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Germany's political uncertainties

The future of the Federal Republic of Germany under a coalition regime in which the country's principal rivals — the Christian Democrat Union (with its Bavarian arm, the Christian Social Union) and the Social Democrat Party — share power is as much clouded in uncertainty as the future of Europe is in the wake of the French and Dutch rejection of the constitution. Politically, the big challenge for German as well as European leaders will be winning popular legitimacy for difficult economic reforms they are committed to pushing through, despite the costs involved. The uniquely German deal — whereby the marginally vanquished have agreed to cohabit in government with the not-quite victors for the second time since 1949 — that broke the stalemate produced by the September 18 election could not have been delayed any further. The emergence of Angela Merkel as the country's first woman Chancellor and first head of government from the East is a major indication that the provinces facing the political and economic challenges of reunification are catching up with the rest of the federation. The need for Germany to stay competitive and Ms. Merkel's familiarity with the issues of the region offer the possibility of deepened engagement with the economies of the new European Union members. However, the compulsions of welding together a coalition with the SPD — the junior partner that has cornered eight of the portfolios, including the key Foreign, Finance, Justice, and Labour — have begun to weaken the CDU's capacity to pursue its set conservative agenda. The CDU has had to scrap plans to decentralise wage-bargaining (which would have weakened trade unions) and lift tax exemptions for Sunday and late night workers even before formal negotiations to work out a common policy framework have concluded. The proposals in the CDU manifesto for a two per cent increase in Value Added Tax to offset cuts in employers' social security contribution (aimed at reducing labour costs) and the withdrawal of tax-breaks on housing and commuter fares are potential trouble spots for the coalition.

The fluidity in German politics, coupled with the stasis in European integration, could be symptomatic of growing popular resistance to altering the post-war European model. But then, the continued viability of the key elements of post-war reconstruction is predicated upon the perceived competitiveness of European economies. To that extent, further enlargement and progress in the ongoing Lisbon Agenda of economic reforms — classic instances of alternatives sought to be imposed from the top — are political challenges. However, resistance to the commencement of negotiations on Turkey's accession to the European Union — which eventually proceeded on schedule despite frantic attempts by Austria officially to halt the process — is a sign of the many roadblocks along this highway.

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