Ulrike Guérot is on the European Council for Foreign Relations where she is Senior Policy Fellow and Representative for Germany. She leads the Germany in Europe project and is now particularly active in the Reinvention of Europe programme. She talked to The Hindu about Germany’s legislative election on September 22 and what the future could hold.

The Hartz IV reforms (named after Peter Hartz, the former CEO of Volkswagen) to which this interview refers, were introduced in stages starting in 2003. They aimed to dismantle Germany’s overgenerous welfare state and have resulted in competitiveness, reduced wages, higher exports and a better balance of payments. But the deregulated labour market (there is no minimum wage in Germany) has led to massive exploitation, particularly of the more vulnerable blue-collar workers who find themselves working long in poor conditions for little pay. Excerpts:

The German model is being held up as the “ideal” model in this globalised world — huge exports, healthy balance of payments with a national debt under control — but all this has come at a cost. Could you discuss the Hartz IV reforms of the labour market that led to these changes and what it has done to German society?

There are obviously many opinions. There are three economists and five opinions so there are those that say these reforms have been very successful and that Germany is now reaping the fruits of labour market reforms, which have brought down the cost of wages and made Germany more competitive. That is one reading.

The other reading is that Hartz IV has created a core in Germany that has been left behind; that it has created tremendous income disparity with 20 per cent of the people stuck at very low incomes with temporary contracts and no hope of ever getting out of this second labour market into the first labour market. This is also having an impact on society because children born to such poor parents rarely aspire to higher education. And that poses a problem because it no longer corresponds to the “classical” German model which has put the accent on income equality and higher education and a middle-class life for all. The question is, to what extent are the Germans willing to discuss this?

The problem is that the deregulation of the labour market was brought in by the Social Democratic (SPD) and the Green parties. Both left wing creators of these Hartz IV reforms are unable to admit that they introduced measures that went against their own electorate — blue-collar workers, the economically weak. This is a critical problem of admission and Germany keeps running away from a national debate on this subject. The overwhelming opinion is that Germany is doing fine and that failing economies should apply the German formula for success.

You have described the German electoral campaign as boring and lacking in any serious issue-based campaigning. How would you interpret last week’s thundering success of the Christian Social Union, the Bavarian sister party of the Christian Democrats, the (CDU-CSU) alliance?

It has been a slow moving campaign. Chancellor Merkel has avoided discussing any topic whatsoever. Der Spiegel ran a cover story describing her as the Queen, saying that a personality cult has been built around her. She has been dodging direct confrontation, riding on a wave of popularity and the SPD and Greens have shied away from discussing any real problems including that of Europe for fear of losing voters. Because in Germany there is the feeling that everything is going just fine.

Is anything predictable in this election at all?

At this point all the bets are off. Most people tend to presume that we will be heading for another Grand Coalition between the Christian Democrats and the Social Democrats. But all sorts of combinations are possible. One cannot mathematically rule out an SPD and Green coalition along with the Left party. Anything is possible.

Germany has given very reluctant support to the French position on Syria. It was clearly against the operation in Libya or Iraq and more recently in Mali. Is the Franco-German relationship unravelling? And what does that mean for Europe?

Germany is of the opinion that France should get its economic house in order first instead of playing big roles internationally. France tends to project itself through actions of this kind. There is a deterioration in the Franco-German relationship and it is to France’s disadvantage. There was a time when the two countries consulted closely over Europe. France would come up with proposals. These would be discussed and the Germans would support the proposals. It has to be said that the French appear to be running out of imaginative ideas for Europe. The two countries no longer see eye to eye. They differ on energy policy, on the nuclear question. Most importantly, Germany insists upon economic recovery as a priority. It wants to impose a certain degree of fiscal discipline and recommends austerity. So there is a hiatus. What can take this forward is if the two countries stop the blame game, stop confronting each other with opposite visions of Europe and try to see what sort of Europe is possible. It should not be a French Yes to Eurobonds and a German No to Eurobonds but what is desirable and attainable, efficient and effective.

What do you see as the future of Germany?

It is possible that Merkel in her third term as Chancellor will be a softer, more amenable leader. She has done all the weeding in the European garden. She has wielded the hatchet on the weak economies of the Eurozone. Now she can begin replanting. She is thinking of her place in the history books. Actually there are rumours that she may not serve her full four years but might leave after two years in office.

Mrs Merkel is not obdurate although she might appear to be inflexible. She listens and she pays attentions to what others say. She may well take a softer more consensual approach in her third term.

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