Q&A on Germany’s Election

Q&A on Germany’s Election

September 14, 2005 4:37 pm (EST)

Current political and economic issues succinctly explained.

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What are the main issues facing voters in Germany’s upcoming elections?

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.

Who are the two main candidates for German chancellor?

  • Angela Merkel. Chairwoman of the CDU, Germany’s longest-ruling party, Merkel is a Protestant former chemist, and the first woman to seek Germany’s chancellorship. She grew up in East Germany and rose to prominence under the tutelage of Helmut Kohl (chancellor from 1982-98). She then severed ties with him in the mid-1990s after Kohl became embroiled in a bribery scandal. At age 51, she has earned a Margaret Thatcher-like persona for her tough demeanor and conservative stances; she has “no appetite for cozy talk,” writes Jane Kramer in the New Yorker. But personality aside, her policies have won the support of 42 percent of German voters, according to a September 12 Forsa poll, putting her seven points ahead of the SPD. Barring a late surge by her opponent, experts say, she is likely to be Germany’s first female chancellor.
  • Gerhard Schroeder. Chancellor of Germany since 1998, when he ousted the Christian Democrats after sixteen years in power, Schroeder narrowly won reelection in 2002. His reelection was largely credited to his opposition to the U.S. war in Iraq and his handling of floods that struck the eastern half of Germany three years ago. But his popularity plummeted after German unemployment hit new highs earlier this year. His SPD party, Germany’s oldest, has governed in a coalition with Germany’s Green Party for the past seven years. A native of Lower Saxony, former activist and chairman of the Young Socialists, Schroeder, 61, has appealed to German voters more because of his charisma and camera-friendly demeanor than his economic record. His approval ratings have risen in recent weeks, however, after he performed well in two televised debates with his less media-savvy opponent.

How do the candidates propose to fix Germany’s economy?

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.

What are the details of their plans?

  • 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.

  • Schroeder. The SPD leader has called for continuing his so-called Hartz IV reforms—named after a former Volkswagen executive—passed in 2003, which include relaxing Germany’s rules on hiring and firing workers and enacting so-called mini-jobs, or more flexible part-time work, which pay $500 per month and free workers from paying welfare-insurance contributions. These reforms have won Schroeder the ire of Germany’s most powerful trade unions and scorn from reform-minded economists who argue his plan does not do enough to rescue Germany’s economy. On the campaign trail, Schroeder also said he would reverse his previous tax cuts, increasing from 42 percent to 45 percent the top income-tax rate for those earning over roughly $300,000 per year. (As chancellor, he cut the minimum tax rate from 25.9 percent to 15 percent and the top tax rate from 53 percent to 42 percent.) Schroeder has not repeated his 1998 mistake when he promised to cut unemployment in half by the close of his first term, but he has repeatedly promised to reduce the number of unemployed to 3.5 million. Last, Schroeder favors maintaining Germany’s Mitbestimmung system, which gives workers a more direct say in running private companies than in most other countries.

How do the candidates differ on foreign policy?

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:

  • U.S.-German relations. Politically speaking, neither candidate wants to be seen as pro-U.S. As Knapp puts it, “[George W.] Bush is radioactive over here.” But political observers generally say relations between the United States and Germany would be warmer under a Merkel chancellorship. “CDU, the party of [former Chancellor Konrad] Adenauer and Kohl, has always been the party of transatlanticism, while the SPD has always been tempted by neutrality,” Speck says. “[Merkel’s] sympathy for the United States is seen as her Achilles heel. That’s why she is forced to hide it.” Schroeder has strongly opposed the war in Iraq , which polls show around 80 percent of Germans also oppose. Merkel, who came out in favor of the war in Iraq in 2003, has been critical of Schroeder’s confrontational stance with the United States on Iraq and other transatlantic issues.
  • Turkey’s EU candidacy. Schroeder enthusiastically favors Turkey’s eventual membership in the European Union. Merkel opposes Turkey’s entry but favors something short of full membership, what she calls “privileged partnership.” She told reporters that allowing in Turkey, whose population is expected to eclipse Germany ’s in the near future, would “place too heavy a political, economic, and social burden on the European Union and threaten European integration.” While polls show most Germans agree with Merkel, Germany is home to nearly 700,000 Turkish-German voting citizens—in addition to nearly 3 million nonvoting Turkish immigrants—who favor Turkey’s eventual accession. Negotiations between Turkey and the European Union are set to begin in October, though experts do not foresee Turkey joining anytime before 2015.
  • Middle East policy. On Iraq, despite Merkel’s earlier support for the war, there is no chance of German troops being deployed there, experts say. On Iran , Schroeder has opposed Bush for his statement that “all options are on the table” for dealing with Tehran’s nuclear threat—including, presumably, a military option. The SPD leader has ruled out the military option, favoring diplomacy to resolve the European Union’s dispute with Iran. Merkel, on the other hand, would be less accommodating to the Iranians, some experts say. “She’s quite literal,” Knepp says, “and more likely to say, ‘We should enter negotiations with all options on the table.’” On Israel, both candidates have pledged their commitment to the Israeli-Palestinian peace process, as well as to preserve Germany’s “precious” relations with Israel and to continue combating anti-Semitism, both at home and abroad.

Why was the election pushed up a year?

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.

How does Germany’s system of coalitions work?

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.

Is Merkel’s gender expected to play a role in the election?

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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