The meaning of Merkel’s victory

2 Oct

Originally published in the October issue of Le Monde Diplomatique

Angela Merkel and her Christian Democrat party (CDU/CSU) have won a resounding victory in Germany’s general election. Merkel has broken what had become an established rule of European politics since the beginning of the crisis: incumbents don’t get re-elected.

Merkel had seen this at first hand as close working relationships with other European politicians were felled by electoral fortunes. The peculiar alliance of France and Germany (“Merkozy” to the European press) was undone as Nicolas Sarkozy lost out in the 2012 French presidential election to his Socialist challenger, François Hollande. Mario Monti, another favourite partner of Merkel, was routed in Italy’s election earlier this year by the comedian-cum-blogger Beppe Grillo and his Five Star movement. Incumbents have lost out across southern Europe — Spain, Greece, Portugal — as voters hope that a change in government might mean a change in fortunes. There has been no decisive shift left or right, just a broad and sweeping dissatisfaction with existing governments. Apart from Germany.

Merkel’s re-election doesn’t mean that nothing has changed in Germany or that it has been blissfully untouched by the Eurozone crisis. Looking at the substance rather than at the party labels, we see shifts. The more dogmatically free-market FDP, Merkel’s coalition partner in the outgoing government, failed to secure any parliamentary representation at all. The Left Party, Die Linke, a persona non grata for mainstream German politicians because of its roots in East German Stalinism and its opposition to NATO, now has more parliamentary seats than the German Greens. If the Social Democrats (SDP) enter into a coalition with Merkel’s party, then Die Linke will lead the opposition within the Bundestag.

The policies of Merkel herself have steadily drifted leftwards as she has taken on ideas first floated by the SDP. From military conscription to a minimum wage and rent controls, Merkel has adopted policies that first came from the left. This had the effect of emptying much of the campaign of any traditional ideological conflict. German voters have not been divided by the politics of left and right, given the vastly similar programmes adopted by the main parties. Merkel has even given up on nuclear power, in a move that pulled out from under the feet of the Green Party their most distinctive policy position. Instead, the campaign was fought around the language of risk and of personality. Germans preferred Merkel’s low-key, homely aspect to Steinbrück’s debonair image and, seeking reassurance in the widespread depoliticisation, voted for Merkel’s motherly, risk-averse approach.

Political stability in Germany reflects its unique position in Europe as the country that has survived the crisis. Not unscathed, as the leftwards shift suggests, but markedly better off than any other country. Having reformed itself in the early 2000s, German industry rode an export-led boom that continues today. As trading partners in Europe — from Eastern Europe through to southern Mediterranean economies — crashed and burned from 2009 onwards, Germany compensated by expanding sales in non-European export markets. What it lost by way of demand in Europe it has gained in emerging markets, especially in Asia. Germany’s current account surplus, at $246bn over the last year (6.6% of GDP), is greater than China’s. Along with a more flexible labour market that is keeping unemployment low (but part-time employment high), we have the material foundation for Merkel’s victory. But though this foundation is solid, Germany is not booming. Since the early 2000s, German wage growth has been very limited. Moreover, few Germans own their own homes, meaning that they have not experienced the same wealth effects of rising house prices felt by a chunk of the British middle- and upper-middle class, the Dutch, Italians and Spaniards. They have been saved from the effects of collapsing property prices but have not known the heady days of year-on-year price rises. Merkel’s cautious optimism reflects the attitude of a large part of the German working and middle class who feel that their relative prosperity is precarious and needs to be closely guarded.

The meaning of Merkel’s victory for the rest of Europe is mixed. It is possible that Merkel will soften her stance to some extent now the election is over, though we should not expect any sudden U-turns on something like Eurobonds. A slow recalibration of the Eurozone economy is more likely, as crisis-hit countries like Spain and Ireland regain some competitiveness via internal adjustments to wages and prices. Where Merkel may compromise is on measures to boost domestic demand. If Germans were to consume a little more rather than save so much, that would help pull other Eurozone economies out of their deep depression. Though something like this may happen, any recalibration will still occur within the context of a Eurozone marked by massive disparities in wealth and spatially organised around a clear logic of centre and periphery.

4 Responses to “The meaning of Merkel’s victory”

  1. geofftkennedy October 2, 2013 at 2:22 pm #

    Reblogged this on Parchment in the Fire and commented:
    From The Current Moment.

  2. phil October 3, 2013 at 11:46 am #

    It wasn’t a leftward shift. Simply. And I’m truly very sorry to have to say so. But the Christian Democrats nearly gained an absolute majority in parliament, while two other right-of-centre parties just missed the 5 percent clause (FDP at 4.8 and AFD at 4.7 percent), which narrowly avoided a completely different and clearly right-leaning Bundestag.

    Moreover it’s easy in all of this to overlook the importance of Merkel’s assertion of Germany’s dominance in Europe, which has shifted the entire political spectrum in Germany to the right. In Germany it goes without saying that nothing in Europe will work without us, and other countries have to follow our lead because we’re doing fine while they’re falling back – this offers solace to the German working and middle classes, who’ve lost much of their social security, relative wages, and certainty about the future since Schröder’s Agenda 2010 reforms. At least the suffering has paid off. Furthermore, the election result comes at a time of culturally resurgent national sentiment – which anyone visiting Germany during any international football tournament since 2006 would noticed by national flags becoming more ubiquitous than even in the USA in war times. Merkel stands iconically for the strict matriarchal approach with which Germany seeks to govern Europe (“this is for your own good and you’ll be grateful later”), while the Social Democrats with their deficit-hawkish candidate Steinbrück offered nothing else.

    Steinbrück and Merkel’s only real bone of contention in the election was who should be Chancellor; perhaps the only difference in substance was whether taxes should be (moderately) raised in order to balance the national budget a little earlier (SPD), or not raised and the budget balanced a little later (CDU). Merkel hasn’t really drifted left – her so-called minimum wage was a policy to be negotiated on a case-by-case basis at the firm level (at best a veneer, at worst a hoax), and there have been no actual rent controls – but the SPD and the Greens have drifted closer to Merkel.

    Today’s leading figures in the SPD all rose through the ranks under Schröder and still fundamentally adhere to the doctrine that economic policy is about managing the nation’s competitiveness, through means like fiscal rules, wage moderation and labour market reform. The same, largely, goes for the Greens, who are toying with the idea of a coaltition with the Christian Democrats. Meanwhile, a coalition of SPD, Greens and the Left would be an arithmetic possibility, but the SPD has categorically clarified that its ideological enemy is on the left, not the right. A challenger generation in the SPD is slowly emerging from the Länder level, with characters like Hannelore Kraft who wagered a shaky alliance with the Greens and the Left in 2010, but is unlikely to arrive in power in time to undo the damage done by three successive SPD governments from 1998 to 2005 (two SPD-Greens and one CDU-SPD). These challengersencounters resistance at every step from the current leadership. The left (small L), which gained a slim majority in parliament two weeks ago, simply isn’t much of a left.

    Few SPD voters have drifted to Die Linke, most disaffecteds simply have left the parliamentary political arena (non-votership inversely correlates with SPD results http://commons.wikimedia.org/wiki/File:Nichtw%C3%A4hler_bei_Bundestagswahlen_seit_1949.png) or are drifting right into the soothing national-assertive embrace of the CDU (http://www.zeit.de/politik/deutschland/2013-09/waehlerwanderung-bundestagswahl-2013). The success of Die Linke as the third-largest force in parliament should not be overestimated: the only anti-austerity party in the Bundestag lost nearly a third of its voters and remains deeply divided into rival factions. The near-successful entry of the anti-Euro “Alternative Für Deutschland” into parliament, which garnered 4.7 percent of the votes, meanwhile speaks for itself. The neoliberal FDP was mostly punished for its obvious clientelism and incompetence, and less for its free-market ideology.

    Interestingly, Austria’s general election last weekend produced a similar outcome with parties promising national assertion taking the victory. Putting the Christian-democrat ÖVP and the rightist FPÖ together, the traditional conservative wing attained nearly 45 percent of the vote. The SPÖ remaining the strongest party at 26.8 percent (compare with Germany’s SPD at 25.8 percent) is a pyrrhic victory. Two further populist parties, the billionnaire-headed Team Stronach and the free-market liberal NEOS, have appeared out of nowhere to poll 5.7 and 4.9 percent respectively.

    • thecurrentmoment October 3, 2013 at 1:03 pm #

      Good comment. Our argument about the leftwards shift shouldn’t be taken to mean any kind of absolute shift to the left, whatever that might mean exactly. Germany is no different from much of the industrialized West in having seen a broad movement to the right over the last three decades or so, one that has come about as a result of the decline in the political clout of organized labour. That is the big picture trend. Specifically with regards this election though, Merkel’s strategy was often to take up elements of the SPD platform and make it her own. In this respect, Germany has not been entirely removed from the social consequences of the Euro-crisis and its impact on politics. Some discontent and frustration can be taken up by the “nationalist assertions” as you put it, but some also come out in things like the minimum wage. Perhaps the language of left and right shifts is misleading given that, as you point out, both SPD and CDU programs were so similar. The election was really fought out on the terrain of risk aversion. There was strikingly little reflection on – led alone flag-waving – Germany’s role in Europe, which is interesting in and of itself.

  3. philmader October 3, 2013 at 1:37 pm #

    Word up about the big picture shift. Most striking thing about the results is the overwhelming centrist consensus they show, with today’s “centrist” being yesterday’s liberal centre-right. In that sense, Germany is moving in line with other Western countries, but you’re absolutely right that the elements of “caution” and “stability” were far more important than elsewhere.

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