Germany's government | Dropping the co-pilot | Economist.com
Germany's government
Dropping the co-pilot
Nov 15th 2007 | BERLIN
From The Economist print edition
The political consequences of an unpolitical resignation
FOR once, the official line had the ring of truth. Franz Müntefering's wife has cancer, so he had compelling personal reasons to resign as labour minister and vice-chancellor of the “grand coalition” on November 13th. Yet politics also played a role, and the decision will have significant political consequences.
Mr Müntefering was a key architect of the coalition between his Social Democratic Party (SPD) and Chancellor Angela Merkel's Christian Democratic Union (CDU), and was widely seen as its stabilising force. He had both the trust of the chancellor and the respect of his party, which feels increasingly disadvantaged as the CDU's junior partner.
Yet he ended up too reform-minded for the SPD and too radical for the CDU. At its party convention last month, the SPD voted for longer unemployment benefits for older workers, which would be a partial rollback of the Agenda 2010 reforms that Mr Müntefering helped to push through in 2003, under the SPD-led government of Gerhard Schröder. Hours before his resignation, in an all-night coalition meeting, Ms Merkel rejected his plea for a minimum wage in the postal service. Mr Müntefering said he was “deeply disappointed”. The SPD accused Ms Merkel of breaking her word and surrendering to the business lobby. Mr Müntefering must have felt let down on all sides.
His resignation leaves the coalition even more bedraggled. The SPD's chairman, Kurt Beck, did not step into his place mainly because he wants the freedom to prepare his party (and himself) for the federal election due by September 2009. The new vice-chancellor, Frank-Walter Steinmeier, is no lightweight—he was Mr Schröder's chief of staff, is Germany's second-most popular politician after Ms Merkel and will remain foreign minister. But he lacks Mr Müntefering's clout within the SPD and has become publicly testy about Ms Merkel's foreign policy. The chancellor is more interested in grabbing headlines by rebuking Russia and China for anti-democratic practices than using quiet diplomacy to discourage them, he has suggested. The two may well clash. Olaf Scholz, promoted from party whip to be labour minister, is a labour lawyer who has none of Mr Müntefering's prestige.
The mix of compromise and stalemate produced by the coalition's late-night tussle may be a foretaste of what is to come. Although it rejected the postal minimum wage, the CDU bowed to the SPD's demand for longer unemployment benefits for older workers. The coalition found enough cash to cut payroll taxes sharply, which should spur job creation. But internal strife has left Deutsche Bahn in limbo. The railway, the federal government's largest enterprise, faced the biggest strike in its history this week. It needs fresh capital, but the SPD refuses to consider raising this by issuing voting shares. It is not clear if it will accept a compromise suggested by the (Social Democratic) finance minister, Peer Steinbrück, under which the tracks would remain federal property but the trains would be partially privatised.
An ambitious government would find plenty to do in its remaining two years in office. It spends €60 billion-80 billion ($85 billion-115 billion) on social-security programmes which pay people not to work. That money could be better spent on education or infrastructure, says Hilmar Schneider of the Institute for the Study of Labour in Bonn. Health-care financing remains a mess. But the coalition is increasingly incapable of rising to such challenges. The risk, as a committee of economic wise men declared recently, is that many of the gains of the past few years may be thrown away.
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