Heated coalitions, half-baked reforms

Can Merkel's coalition of partners who have always been bitter rivals last longer than the conviction that this constellation is the only option available?

Lars Meyer Berlin
In the end, a year of much uncertainty and confusion in German politics found a quiet, almost surprisingly unspectacular end. After Chancellor Gerhard Schröder's surprising move to initiate early elections, the voters' refusal to grant any of the major camps a stable parliamentary majority, and months-long negotiations to form only the second left-right coalition since World War II, Angela Merkel was finally sworn in as chancellor in November.

Being the first-ever female and also the first politician from the formerly communist East Germany to head a federal government, Merkel was forced to form a coalition of the country's two major political rivals: the centre-right Christian Democrats (CDU) and their Bavarian sister party (CSU) on the one hand, and Schröder's centre-left Social Democrats (SPD) on the other. Consequently, this constellation bears as many risks as chances. Will this coalition, which embraces almost 70 per cent the popular vote, have the courage to tackle unpopular reforms and lead the country out of its serious economic crisis? On the other hand, will Merkel be able to advance rapprochement with the US despite her foreign minister being an old political companion of Schröder's (who opposed the invasion of Iraq and maintained much closer ties to France and Russia)? Finally, can a coalition of partners who have always been bitter rivals last longer than their leaders' conviction that this constellation is the only option available?

There is, in any case, much debate over the coalition's agenda on economic reforms. While many welcome Merkel's plan to drastically cut the budgetary deficit over the coming years, and modify Germany's outdated federal system in favour of a more uniform economic policy, observers from all parts of the political spectrum argue that some urgent reforms have already been postponed. Especially a much-needed liberalisation of the labour market and a more flexible tax system have fallen victim of the SPD’s resolute protection of Germany's heavily deficient welfare state. Similarly, economic stakeholders criticise that fiscal consolidation will be financed through cuts of government subsidies and a 3 per cent increase of value-added tax instead of a heavy reduction of the country's notorious bureaucracy. Many fear that the administration's reform efforts might lead to nothing more than mere fiscal and institutional repair.

However heavily debated its economic agenda may be, the coalition's joint programme, though criticised as too much of a tentative compromise between political counterparts, clearly stresses the new government's stance on foreign affairs. Especially as Merkel's CDU seek to revive, or repair, Germany's relations with the US. Observers already got a first flavour of the chancellor's new tone when her reaction to the CIA's alleged secret flights to and from German airports to transfer terror suspects remained rather composed.