enough to cash in on the protest vote.

Who will emerge as the chancellor, or will there be some compromise choice?

I think it is too soon to say. Thus far, all of the leading figures have stated in rather unequivocal terms that they won’t play ball with their erstwhile political opponents. So Schroeder says: “No Grand Coalition with Merkel as chancellor;” the Free Democrats [allies of the CDU] are saying: “No coalition with the Social Democrats;” the Greens [allies of the SPD] are saying: “No coalition with the Christian Democrats.” It is quite likely these are intended as much for bargaining positions as for final statements.

Some people have said that the reason Schroeder was able to narrow the vote so dramatically in the final weeks was that Germans could not get themselves to vote for the economic changes the CDU was talking about, aimed primarily at cutting labor costs. Is there some truth to that view?

There is a sort of paradox to the vote, in that Schroeder was headed for electoral defeat in part because of his economic reforms.

What were his reforms?

He had focused on several different fronts. One was to try to reduce unemployment benefits; another to reduce the costs of the health care system; and also to introduce some modest tax reforms. Merkel focused less on the benefits side and more on the non-wage costs of labor, which I think many agree is the biggest impediment to growth in Germany. You have in Germany a situation in which wages are already high, and when you add to that costs that employers bear on health care and unemployment insurance, hiring workers becomes prohibitive. And Merkel was going to go after that by reducing the amount that employers would have to pay to the unemployment fund. She wanted to compensate by raising the Value Added Tax (VAT) [effectively, a national sales tax].

One of the setbacks she suffered was that an adviser she brought in from the private sector was a strong proponent of a flat tax. Even though Merkel herself did not support a flat tax, it created a huge opening for criticism from the Social Democrats, who said a flat tax was retrogressive. That hurt Merkel in the election.

What impact is the impasse in Germany having on the EU itself, coming after the rejection of the EU constitution earlier in the year by France and the Netherlands?

I think in some ways it is a double body blow. On the one hand, this is because, whoever leads the next government, the coalition is likely to be a weak one. That means Germany is unlikely to implement the far-reaching economic reforms that Germany and Europe need to stimulate growth. On the other hand, Europe, in the wake of the French and Dutch rejections of the constitution and a stalemate over the EU budget, is in what is arguably its most significant political crisis since its inception. You have already a weak government in France: Jacques Chirac is a lame duck president. Prime Minister [Silvio] Berlosconi’s government is teetering on the edge of collapse in Italy; Tony Blair won reelection in Britain, but had his parliamentary majority seriously reduced. And now you have stunning political weakness in Germany. That does not add up to the type of leadership that Europe needs to get out of its current turmoil.

The stalemate we see in Germany today is in some respects a microcosm of the bigger debate across Europe on whether to hunker down and protect the traditional welfare state and traditional nation-state, with its largely Christian character. This is in opposition to the realization that adapting to enlargement and globalization is a question of when and not if, and [stops politicians from] getting on with the difficult tasks of downsizing the welfare state, implementing economic reforms, and making Europe more multicultural so it is better able to integrate the Muslim immigrants that it needs to replenish its diminishing working-age population.

That has nothing to do with the United States, I take it?

I think it has negative implications for the United States but is in no way caused by the United States. These negative implications are in two respects. One is that the United States continues to look to Europe to help grow the global economy. Second, the Bush administration, in its second term, seems to have rediscovered the merits of the transatlantic partnership. You may recall that soon after his inauguration in January of this year, Bush went to Europe with flowers in hand, saying, “We Americans love you after all.”

That’s because, I think, Bush realized he needs help in Iraq, Iran and the Middle East, and the best place to get that help is from a capable and collective EU. But that does not seem to be in the offing for now.

Are there intelligent people in Europe who see a way out of this crisis, or will matters just continue to drift?

If you look at the political trajectory of Europe over decades, these types of pauses are not infrequent. Europe tends to have good days and bad days, but ultimately gets to its designated destination. My guess is the Europeans will regroup and get back on their horse, but this is certainly one of the more sobering moments in the history of European integration.

Is a large part of this due to the quick expansion to the east to allow membership from the former Soviet bloc?

The quick expansion to the east is probably the most significant cause of a foul mood of the electorate towards the EU. That’s partly because enlargement is in some ways a scapegoat for other ills.

That’s where the story of the “Polish plumber” in France doing work more cheaply than French plumbers touched a raw nerve during the buildup to the constitution vote, didn’t it?

Exactly. The heart of the problem in France is the absence of growth and the lagging economy, which has much more to do with domestic policy than EU enlargement. In many respects, enlargement and EU reform represent the solution to the problem, because it would help EU member states to deal with globalization. But instead of facing that reality, you have opponents of the constitution blaming the EU for allowing immigrants in from central Europe and ultimately, Turkey—if Turkey were to join—and calling the constitution “an Anglo-Saxon document,” too liberal in its orientation. Those sorts of charges gained a lot of support for the ‘no’ vote.

Let’s talk about Turkey. Negotiations on Turkey’s accession to the EU are supposed to start next week.

I believe the dialogue has already begun and there will be a lot of fudging going on in the coming weeks as the discussions go forward.

There is no chance of Turkey’s being admitted now, right?

No, there isn’t. And that was not likely in any case. The general idea was that negotiations would begin now and there would be a long lead time before Turkey would be ready for membership. In light of the French and Dutch ‘no’ votes and the more general opposition to Turkish membership—Angela Merkel is openly opposed to Turkish membership—the issue is likely to be put off, perhaps indefinitely, although discussions will continue so it doesn’t look as if Europe is formally closing the door.

And the reaction in Turkey to Europe right now?

I think there is growing skepticism about if and when Turkey would get in, as well as a growing nationalism in Turkey. This is related not just to the EU but to the United States and the Iraq war. In particular, many Turks fear a resurgence of Kurdish separatism spilling over from northern Iraq.

Are relations between Turkey and the United States still strained over Turkey’s refusal to allow United States troops to use it as a jumping off point to invade Iraq?

Yes. They are strained over the issues that emerged in the leadup to the war. They are strained by rising skepticism toward the United States from the Turkish public. I think American officials are alarmed by the more nationalist tone to Turkish politics.

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