New German coalition looks grand
WORTH REPEATING
After more than a month of doomladen predictions, brinkmanship and tantrums, Germany almost has a government. Angela Merkel’s centre- right alliance and the Social Democrats have finalized the terms of their “ grand coalition.” The arrangement is, as a senior Social Democrat put it, a marriage of convenience, not a love affair. For all the drawbacks, however, a marriage of convenience “consensual, pragmatic and purposeful” could be just what Germany needs. Indeed, it is effectively what Germany voted for all those weeks ago when Merkel and Chancellor Gerhard Schroeder ended up in a virtual dead heat. Germans clearly favoured change, but not in as rapid or untrammelled a form as Merkel and her CDU-CSU alliance had promised. With unemployment rife, voters were understandably reluctant to jeopardize their social safety net for Merkel’s free-market entrepreneurialism. Schroeder’s warnings about inequality struck a chord. The agreed program balances the need for reform with a recognition of German voters’ fears. If there is a domcan inant theme, it is the laudable imperative of sound financial management. As Merkel, who will become Germany’s first woman chancellor, said with housekeeperly briskness: “ Nobody on Earth can change the maths.”
Otherwise, it is a matter of equal pain, rather than equal gain. Those advocating deregulation have some of what they wanted in the form of less job protection and a higher pension age. Those concerned about social inequality in a more market- orientated system cite the proposed tax rise for the highest paid. An increase in sales tax, which was a controversial plank in Merkel’s election manifesto, will be used partly to reduce employers’ insurance contributions.
Merkel has already been criticized by her own side for conceding too much to her Social Democrat partners. In front- loading the pain, however, the new chancellor has been canny. Like U. S. president Bill Clinton in his first term, she has taken the political risk of raising taxes, gambling that the economy will strengthen thereafter. But she has an advantage over Clinton, in that she leads a coalition. The Social Democrats are complicit in the austerity measures. Were they to flounce out of the government and force a new election, they would share the blame for the tax rises. If they stay and Germany’s economy improves, Merkel, as chancellor, will take the credit. The deal for her, and for Germany, is a good deal better than it may look. This is an edited version of an editorial from the Independent, London.