Monday, September 05, 2005

German Election Debate and the Prospects for Recovery

Angela Merkel, the CDU's centrist candidate, yesterday debated with Chancellor Schöder, leader of the tired, seven-year-in-office socialist administration. By German standards it was a reasonably lively affair. The expectation was that Schröder, the "media Chancellor" would "win" through being more relaxed and plausible, but Frau Merkel held her own.

As it happens, economic prospects are beginning to look brighter in Germany. It is now the biggest exporter in the world. Some labour costs are going down: in manufacturing, for example, unit labour costs have fallen by 4.4% over the last year. Nor is the share of GDP taken by the state as catastrophically high as in, say, France (Germany: 46%; UK: 45%; France: 56%). the problems in Germany are inflexible labour policies, Byzantine tax rules and excess bureaucracy.

Encouragingly, Angela Merkel has brought in Professor Paul Kirchof as her candidate for finance minister. He is a "flat rate" tax guru, an idea which has been successfully implemented in eastern Europe and is increasingly seen as a good move in the west. Kirchof also wants to take the axe to 90,000 arcane tax rules and exemptions which impede German business and add to bureaucratic overload.

Nevertheless, the debate never really caught fire. Merkel did not savage Schröder for his economic mismanagement - even if the 5 million unemployed and the record level of debt couldn't be avoided altogether. Nor did she rebuke the Chancellor for allowing his Green party colleague Trittin (German environment minister) to blame President Bush for the ravages of Hurricane Katrina, yet another sign of the German administration's loathing of Bush. Nor did she question the widom of the socialist party chairman, Chairman Müntefering, in attacking capitalists for their "locust-like" depredations on the German economy.

Instead, Merkel seemed concerned to appear calm and collected, a serious figure with rational solutions to the country's problems. She succeeded in this. Schröder, meanwhile, was grateful to be allowed to exude statesmanlike gravitas, dissociating himself from his government's many embarrassments. He was even given the chance to pose as the loving husband, justifiyng his wife Doris' impertinent remarks - that Angela Merkel's biography was not that of a typical German woman (Merkel is on her second marriage and remains childless). Chancellor Schröder - who has banned speculation about the uncannily black glossiness of his ageing hair - told the watching millions how dearly he loved Doris, his fourth wife.

A dull debate, therefore. But these politicians have a shrewd measure of what will appeal to the German voters, and have probably given it their best shot. The polls still show a narrow overall majority for a putative CDU/CSU/FDP coalition. Grounds for cautious optimism for the centrists, goodish news for Germany.

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