Tuesday, November 22, 2005
Bringing this series on Germany's unexpected election to a close, I must say that I had great hopes in the beginning that there would be some genuine change in one of Europe's Big Three. To start off with there was a real prospect of economic reform, which would have helped the British economy as well and would have given a German chancellor more leeway in dealing with the EU. Such a position would have made cooperation with Britain easier and more beneficial for Germany and us. Coupled with the Chancellor-hopeful Angela Merkel's robust Atlanticism it really did look like a fresh dawn in the Western alliance. Well all of that has come to nothing. The indecisive outcome which gave the parting and unmissed Gerhard Schroeder's social democrats an almost equal say in the new government has lead to the formal coalition agreement that was signed last week.
How long this "grand" coalition holds in another thing but its economics doesn't bring much inspiration with it: mainly tax raising measures to fix the budget deficit, but at the expense of job creation measures, which in turn will mean higher welfare bills, which will mean a greater budget deficit, which in turn . . . well you get my drift. Germany needed a courageous and perhaps even dangerous cut in taxes and red tape to get it still-sluggish economy off the ground. Then solving the budget problem would have been far easier. Such a policy could of course never be decided by a grand coalition, which by the nature of the game will be shaped by compromises that lead to a sub-optimal outcome in which everybody's worse off.
As for foreign policy, the signs are not too great on this either. I suppose it's already a bad omen to begin with that the now-governing Christian democrats one staunch Atlanticist, Friedbert Pflüger, is not included in the cabinet at all. Whilst some people have opined that the new foreign minister, the former