The Hindu Business Line : An Iron Lady for Germany

A PHYSICIST, MS Angela Merkel's approach to politics is said to be quite like solving a science problem: Suggest a proposition and work to prove it. Some eight years ago, fighting over energy issues, Ms Merkel, as Germany's Environment Minister, had told Mr Gerhard Schroeder, who was Governor of Lower Saxony, that one day she would corner him as he had done her. Last week, she managed to do just that to the German Chancellor. After three weeks of political wrangling over the deadlocked results of the September 8 elections, Germany is to be governed by an unlikely coalition of Ms Merkel's Christian Democratic Union (CDU) and its ally, the Bavarian Social Union (BSU), and Mr Schroeder's Social Democratic Party (SPD). Ms Merkel, who surprised most observers by out-manoeuvring her detractors in the CDU, has managed two firsts — Germany's first woman chancellor and the first from what used to be the Eastern half.

Creditable though the win, her innings may not be smooth as she inherits a sluggish economy that has been hit by rising oil prices, which brought industrial production down by 1.6 per cent in August. The unemployment rate is a high 11 per cent. Mr Schroeder's failure to tackle the worsening unemployment problem, with five million out of work, despite unpopular reforms to kick-start the economy, was his undoing. Ironically, seven years ago, Mr Schroeder had defeated Mr Helmut Kohl for the same reason; then around 4.2 million were jobless. Ms Merkel campaigned mainly on a programme of cutting social spending, some of it to be financed by an increase in the value-added tax, and the introduction of labour market flexibility, an euphemism for an easier hire-and-fire policy. Governance may be difficult also because in the jockeying for power, Ms Merkel had to concede such key portfolios as Finance and Labour to the SPD, which is surely not going to make her task easy. She also faces a lack of enthusiasm for reforms within her own party and the BSU. Perhaps that was why the currency market was cool to the news of the Merkel choice, though the stock exchange — thought to be a more credible indicator of investor attitude to the election — was doing quite well.

More a vote on domestic issues, foreign policy was no bone of contention at the elections. Anyway, not much of a change is expected, at least as long as the coalition holds. On the crucial question of Turkey's entry into the EU, Ms Merkel is opposed to full membership and wants a "privileged partnership". She may woo smaller members and not just France. A Social Democrat to hold the Foreign Ministry, the Merkel Government's approach to sticky issues with the US — climate change, war on terror, and the UN — may not be radically different from those of its predecessor's. With Germany relying on Russia for 35 per cent of its oil and 40 per cent of its gas, she cannot afford to antagonise Moscow, though the relationship may not exactly be warm. Surely, Ms Merkel will need all her skills to make the coalition work. But she has the right political instincts. Thus did she rise to the helm of the Christian Democrats and earn the name of Iron Lady, drawing flattering comparisons to Mrs Margaret Thatcher. Ms Merkel obviously knows the science of politics.

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