Do something, Schröder! That's the message Germany's Chancellor is getting from voters, executives, and investors who are desperate for economic growth to reignite. No wonder they're anxious: The jobless rate is above 11%, the country's finances are in a shambles, and the standoff between labor and management seems worse than ever.
But those looking for change may be imploring the wrong politician. Maybe they should be shouting: "Do something, Merkel!"
That's Angela Merkel, the 48-year-old head of Germany's opposition Christian Democratic Union (CDU). A physicist by training, a pastor's daughter, and an East German by birth, Merkel has made a specialty of hanging on. She emerged at the top of the CDU scrum in 2000 after party boss Helmut Kohl was felled by scandal. Critics immediately questioned her abilities, especially when the CDU was trounced in local contests by Gerhard Schröder's Social Democrats. Merkel didn't even run against Schröder in last fall's national election. Sensing that she wasn't strong enough, she yielded the honor of leading the conservative ticket to Edmund Stoiber, prime minister of Bavaria.
But Stoiber lost, the economy swooned, Schröder stumbled. Now Merkel's unassuming honesty makes her a voter favorite. According to a recent poll, only Foreign Minister Joschka Fischer boasts a higher approval rating. But Fischer heads the tiny Green Party, while Merkel's CDU now has firm control of the upper house of Parliament, the Bundesrat, after thumping the Social Democrats in regional elections last month.
The triumph gives Merkel a stark choice: marshal the CDU's power to make common cause with the reformist elements inside the Social Democrats -- or pull every legislative maneuver possible to block Schröder's agenda, hamstring his efforts to fix the economy, and set the stage for her own rise to the Chancellorship in 2006.
If she opts for the first course, the result could be an informal grand coalition in which Germany's two major parties agree to difficult reforms, such as cutbacks in overly generous pensions and health coverage. That would help lower nonwage costs for employers -- currently the second-highest in the world -- and encourage companies to hire new workers.
That's the high road. Trouble is, the low road looks pretty good too. The unions will inevitably water down any reforms that are proposed, and Schröder will claim credit for any progress. "In the end, the CDU wants to win the next elections, so they don't have an interest in making the Social Democrats look good," says economist Jürgen von Hagen, co-chairman of the Center for European Integration Studies in Bonn.
There's also the question of whether Merkel, regardless of her newfound clout, will be able to persuade the rest of her party to work with Schröder. The Bundesrat is made up of state prime ministers and state cabinet ministers who don't answer directly to her. Some, notably Hesse's premier Roland Koch, have ambitions to lead the CDU.
So which way will Merkel go? The CDU has scored points by vowing to block proposed government tax hikes. That's an easy shot for an opposition politician to make, though. What's missing is a strong statement by Merkel on the need to loosen labor laws. But this is the hottest hot button in German politics.
Some signs of spunk are surfacing. In recent weeks, Merkel has spoken out forcefully on the probable war with Iraq, arguing that Germany should be more supportive of the U.S. position. She even traveled to Washington in late February for meetings with Vice-President Dick Cheney and other officials. This is pretty brave, considering that a clear majority of German voters oppose using military force in Iraq.
Now Merkel must show the same courage on domestic issues. Even if she launches a reform program that fails, Germans may yet reward her gutsiness in the next election.
If Merkel wants to be Germany's first woman Chancellor, she may never have a better platform than she does right now.
Frankfurt bureau chief Ewing covers German politics and business.
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