The New Old World (44 page)

But success or failure in bringing down unemployment will not be decided within Germany alone. The arrival of the single European currency will change all parameters. This last, and most momentous, of all the changes now underway in Germany tacitly divides the government too. Prior to his nomination as SPD candidate for chancellor, Schröder did little to hide a sceptical reserve towards any sacrifice of the D-mark to the euro. Once adopted by his party, he altered his tone; his outlook perhaps somewhat less. In the spring of 1998 the Willy Brandt Haus, the svelte new headquarters of the SPD in Berlin, hosted a debate between Schröder and Habermas.
¹⁶
If in many ways an impressive occasion, it was also a disconcerting one. Habermas spoke eloquently of the need for common social and economic policies in the European Union, as the limitations of any national framework became ever more apparent, ending with a direct challenge to the SPD: ‘Have you any offensive strategy for Europe at all?' In reply, Schröder held forth fluently on the
Bundnis für Arbeit
, the compatibility between competitive performance and social justice, the importance of a modern culture, but said scarcely a word about Europe. A few months earlier, asked his view of measures to create jobs by introducing a thirty-five-hour week in France and Italy, he replied simply: ‘Good news. Our German firms will beat theirs all the more easily'.

Lafontaine always struck a different note, telling audiences long before the election that effective responses to unemployment and inequality would inevitably require coordinated European action, beyond the limits of Maastricht. Within days of taking office, he had criticized the European Central Bank for its attachment to high interest rates, proposed a target zone of the euro against the dollar, and called for a political counterweight to the ECB in the macro-economic affairs of the Union. Such ideas represent a complete reversal of the historic role of Germany in the EU. It was at German insistence that the ECB was given absolute power—without a trace of popular accountability—to determine the money supply, and therewith rates of growth and employment, in Europe; that draconian convergence criteria were made the condition of entry into the single currency; that a deflationary Stability Pact was imposed on national budgets even after entry.
This is the framing order Europe was used to, and had come to accept.

Germany's entry into monetary union is thus unlikely to be smooth, for either itself or Europe. The new government is already under attack from the media, put out by Schröder's disappointment to date of business expectations. The size of its electoral victory is no guarantee of a secure life. The most stable of all political orders in post-war Europe has entered a period of unpredictable turbulence, like some vast placid river gradually starting to churn and tumble towards the rapids. Of only one thing can we be sure. Germany will not be a dull place. ‘That great and ambiguous country', as Eric Hobsbawm once called it, is going to occupy centre stage over the next years.
¹⁷
What kind of future it will come to represent remains hidden, not least to the Germans themselves. The phrase that lingers in the mind is a form of the interrogative peculiar to this culture. All European languages have a colloquial expression appending a negative query at the end of an affirmative statement—isn't it?;
n'est-ce pas
?;
no es
? German, although it has an equivalent,
nicht wahr?
, goes further. Here teenagers round off their sentences with a single, more radically indeterminate word, seductive and unsettling.
Oder?

 

A decade after Helmut Kohl's fall from power—two since the Berlin Wall came down—in what directions, and how swiftly or sluggishly has the broadened German river flowed? The country has undergone enormous structural changes 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, three hundred 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 Kohl's sixteen-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 fundamental 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, newly 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.
¹⁸
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 washout. 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.
¹⁹
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 Oder 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 October, the SPD had a margin of six thousand votes over the CDU/CSU, and the coalition was back in power with a majority of three seats in the Bundestag.
²⁰

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 had been, 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.
²¹
In the autumn of 2003, the Red–Green coalition passed a package of measures, dubbed Agenda 2010, to break the muchdecried
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 healthinsurance, 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, in its long years in power, had flinched. Editors and executives, even if mostly wishing the Agenda had been tougher, were full of praise.

The SPD had, in fact, passed a more concentrated and comprehensive bout of neo-liberal legislation than New Labour, a much-invoked model, was ever to do. But the political landscape in which Agenda 2010 was introduced was not that of Britain under Blair. On the one hand, there was no Thatcherism in Germany for Social Democracy to inherit—it had been forced to do the same originating job for capital itself, rather than simply extending it further in the same direction. On the other, the German working-class
and its organizations remained substantially stronger than in Britain. If trade-union density was comparable—less than a third of the work-force in either case, falling more sharply in Britain—the Confederation of German Trade Unions (DGB) commanded significantly greater bargaining power, through traditional corporatist institutions of wage negotiation and codetermination, than the TUC; while the SPD itself, with over double the membership of New Labour, was far less hollowed-out as a party. The result was twofold: the neo-liberal thrust of Agenda 2010, coming not from the radical right but a hang-dog centre, was inevitably much weaker than that of Thatcher's regime, while the resistance to it within a still—relatively—uncastrated labour movement was much stronger than among Blair's following.