German Alternatives

24 juli 2005

Now, everything is on the table. The election programs have been presented. The President has given his OK. Everyone is awaiting the formal go-ahead for the federal elections in Germany September 18

Elections are always decided on election day – never before. At this time before the September 2002 elections the opposition lead by CDU/CSU was clearly in the lead in the opinion polls. But then events in combination with the tactical skills of Gerhard Schröder intervened, and the red-green coalition, by the thinnest of margins, managed to survive.

Then it was the sudden discussion concerning a possible war in Iraq and the flooding disasters in Eastern Germany that suddenly changed the scenery. The opposition challenger Edmund Stoiber lost the election during the last two weeks of the campaign, and he essentially lost in among the voters of Eastern Germany.

Now, prospects for the opposition looks more solid. But there are problems on the horizon.

What happened during the years since 2002 is that the red-green coalition in Berlin suddenly was forced to see the necessity of structural reforms in the economy, launced the so called Agenda 2010 but then gradually started to lose the support of their own party machineries and voters. Their past rhetoric clashed with the reality of governance, and the result was a de facto collapse of the consensus needed for succesful governance.

When Chancellor Schröder laid out the arguments for dissolving the Bundestag in a remarkable statesmans-like address on July 1st, this was effectively what he said. He did not hide the painful poolitical reality of his situation.

Since then, attention has been focused mainly on the government program presented by the CDU/CSU, but also on the emergence of new political forces to the left of the SPD and the Greens.

Angela Merkel has been firm in wanting to present an honest program that can be governed on after the election. It has obviously taken some arms-twisting within the CEDU/CSU to do so, but as a side-effect her reputation as a determined boss has been reinforced.

She has come out with a program that aims at boosting the economy and furthering by taking down wage taxes by two percentage points, thus further increasing the competitiveness of German industry, lowering income taxes with the highest bracket going down from 42 to 39 % as well as proceeding with plans to take down corporate taxes to 19 %. All of this should be financed by an increase in VAT from 16 to 18 %.

And to this should of course be added other measures. Labour market regulations will be further liberalized, among other things.

This program has, of course, lead to a major debate on the wisdom of increasing VAT, and of announcing the intention ahead of the election. SPD is saying that with the CDU everything will be more expensive but nothing will be better. FDP is not happy with the VAT increase, saying that more expenditures should be cut.

But economist and business leaders that are grudging over the VAT increase are still giving their nod of approval to a program that does attack some of the structural weaknesses of the German economy.

I agree. In fact I believe that Germany is already on its way towards boosting its competitiveness. But this would give this development further impertus. This should provide more jobs down the line as well.

And so far it does not seem as if the VAT proposal has hurt the standing of CDU/CSU in the opinion polls.

As the SPD has started to work with Agenda 2010, its leftist wing has become increasingly frustrated. And now a new phenomenon has emerged with the alliance between the old leader of the SPD and former finance minister Oscar Lafontaine and Gregor Gysi of the old PDS successor to the East German communist party.

With a message of heavy leftist populism, although with an element of nationalism and resistance to immigration, this new group has now climed to 12 % in the opinion polls. In East Germany, it today looks like the single strongest political force.

This is primarily a very difficult challenge for the SPD, and so far they have not managed to find a strategy to counter this new leftist development. The debate on what to do is accelerating.

But it’s also a problem for the ambitions of Angela Merkel. The latest opinion polls give the combination of CDU/CSU and liberal FDP 49 %, while a combination of SPD, the Greens and the new leftist populist gets 48 %. A slight shift to the left and Germany risks entering a most difficult situation.

What then? A grand coalition between the CDU/CDU and the SPD? Not impossible, but any mention of that possibility exposes the left flank of the SPD even more than it already is, and accordingly we are likely to hear everyone saying that it will not happen. But an impossible situation might require impossible answers.

We’ll see. The hoped-for coalition between the CDU/CSU and FDP is certainly very possible on present trends, indeed the most likely outcome. But there is room for drama and surprises in the weeks ahead.

We’ll stay tuned.

London Lives

22 juli 2005

BBC NEWS | UK | Police issue bomb suspect images

I landed in London just after the second wave of attacks had started, and spent the day and the day thereafter in that magnificent city.

London has seen much of this before. There are still memories of the Blitz during the war, and there was the sustained campaign by the IRA during a number of years. The attack on 7/7 left 56 persons dead.

So, life tends to go on. If you are alert, you might notice some beefed up security and some movements that are normally not there. If you are not, and if you don’t intend to use the subway, you are not likely to notice anything at all besides the news reports.

Life goes on. There is no terrorism that will terrify London.

I commented immedately after the 7/7 attacks that one conclusions seemed to be that the quality of these attacks seems to be declining. And with the quality we of course see a declining political effect of them.

That conclusion is certainly reinforced by the follow-up wave of attacks. That second wave follows the pattern we saw in the Istanbul attack and what we know was planned after the Madrid attack.

But obviously it all failed. Detonators went off but failed to ignite the explosives in all of the cases. The prospective suicide bombers fled in panic. They are most unlikely to be able to be on the run for long.

Obviously, the technical competence of this particular group – or groups – leaves much to be desired. They – literally – blew it.

Even if Prime Minister Blair has warned of the possibility of the terrorists creating an ”Armageddon” in Britain and elsewhere, the reality so far is different.

In fact, there have so far been only five succesful al Qaeda inspired attacks in the West, with the recent London one – if that could be considered a success – being the sixth. Most of them kill a fairly small number of people, or none at all. Since 9/11, the average death toll in all al Qaeda-linked attacks has been 32.

Bad and horrible – but hardly Armageddon.

The average lethality of al Qaeda linked attacks has more than halved in the last two years. Including 7/7, the average number of attacks during this period has been 15.

This is not to say that the threat isn’t serious. It certainly is. These are attacks that aim at killing as many innocent people as possible. But we shall not paint the enmeny larger than he actually is, and we should not let fear dominate our socities.

It was great to be in London these days. The calm counter-operations of the police were impressive. The determination of the city to just continue was obvious.

In these cases, and so far, the terrorists are losing, and we are winning.

Germany Decides

22 juli 2005

K�hler Gives Go Ahead for Early Elections | Current Affairs | Deutsche Welle |

German President Horst Köhler has now decided to dissolve the Bundestag in order to pave the way for federal elections September 18. It will in all probability be the most important election in Europe this year.

There are still some clouds. The Presidents decision is likely to be taken to the Constitutional Court, and in theory they could take another line, although it seems extremely unlikely.

So, it’s virtually certain that there will be elections September 18, equally certain that this will see the end of the red-green government in Berlin, and highly likely that the name of the Chancellor of Germany in October will be Angela Merkel.

But elections are elections, with all the uncertainties associated with that. At this time prior to the September 2002 elections the opposition was clearly in the lead in the opinion polls, but then different events intervened.

Democracy is a constant drama, and now we’ll see it played out in Germany. More to come.

Angela Coming

21 juli 2005

05_07_11_Regierungsprogramm_Englisch.pdf (application/pdf Object)

It’s still not clear if there will be federal elections in Germany September 18 or not, but for the time being the overwhelming probability is that there will be, and that the result will be that Angela Merkel will be the next Chancellor of the strongest of the member states of the European Union.

Accordingly, it is of the greatest interest to look at the program that CDU/CSU presents before the election.

So far, only the foreign policy parts are translated into English. The entire program is of course available in German at

But I will return shortly with my comments to it. It’s very clearly going in the right direction – but it will clearly have to achieve more in order to deliver true success in the years to come.

Europe as a Model

20 juli 2005

Export Goods, Not People

One of the more controversial issues on the US political agenda at the moment is the upcoming vote in the House of Representatives on the Central America Free Trade Area.

The Democrats, supported by the always backward-looking trade unions, are agitating fiercely against the treaty. And the vote will be critical in determining how the wider agenda of opening up world trade will develop.

The former President of Costa Rica Oscar Arias argued forcefully in the Washington Post for ratification of CAFTA. And he sees what has been done in Europe as an inspiration for what can be done in his part of the world:

The countries of the Americas would be well served by studying the example of the European Union, where trade policies were enacted in conjunction with reasonable aid. Between 1986 and 1999 the income per capita in the poorest countries of Western Europe rose from 65 percent to 78 percent of the European Union average, largely thanks to economic integration with wealthier countries. Such an astonishing leap was made possible not only by the opening of markets but also by the transfer of resources from wealthier to poorer European nations, facilitating investments in technology and infrastructure.

Let’s hope the majority of the members of Congress listens to his arguments as well as those of the administration.

We need a more open world – so that it’s benefits can be shared also by those now deprived of them.

India Shines in Washington

20 juli 2005

Prime Minister of India

In sunny and warm Washington, these are the days dominated by the visit of the Prime Minister of India Mr Manmohan Singh.

It’s undoubtedly an important visit. The world’s most powerful country and what shortly will be the world’s most popolous country. And they are both well-functioning democracies governed by the rule of the law and committed to an increasingly open global economy.

Mr Singh was given the honour of addressing a Joint Session of Congress, and I have linked to his speech, which gives a flavour of how modern India approaches the modern world.

He rightly stressed the success of India’s policy of liberalizing its economy:

The economic policy changes that have been made in India have far-reaching implications. They have liberated Indian enterprise from government control and made the economy much more open to global flows of trade, capital and technology. Our entrepreneurial talent has been unleashed, and is encouraged to compete with the best. We will continue this process so that Indian talent and enterprise can realize its full potential, enabling India to participate in the global economy as an equal partner.

That’s important. But what gets the immediate headline is the US offer to India of technology for the nuclear power production, lifting existing sanctions in that area. India needs the power for its future economic development.

Thus, the US accepts India as a nuclear weapons power, and stands ready to help it use also the possibilities of the peaceful use of nuclear energy.

An axis of democracies is being formed between North America and South Asia. Europe take note.

Sharon and Abbas versus Extremists

20 juli 2005


As I wrote about in the beginning of this year on this blog, the decesive immediate development in the search for peace between Israel and Palestine this year would be the respective leaders Ariel Sharon and Abu Mazen confronting the extremists in their respective camps.

This is certainly what we have been seeing in the last few weeks.

In Gaza, the police of the Palestinian Authority has been engaged in gun battles with the armed forces of the Hamas. And now in Israel, the confrontation between the police and the army on the one side and the extremist settlers over the coming evacuation of settlements in Gaza is heating up.

The extremists are feeding and fueling each other. For the settlers, there are no moderate Palestinians worth talking to, and Israelis that believe so are views as traitors to the cause. For the extremists on the Palestinians side there are no moderate Israelies worth talking to, and Palestinians that believe so are seen as traitors to the cause.

It’s this logic of violence and intolerance that must be broken. And to me it looks as if the violence we see on the TV screens now are part of that process. The moderate majorities are no longer tolerating being harassed by the militant fringes of their respective societies.

As to the continuation, that’s an open question. US Secretary of State Rice is on her way to the region to give support to the disengagement and the relative truce, and perhaps to start to discuss what will happen thereafter.

Important days ahead in the region.