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| Author: | Lionel Beehner |
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September 14, 2005
Germans go to the polls September 18 to choose between candidates from the country’s two main political parties, the conservative Christian Democratic Union (CDU) and the center-left Social Democratic Party (SPD). The poll comes as Germany struggles with near-record high unemployment, a growing trade deficit, and a stagnant economy. Less important to voters, polls show, but equally critical are candidates’ views on foreign policy, including the European Union’s (EU) nuclear negotiations with Iran, Turkey’s EU candidacy, and Germany’s peace efforts in the Middle East. One week before the election, roughly one-third of German voters—particularly those in former East Germany, where unemployment is as high as 30 percent—remain undecided.
Polls show the primary issue concerning voters is the economy. Around 4.7 million Germans are unemployed, or 11.6 percent of the country’s workforce—close to the highest rate since World War II. Public debt has ballooned to 66 percent of Germany’s gross domestic product (GDP), and economic growth since 1997 has been a sluggish 0.1 percent, according to the World Bank. The two candidates share basically the same plan for shaking up Germany’s labor market, reforming the country’s unemployment-benefit system, and easing restrictions on employers’ ability to hire and fire employees. But they differ on the speed and scale of the reforms, and also on issues such as tax cuts and simplifying Germany’s notoriously complex tax-code system.
Merkel. The CDU chairwoman has proposed a number of reforms aimed at lowering unemployment, chief among them a controversial increase in Germany’s value-added tax (VAT) on sales of goods from 16 percent to 18 percent. The purpose of this tax increase, which will raise an estimated $19.5 billion, is to offset cuts in social-security costs for employers. Merkel also plans to relax worker protections, allow companies greater ease to hire and fire workers, and cut corporate contributions to unemployment insurance. She also favors allowing individual corporations to negotiate their own wage deals, a move opposed by Germany’s major trade unions.
Some analysts also speculate Merkel’s choice for finance minister, Paul Kirchhof, a former constitutional court judge, might impose his widely discussed plan for a 25 percent flat tax. Popular in Eastern Europe, a flat tax on income is seen by some economists as an effective tool to make compliance easier and evasion more difficult. Social Democrats say this tax is regressive and would primarily benefit the rich. But rumors of the flat tax are being “totally overblown,” says Julian Knapp, senior program officer at Berlin’s Aspen Institute. “It’s sort of [Kirchhof’s] ideal world but everyone agrees this is just a utopia, not a program they’re running on.” Instead, Knapp says, Merkel’s camp is proposing “very modest” steps toward reforming Germany ’s arcane tax system—which consists of some 96,000 rules and regulations—including closing tax loopholes and abolishing 418 types of tax subsidies and exemptions.
Both candidates have run on platforms that emphasize their economic plans, not their foreign-policy views. “Germany’s political culture is still very inward-looking,” says Ulrich Speck, a political observer based in Berlin. “Schroeder never forgets to present himself as the ‘peace chancellor,’ but there is, in fact, no public interest in foreign policy.” German foreign policy, most experts say, would not be significantly altered by either candidate. But the candidates do differ on some key international issues. Among them:
Earlier this year, Schroeder’s low approval ratings, combined with a string of electoral defeats—including the SPD’s first loss in local elections since 1966 in North Rhine Westphalia, an industrial region and traditional SPD stronghold—prompted him to call early elections to ask for a mandate to continue his reforms. Experts say Schroeder expected to face certain defeat in 2006 and gambled that calling an early election might boost his support and prevent the opposition, namely the CDU, from putting together a powerful campaign.
Since Germany adopted its current constitution in 1949, the country has been run by a series of coalitions of different parties. The reason is because of Germany ’s electoral system; voters get to cast, in effect, two votes—one for a local candidate, and one for a party. The percentage of votes each party gets determines the number of candidates elected to the Bundestag, Germany’s parliament. A party must get at least 5 percent of the vote to win parliamentary representation.
Coalitions are an important part of this year’s election. The CDU has actively courted the Free Democratic Party (FDP), a pro-business party that has a history of playing kingmaker in German politics. But some analysts expect the CDU may not win a majority, because the vote may be splintered by the emergence of the Left Party—a merger of Communists and disgruntled members of the SPD like former finance minister Oskar Lafontaine—whose popularity has picked up in recent weeks. Without a majority of the vote, Merkel may be forced to form a “grand coalition” with the SPD, some experts say. Schroeder has told party leaders he would never join a coalition as a junior partner, and has refused to combine forces with Lafontaine, despite the fact that the Left Party is polling stronger than the FDP or the Green Party. Another possible combination, experts say, is a three-way “traffic-light coalition” of SPD (whose color is red), FDP (yellow), and the Greens.
Until recently, Merkel has rarely played the gender card and made little mention of the fact that she’s the first female to run for chancellor in German politics, often referred to as an “old boys’ club.” Women in Germany only began to enter politics in the 1960s and continue to hold mainly ministerial positions linked to family or youth. In the early 1990s, Merkel herself was Germany ’s minister for women and youth. “I have tried never to sit in a corner and argue my ‘minority properties,’” she told the New Yorker. “A chancellor has German interests,” she often says, not “women’s interests.” Polls show Germans do not generally consider a candidate’s gender a major factor, yet half of Germans believe her chancellorship would be “an historic advance.” As Merkel has slipped in the polls, experts say, she has emphasized her femininity more, giving up plain suits for rose-colored jackets and well-coiffed hair.
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