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Update 8 (January 2006):

Germany's Grand Coalition, 2005-?

Even those of us who are sceptical about the extent to which campaigns and the media make a difference to the outcome of elections (see Chapter 6 and Chapter 7) would find it hard to deny that both played a role in Germany's Bundestagswahl in 2005, a comprehensive report on which can be found here.

In May 2005, Gerhard Schröder called an election for the Autumn, even though the contest wasn't scheduled to take place until Autumn 2006. He was reacting to yet another defeat for his party, the SPD, in regional (Land) elections - crucial because they determine the composition of the Bundesrat, the upper house of parliament that plays such a big part in German government. In so doing, he shocked not only his fellow social democrats but also many constitutional conservatives. In Germany, governments generally last a full four years because any parliamentary vote of no-confidence tabled by the opposition has to be 'constructive' (that is, the proposers of the motion have to have an alternative government ready and willing to take over). Even though this isn't a requirement for confidence motions tabled by the government, many still questioned the propriety of Schröder 's move to engineer a parliamentary vote that he would lose, thereby allowing Germany's president to call an election.

So why did Schröder do it? Primarily because he felt that things could only get worse.

First, there was little prospect of an economic upturn: Germany may have regained its status as the world's biggest exporter (both absolutely and per capita), but domestic growth remained barely perceptible. The economy was dragged down by a lack of consumer confidence and an interest rate determined by a European Central Bank tasked with maintaining the stability of the euro, not pulling Germany out of recession. Meanwhile, unemployment (11.5% nationally and 20% in the former East Germany) was as bad as ever, and unlikely to respond in the short term to the so-called Agenda 2010 and Hartz IV labour market and welfare reforms aimed at increasing flexibility and decreasing dependency.

Second, those reforms had proved sufficiently unpopular with some on the left of the SPD and its trade union supporters that they had set up an alternative political movement, the WASG (Election Alternative for Labour and Social Justice): an early election would give it less time to organise and sell itself to disgruntled social democrats.

Third, Schröder guessed that the 20-plus point lead in the opinion polls registered by his main opposition, the Christian Democrat CDU/CSU might well represent something of mid-term protest and might therefore deflate were decision day to be brought forward. Schröder also knew he was a great campaigner: in 2002 he had come from behind to snatch defeat, not simply because of his opposition to war in Iraq but because he is a charismatic figure capable of exciting audiences whether they be sitting at home watching him go head-to-head in televised debates or standing in the crowd at one of the traditional outdoor rallies that still play a big part in German elections. We noted in Chapter 7 how Schröder - dubbed the 'Media Chancellor' - had bested his relatively experienced opponent, Bavarian premier Edmund Stoiber, three years before. Now he was up against the relatively untested Angela Merkel - not only the first Ossi (easterner) to be chosen by a large party as Chancellor-candidate but also the first woman.

And true to form, Schröder, notwithstanding the fatigue he must have been feeling as the result of his criss-crossing the country to attend over 100 rallies, outclassed or at least outplayed the CDU leader in the only televised debate between them - an event watched by an estimated 21 million Germans. With Merkel's poll lead rapidly evaporating, her supposedly Thatcherite policies (particularly a plan to raise VAT) proving unpopular and rumbles of discontent over her uninspiring presence from within her own party, Schröder made much - as he was already doing on the campaign trail - of her ill-advised appointment of a 'flat-taxer' who was, he claimed, planning to rob Germans of their extensive tax reliefs and make a fireman and a nurse pay the same as a millionaire.

In the event, even Schröder was unable to pull off the miracle that a win for the SPD (and the continuation of the 'red-green' coalition) would surely have represented. But he certainly pooped Mrs Merkel's party: the CDU/CSU took only 35.2% of the vote (compared to the SPD's 34.2%) - not enough to form its planned coalition with the (market) liberal FDP that, guided by its leader, the openly gay Guido Westerwelle, had kept its side of the bargain by winning 9.8% (over two points up on 2002). The Greens could be fairly pleased with their total (7.4%), although the real winners on the more radical end of the spectrum, with 8.7% (25.3% in the East and 4.9% in the West), was the Linkspartei - a joint venture between the former East German communists, the PDS, and the western WASG that now hopes to become a unified left-wing alternative covering the whole of the Federal Republic. The far-right NPD, despite its chances being periodically talked up in the foreign media (which loves nothing better than reminding readers of the risk of Germany somehow returning to its Nazi past), predictably came nowhere near crossing the electoral threshold of 5%.

In some European democracies, a social democratic party facing similar parliamentary arithmetic might have opted to form a minority government (see Chapter 4), relying on support from the Greens (probably as a coalition partner) and the Left party (too extreme to invite into government formally). In Germany, as in the Netherlands for instance, however, the cultural logic (if not the constitution) pushes the parties to achieve a majority solution. The international media may have amused itself by touting the possibility of a 'Jamaica coalition', the FDP and the Greens, but there was really only one possible outcome - a so-called Grand Coalition (Grosse Koalition) made up of Mrs Merkel's party and the SPD. Once Mr Schröder had been persuaded that he could not lead such a government, negotiations began in earnest and, all things considered, were concluded relatively quickly. This may have confirmed the suspicion of many voters that there really wasn't much difference between a social democratic party beginning to realise some of the upsides of 'Anglo-Saxon' policies and a Christian democratic party whose continued commitment the social market economy (as opposed to the free market) was always destined to disappoint neo-liberal wishful thinkers (see Chapter 9).

The Grand Coalition - the first since the late sixties - received majority support in many opinion polls. And despite 51 votes against it by MPs supposedly part of its 448 seat parliamentary strength, it was confirmed by the Bundestag in November, some eight weeks after the election. As the price for Schröder stepping aside, the 'junior partner', the SPD, emerged with more cabinet posts than the 'senior partner', the CDU/CSU. It also took most of the big portfolios, such as finance, foreign affairs, health, environment and transport - something which can either be seen as a triumph or as a failure to realise that many such posts will turn out to be poisoned chalices. Certainly, there were disagreements within the SPD's ranks, with the party changing its leader (Matthias Platzeck, another Easterner, taking over from Franz Müntefering) during the negotiations.

The coalition's very detailed (143 pages) programme was hardly Thatcherite. But it contained some signs that the new government - which unlike its predecessor enjoys the considerable advantage of a clear majority in the crucial upper house as well as the lower house of parliament (see Chapter 4) - may continue Schröder's halting attempts to bring about the structural (and perhaps constitutional) reforms received wisdom suggests are necessary to improve the economy. On the other hand, if you believe that the country's main problem is the lack of consumer demand and the fact that the Eurozone's 'one-size-fits-all' interest rate (see Chapter 9) is set far too high for Germany, the coalition's programme misses the point and may even do more harm than good.

As for Mr Schröder, he continues to hit the headlines, taking a job with a subsidiary of Russia's state-owned energy giant Gazprom just weeks after, in his capacity as Chancellor, using his good relationship with Vladimir Putin to negotiate a deal to supply Germany - a move that attracted huge criticism at home and abroad even before Gazprom sparked a political crisis by turning off gas supplies to the Ukraine. Interestingly, his successor as Chancellor, Mrs Merkel, although a Russian-speaker, has hinted she prefers a more constructive relationship with the USA (see Chapter 11). Even more interestingly, perhaps, she suggested, both by word and by deed, at her first EU summit in December 2005 that she would take a more benign stance toward the UK, even if this meant abandoning some (though not all) of the nostrums underpinning the 'Franco-German axis' that has traditionally been a 'motor of integration' in Europe (see Chapter 1, Chapter 2 and Chapter 11).

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