Walker's World: Merkel: The dark side

By MARTIN WALKER, UPI Editor Emeritus  |  Sept. 24, 2013 at 10:30 AM
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STUTTGART, Germany, Sept. 24 (UPI) -- The adulation and euphoria surrounding Angela Merkel's re-election success is getting out of hand. The curse of the third term now lies in wait.

"Third time lucky," it is said, but for politicians it is more like "Third term unlucky." Success goes to the head. Re-elected politicians start to believe the praise they hear.

The precedents are grim. Margaret Thatcher went slightly mad in her third term and Tony Blair started to believe he was a world statesman, if not savior, rather than the leader of a middling European power and of a deeply divided and dysfunctional political party. For Helmut Kohl, Merkel's conservative predecessor as German chancellor, a third term led to political disaster and personal disgrace.

Merkel's success wasn't all her own doing. The economic and welfare reforms launched by her Social Democratic predecessor Gerhard Schroeder paved the way for the economic renaissance that Merkel has enjoyed.

Above all, the euro has been an extraordinary bonus for Germany's export-oriented industries by holding down its exchange rate and thus its export prices. Had Germany stayed with its former Deutschemark currency, its exchange rate (like that of Switzerland) would have shot through the roof, pricing Germany out of the export markets it has been able to penetrate so well.

The weak sisters of the eurozone have thus helped create Germany's current prosperity. Moreover, Germany isn't as prosperous as all that, with a current growth rate of well below 1 percent, barely one-third of what the United States and Britain and Japan are beginning to enjoy.

And then there is the curse of Merkel herself. In political terms, the woman is a Death Star, extinguishing political vigor wherever she goes. She sucked the Social Democrats into a coalition during her first term, which set its two wings fighting between themselves, dismayed much of the party's labor union base and opening the way for the far left Linke party (rooted in the old East German Communists) to become the ideological opposition.

Her chief opponent in this latest election, Peer Steinbruck, was unable to gain traction in criticizing Merkel's record because he served as finance minister in her first coalition. He scored significant points against her economic record in their TV debate but each time she was able to deflect them by saying he and his party had gone along. The Social Democrats have yet to recover from Merkel's deadly embrace.

The same fate has engulfed her next coalition partners, the Free Democrats, who for the first time in modern German history failed to reach the threshold of 5 percent of the vote and thus have no seats in the new federal Parliament.

And like some giant tree in the forest, Merkel's towering effect has denied sunlight and life to her own surroundings. An entire generation of potential rivals among her fellow Christian Democrats has been eclipsed. Rising young politicians in her party have been sidelined, undermined or given politically treacherous jobs, so suspicious of future challenge is this superwoman of the Bundestag.

"After me, the deluge," France's King Louis XV is supposed to have said. Merkel could echo the phrase.

The legacy of her rule is a disastrous and expensive energy policy, an underfunded and creaking infrastructure of road and rail (German railways no longer run on time) and an unreformed university system that shows pitifully in the world rankings.

And then, of course, there is the euro, which like some hoary old ghost in a Shakespearian drama is about to clamber back on stage: Greece needs another bailout. Spain's debt has just reached record levels. The Italian economy is held together by debt that keeps on rising and interest rates are rising ominously.

Merkel's euro strategy has been to do the minimum possible to avert disaster at the last possible minute while assuring her German voters they won't be tricked into paying for the feckless southern Europeans. In fact, Germany's obligations and credit guarantees in the various rescues and bailouts are now the equivalent of one year of the German government's budget. And there is no sign of any new policy coming from the chancellor's office.

So what comes next? A new euro crisis can virtually be guaranteed, a slowing Chinese economy means a shrunken market for German exports. The country's disastrous demographics as a fast-aging country with too few children are intensifying the challenge of financing the welfare state.

One place to look for a sense of the future is at Hannelore Kraft, 53, an economist by training with a degree from King's College, London. Currently leading the powerful industrial province of North Rhine-Westphalia, she is a mother, an evangelical Protestant (having converted from Roman Catholicism) and a Social Democrat.

Governing in coalition with the Green Party with tacit support from the Linke, Kraft is proving an attractive and competent potential alternative to Merkel.

The broad coalition of the left and center-left that keeps Kraft in power may be the key to Germany's political future. Bear in mind that Merkel's election triumph still left her coalition of the center-right trailing behind the overall votes of the left.

Merkel's legacy may yet turn out to be a reinvented and reinvigorated German left, with another woman as leader.

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