Infighting puts reform on Berlin’s backburner

Is the Angela Merkel grand coalition falling apart? The German press has been obsessed with the question since Kurt Beck, SPD chairman, attacked the CDU for “neo-liberal” drift in a recent newspaper column.

Even though the answer to the question is “probably not”, it looks as though the left-right government is going to find it increasingly difficult to push through the reform agenda it set for itself after inconclusive elections two years ago.

Labour market and social security reforms unveiled on Tuesday are a case in point. The compromise left neither the ruling parties nor the analysts satisfied.

On the face of it, the decisions, reached after seven hours of talks in the “coalition round”, an ad hoc steering committee of the government’s senior leaders, did not differ markedly from similar compromises reached in the past two years.

The creation of a minimum wage in some sectors of the economy, a move to inject money into the state nursing insurance system and plans to extend the scope of home care coverage for the elderly reflect the lowest common denominator between the two ruling parties’ policy ideas.

That in itself is nothing new. But the nursing insurance decision marked the first time the partners had failed to live up to the pledges outlined in their 2005 “coalition agreement”, the government’s 190-page working programme.

While the coalition agreement foresaw a shift from the scheme’s state-funded pay-as-you-go system into one financed through private savings, Tuesday’s decision to raise employer and employee contributions falls well short of reforming the scheme’s finances.

“The grand coalition used to govern,” Jürgen Falter, one of Germany’s leading political analysts, said. “From now on it will be administering.”

“We are looking beyond the next election,” says Kurt Lauk, head of the CDU’s Economic Council, a club close to business, “hoping that it will give us the majority we need to implement what we can no longer achieve with an SPD that is moving to the left.”

The lack of effort the coalition’s leaders mustered to put a positive spin on Tuesday’s decisions only served to reinforce suspicions that the grand coalition has exhausted its reformist energy.

Franz Müntefering, deputy chancellor and labour minister, said he felt “revolted and angry” by the CDU’s refusal to consider a universal minimum wage.

“The lesson is that the minimum wage is not do-able with the CDU but only against it. I will make sure it happens,” the moderate SPD veteran promised.

He may have a long wait. Pollsters say triggering an early election would be political hara-kiri for the SPD, which lags 10 points behind the CDU in opinion surveys. CDU leaders also fear that wrecking the coalition would damage their popularity.

Nevertheless the parties are beginning to focus their energy on regional elections due in January and February, when three CDU strongholds – Hesse, Hamburg and Lower Saxony – go to the polls. This is bound to make co-operation in the coalition even more difficult.

“We have a convergence of two trends here,” says Hans-Peter Bartels, an SPD member of parliament. “The approaching elections that make it more difficult for the parties to agree on painful issues, and the economic recovery, which takes the pressure off them to make these difficult decisions.”

The SPD has already said it would make a universal minimum wage its flagship electoral theme.

In the conservative camp, Michael Glos, the economics minister, has called for income tax cuts and a €70bn ($93.8bn, £42bn) economic stimulus programme – two proposals that should play well with voters but have no chance of gaining the SPD’s support.

Though the coalition is likely to hold together for at least another year, analysts say it could become paralysed by the low-intensity fighting.

Only a political earthquake at next year’s state elections – the loss of a CDU state or the SPD scoring below 20 per cent – could cause an outright collapse, they say.

“Any of these scenarios could cause panic reactions,” Professor Falter says.

“And only panic can destroy the grand coalition.”

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