In the international clamour that has surrounded the onset of the current economic crisis, Germany has often appeared the still centre. Yet such seeming passivity belies the enormous structural changes that the country has undergone since the fall of the Wall. Polity, economy, culture and society have been subject to acute, often contradictory pressures. It is barely a decade since the federal capital was relocated, 300 miles to the east; less than that since the D-Mark disappeared and Germany assumed its dominant position within the eurozone. Politically, a new post-unification landscape began to emerge only with the elections of 1998, when fatigue with Helmut Kohl’s 16-year reign, broken promises in the East and, above all, slow growth and stubbornly high rates of unemployment ushered in a Red–Green coalition. No attempt to track Germany’s current direction can avoid consideration of these subterranean shifts.
In 1998, Gerhard Schröder’s most prominent single pledge had been to halve the number of jobless within his term of office. How was this to be done? Oskar Lafontaine, the popular spd chairman installed as Finance Minister, had no doubts: reanimation of the German economy depended on scrapping the deflationary Stability Pact that Bonn had imposed as a price for monetary union, and boosting domestic consumption with counter-cyclical policies along Keynesian lines. After a few months of frustration, he was overboard.footnote1 Schröder, relieved to be shot of a rival, opted for orthodoxy: balancing the budget came first. Lafontaine’s successor, Hans Eichel, became a byword for wooden, if far from successful, devotion to the task of consolidating public finances. Tax cuts, when they came, were for capital not labour, assisting corporations and banks rather than consumers. Growth did not pick up. When the spd–Green government faced the voters again in 2002, its economic record was in effect a wash-out. Schröder had boasted he would reduce unemployment to 5 per cent. As the coalition went to the polls, it was just under 10 per cent. A scattering of modest social reforms, the most significant a long-overdue liberalization of the rules for naturalization, had done little to offset this failure.
Externally, on the other hand, the coalition enjoyed a less constrained field of operations. Within a year of coming to power, it had committed Germany to the Balkan War, dispatching the Luftwaffe to fly once again over Yugoslavia. Presented as a vital humanitarian mission to prevent another Holocaust on European soil, German participation in Operation Allied Force was greeted with all but unanimous domestic applause: by Centre-Right opinion as robust proof of the recovered national self-confidence of the country as a military power, by Centre-Left as an inspiring example of international conscience and philanthropy. In the media, the decisive conversion of the Greens to military action was the occasion for particular satisfaction. Two years later, the Bundeswehr had left Europe behind to play its part in the occupation of Afghanistan; a suitable regime for that country was fixed up between interested parties in Bonn, and a German general was soon in command of allied forces in Kabul. This expedition too met with general approval, if—a remoter venture—less active enthusiasm among voters. Germany was becoming a normal force for the good, as responsible as any other power in the democratic West.
In public standing, this transformation stood Red–Green rule in good stead. It made Fischer, its most profuse spokesman, the most popular politician in the land. But this was a position Foreign Ministers in the Bundesrepublik, usually representing smaller parties, had long enjoyed, as pastors of the nation’s conscience—not merely the interminable Hans-Dietrich Genscher, but even the imperceptible Klaus Kinkel possessing the same esteem in their time. Nor, of course, did loyalty to nato distinguish government from opposition. Prestige in performance abroad is rarely a substitute for prosperity at home, as figures on a larger scale—Bush Senior or Gorbachev—discovered. Heading into the elections in 2002, the spd–Green coalition was far behind the cdu–csu in the polls. The Christian Democrats had been seriously damaged by revelations of Kohl’s long-standing corruption—the party was extremely lucky these emerged after he had ceased to be ruler, rather than while in office.footnote2 But the solidarity of a political class, few of whose houses were not also built of glass, ensured that, as elsewhere in the West, the incriminated was never prosecuted, let alone punished; the waters rapidly closed over the episode without much benefit to the Social Democrats. With the economy still floundering, the opposition looked primed for victory.
In the summer of 2002, however, the countdown to the invasion of Iraq, signalled well in advance, altered the atmosphere. Regime change in Baghdad, however welcome a prospect in itself, clearly involved bigger risks than in Belgrade or Kabul, making public opinion in Germany much jumpier. Sensing popular apprehension, and fortified by the reserve of France, Schröder announced that Berlin would not join an attack on Iraq even—Habermas was scandalized—if the un were to authorize one. Fischer, devoted to the previous American administration, was reduced to muttering assent in the wings, while Christian Democracy was caught thoroughly off-balance—unable to back Washington openly, yet unwilling to fall into line behind the Chancellor. Schröder’s advantage was complete: this time, German pride could sport colours of peace rather than war, and to boot, the opposition could not share them. It only remained for the biblical intervention of a flood in the East, when the Elbe burst its banks, permitting a well-televised display of hands-on energy and compassion, to put him over the top. When the votes were counted in September, the spd had a margin of 6,000 over the cdu–csu, and the coalition was back in power with a majority of eleven seats in the Bundestag.footnote3
Once banked electorally, public opposition to the attack on Baghdad could recede, and discreet practical support be extended to the American war effort, German agents providing undercover identification of targets for Shock and Awe. In Europe, the occupation—as distinct from invasion—of Iraq was anyway soon accepted as an accomplished fact, losing political salience. But Schröder was careful to maintain the entente with Chirac he had formed during the run-up to the war, gratifying the Elysée both economically and politically, by conceding an extension of the Common Agricultural Policy and continued French parity with Germany in the weighting arrangements of the Treaty of Nice. Close alignment with France was, of course, traditional German policy since the days of Adenauer. For Schröder, however, it now afforded cover for overtures to Russia that were precluded when the ussr still existed, and might otherwise have been suspect of a second Rapallo. Warmly supported by German business, enjoying lucrative contracts in Russia, Schröder’s friendship with Putin—‘a flawless democrat’ in the Chancellor’s words—met with a cool reception in the media. Geopolitically, the growth of ties between Berlin and Moscow was the most significant novelty of Schröder’s tenure. But politically, it counted for little at home.
There, as his second term began, the economic problems that had originally elected him remained apparently intact. Aware how narrowly he had escaped punishment for failing to deal with them, and goaded by criticisms in the press, Schröder now decided to bite the neo-liberal bullet, as authorized opinion had long urged him to.footnote4 In the autumn of 2003, the Red–Green coalition passed a package of measures, dubbed Agenda 2010, to break the much decried Reformstau—blockage of needed improvements—in the Federal Republic. It comprised the standard recipes of the period: cutting the dole, raising the age of retirement, outsourcing health-insurance, reducing subsidies, abolishing craft requirements, extending shopping hours. German Social-Democracy had finally steeled itself to the social retrenchment and deregulation of the labour market from which Christian Democracy, throughout its long years in power, had flinched. Editors and executives, even if mostly wishing the Agenda had been tougher, were full of praise.