German alternative

Serious expectations are building up nationally and internationally about September's federal elections in Germany - assuming…

Serious expectations are building up nationally and internationally about September's federal elections in Germany - assuming president Horst Köhler agrees they can legally be held after the SPD-Green government engineered an artificial parliamentary defeat to bring them about last month.

Opposition leader Angela Merkel yesterday presented her party's manifesto, which merits close attention given her strong lead in the opinion polls. It proposes income tax cuts funded by increases in VAT rates, more flexible labour market policies and emphasises more competitive economic policies as the best way to tackle unemployment, sluggish growth and large budgetary deficits. Economic policy is at the heart of the document, given Germany's current problems. It also calls for closer relations with the United States, a broader definition of German interests and allies within the European Union, strict limits on the EU budget and opposes full Turkish membership in favour of a privileged partnership.

Ms Merkel is being painted as a new Margaret Thatcher by liberal and neoconservative commentators in the UK and the US who are anxious to see a radical change in Germany's welfare state to bring it into line with their political models. Yesterday's CDU-CSU programme belies such expectations. While it proposes shifting taxation priorities - which are more sharply etched given plans announced by the Social Democrats to increase taxation of the wealthy - it is certainly not a Thatcherite manifesto.

German politics are locked into federalist and corporatist bargains quite different from those of Britain in the 1980s. Ms Merkel will govern in a coalition and does not enjoy the freedom of movement given to prime ministers by Britain's electoral system. Indeed her plan to increase VAT was immediately attacked yesterday by her likely partners, the Free Democrats. Economists criticised the programme for threatening consumer spending and not addressing the budget deficits effectively.

READ MORE

Ms Merkel's current political strength arises more from dissatisfaction with chancellor Gerhard Schröder and his SPD-Green coalition than from any public demand to dismantle the welfare state. Besides, she lacks political charisma despite her unusual background as a Protestant leader of the conservatives from eastern Germany. It is difficult at this stage to see how Mr Schröder's gamble on early elections can succeed if it is approved by the president. But he is quite capable of a political surprise, while the CDU-CSU must still convince voters they can make a real difference.