One Cheer for Schröder

For anyone critical of the Bush administration's foreign policy, there seemed much to cheer about in German Chancellor Gerhard Schröder's re-election last month. Schröder, after all, had made opposition to U.S. war plans in Iraq the centerpiece of his party's campaign. To a liberal or a progressive, there also appeared to be grounds for optimism in the Social Democratic Party's (SPD) and the Green Party's victory over their conservative rivals, particularly in the wake of social democratic defeats in Denmark, France and Holland. But appearances can deceive.

Schröder won his victory by using foreign policy to distract German voters from their concerns about 10 percent unemployment and almost a decade of economic stagnation. Schröder didn't come to or depart from the election with a credible program for reviving the German economy. And while questions of war and peace are significant, Schröder's criticism of American policy was made opportunistically -- not with an eye toward actually affecting American foreign policy. All in all, the bizarre election probably leaves Schröder, Germany and Europe in worse shape than they were before.

In July, Schröder and the Social Democrats looked like they were headed for defeat at the hands of the Christian Democrats (CDU), the Christian Social Union (CSU) and their potential coalition partners, the Free Democrats (FDP). When Schröder ran in 1998, he promised to reduce unemployment from 4.1 million to at least 3.5 million, but this year it was again at 4 million. The CDU/CSU program was not that different from the SPD's -- Germany's Christian Democrats are like moderate U.S. Democrats in their economic outlook -- but the party's candidate for chancellor, Edmund Stoiber, could boast of his success as the governor of prosperous Bavaria. One poll showed the CDU/CSU and the FDP with 49 percent compared with 41 percent for the SDP and its embattled coalition partner, the Greens. But a series of historical accidents, and the Bush administration's turn toward war with Iraq, turned these numbers around.

In the former East Germany, where unemployment stands at 20 percent, former Communists from the Party of Democratic Socialism (PDS) have held the balance of power. In the September election, the PDS had expected to increase its vote to 7 percent or 8 percent. But in July, a petty scandal forced the PDS' leader, Gregor Gysi, to abandon national politics. Without the moderate and articulate Gysi as its standard-bearer, the PDS was reduced to a party of apparatchiks. The east's voters were suddenly up for grabs.

In early August, floods ravaged eastern Germany. Many Germans attributed these to extreme weather caused by global warming, which boosted the pro-environmental Greens' cause. At the same time, Schröder, sporting waders, responded energetically to the floods while Stoiber arrived belatedly in Dresden clad in loafers. It was a minor gaffe but it dramatized Stoiber's lack of an environmental program. The PDS was equally slow to respond.

Then came Iraq. Schröder and Foreign Minister Joschka Fischer, the leader of the Greens, had announced in early August that they opposed German participation in an American-led war against Iraq. Vice President Dick Cheney's belligerent speeches in Nashville, Tenn., and San Antonio, Texas, at the month's end lent credibility to their arguments that the United States was bent on war. By early September, the SPD and the Greens were rising in the polls, the CDU/CSU was falling and the pacifist PDS, deprived of its last clear issue, was dropping below 5 percent in opinion polls. (If a party fails to win 5 percent nationally, it doesn't get to share seats in Germany's proportional parliamentary system.)

In desperation, the CDU/CSU and the FDP played their race and immigration cards. Stoiber, trying to exploit post- September 11 fears, promised to expel 4,000 Muslims from Germany -- presumably without trial -- and denounced Schröder for favoring immigration. In the election's single most encouraging development, Stoiber's appeal fell flat. Then the FDP's deputy chairman, Jürgen Möllemann, who had been chastised in the spring for anti-Semitic comments, circulated a flyer to voters attacking not only Israeli Prime Minister Ariel Sharon (who is unpopular throughout Europe) but also a major Jewish leader in Germany. Jörg Haider had used a similar tactic to curry favor among Austria's latent anti-Semites, but Möllemann's ploy completely backfired in Germany, dooming the FDP, which had been running a lead of more than 10 percent in the polls, to only 7.4 percent in the final tally.

The key to the SPD's success was that it got about 300,000 PDS votes from the east, while in the west the Greens soaked up about 500,000 disillusioned former SPD voters who might otherwise have backed the FDP or even the CDU/CSU. Not surprisingly, the SPD did worse than it did in 1998, but the PDS defections kept the SPD even with the CDU/CSU at 38.5 percent while the Greens, who got a surprising 8.6 percent, provided the two parties with a slim majority of 11 seats in the Bundestag, the German parliament.

Schröder did not emerge from the election with a specific mandate for fixing the German economy. Its ills are as familiar as they are intractable. Germany, like Japan, seems unable to extricate itself from the conditions of its former success, even though these now contribute to its decline. German industry, which once dominated Europe, has suffered from unusually low rates of profit -- 3.6 percent in 1999 compared with 9.2 percent in the United States or 12 percent in the United Kingdom -- that have dampened investment and led to rising unemployment. Germany, which remains committed to its industrial past, has also been slow to develop a service or Internet economy that could employ many of its immigrants and less-trained workers.

Schröder finds himself boxed in between policy advisers who urge measures to spur investment and new employment and his constituents who covet the status quo. He's constrained as well as by his narrow margin in the Bundestag and by his minority in the Bundesrat, the upper chamber that must approve major legislation. Economists sympathetic to the SDP blame Germany's ills not only on a poor educational system but also on high labor and welfare costs (including huge subsidies to the east) and on draconian labor regulations that discourage start-ups and new hires. But Germany's voters and its unions understandably resist cuts in social welfare and in labor protections, and politicians from the major parties have heeded their wishes. In the election, Stoiber as well as Schröder resisted calls to cut social-welfare spending, and Stoiber actually criticized Schröder for having reduced corporate taxes. Both men promised tax relief and new spending on education but failed to explain how Germany could do so and stay within the deficit-spending limits by the European Union at Germany's insistence.

This August, Schröder received the recommendations of an unemployment commission of business and labor leaders he had appointed to look at the country's chronic unemployment. The commission recommended overhauling the country's unemployment system to provide more incentives for the unemployed to return to work, even at lower wages. A faction within the Greens -- called the "Eco-FDPs" -- has also called for reforms in labor regulations. Schröder's finance minister has called for targeted tax increases and cuts in social spending to reduce the projected deficit. But business has bitterly opposed any tax increases, and labor unions are against any cuts in social programs or labor protections. And Schröder, who owes his election partly to the east, is not in a good position to begin cutting subsidies to that region.

The Schröder government did gain a mandate from the election to develop a new foreign policy, but Schröder may have little interest in doing so. Schröder, like Bush this fall, began to voice strong opinions on foreign policy only when it became obvious that he was losing support because of his economic failings. Earlier, Schröder had not clearly opposed the Bush administration's foreign policy. When he finally announced his opposition to war with Iraq in August, he did not consult with any of Germany's European allies -- whose support would be necessary for Germany to have any influence over the United States. He took a stance that was far more extreme than those of other European critics of the Bush policies. Schröder rejected not only a U.S.-led invasion but also German participation in an armed force organized by the United Nations to ensure Iraq's compliance with arms inspections. That endeared him to the PDS' pacifist voters but not to other European leaders trying to develop a viable alternative to the American position.

Since World War II, Germany has always worked out its foreign initiatives with the French, the other main power on the continent. The European Union was itself a Franco-German initiative. But Schröder -- perhaps miffed by French President Jacques Chirac's tilt toward Stoiber -- bypassed France. He also declared that Germany would go its own "German way" -- a term that eerily recalled the 1930s. And in the wake of his victory, Schröder snubbed France, customarily the first stop on a German government's victory tour, by setting off for Britain, where he asked Prime Minister Tony Blair to intercede on his behalf with the United States. When Schröder finally visited Chirac on Oct. 2, he took the occasion to squabble over agricultural subsidies. Says Tobias Durr, the editor of Berliner Republik and a prominent social democratic intellectual, "Schröder has consistently underestimated the importance of the Franco-German relationship over his four years in office -- one of his larger mistakes, I think. If Europe is to work at all ... the first condition is strong ties between Paris and Berlin. [Helmut] Schmidt knew that, so did [Helmut] Kohl. I doubt whether Schröder does. One suspects he doesn't realize that as a result of his position, he is a weaker man, not a stronger one."

In Schröder's first administration, he and Fischer took the lead in promoting European unity and the expansion of the European Union. A stronger Europe could provide a check on America's worst tendencies -- for instance, Bush's unilateralism -- and a reinforcement of its best. But Schröder's pursuit of a "German way" jeopardizes rather than aids that effort. In tandem with the other wacky elections of this year, the German election has contributed to the fragmentation rather than the unification of Europe.

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