Businessweek Archives

Germany: How Long Can Kohl Contain The Anger?


International Outlook

GERMANY: HOW LONG CAN KOHL CONTAIN THE ANGER?

Four hundred anarchists did much more than ruin Richard von Weizscker's Sunday in Berlin on Nov. 8. As they pelted the dignified 72-year-old German President with eggs and tomatoes, they hijacked a peaceful demonstration by 350,000 people protesting the recent wave of attacks on immigrants and other racist acts.

The incident won't topple Chancellor Helmut Kohl, who attended but did not address the rally, or his center-right coalition overnight. But it is one more reminder that Germany is under huge economic and political stress as it grapples with the radical changes ushered in by the fall of communism. "People are being hit with so much at the moment--unification, Eastern Europe, Maastricht--that they've had a bellyful," warns Horst Khler, state secretary of the Finance Ministry. He fears that there's "a limit to the amount of change people can tolerate at one time."

MORE SACRIFICE AHEAD. Recession, tens of thousands of layoffs, and competition from Eastern European labor have suddenly put many Germans in a nasty mood. Kohl now has to come up with a formula for dealing with tougher times. Before the December, 1994, Bundestag elections, he will need to overhaul the labor-management-government consensus that has been the key to Germany's postwar prosperity. That means raising taxes and cutting spending so he can keep pumping $100 billion into rebuilding east Germany. And Kohl will have to persuade the powerful unions to freeze or even roll back wages to shore up Germany's shrinking competitiveness.

It's going to be tough. Kohl isn't the effective communicator on television that Ronald Reagan or Margaret Thatcher were. But he has at least come clean on Germany's problems. He is finally backing away from saying that east Germany can be integrated without pain. Kohl now warns of much sacrifice to come.

He had little choice. Germany's looming recession will rob Bonn of $8 billion in tax revenues. So far this year, 6,400 west German businesses filed for bankruptcy, a 12.5% jump on 1991. Kohl's first step will be to try to take Germany's most explosive social issue off the street by curbing the constitutionally generous rights of asylum-granted immigrants. He will be supported in this effort by Britain and France, which fear getting the overflow of Germany's immigrants.

LOSING GROUND. While Kohl may take a bashing in the Western press, he will probably get legislation on immigrants through soon. But he'll have a tougher time winning a new labor pact. Although unions are willing to forgo big pay raises if taxes on the wealthy are raised, they will fight hard to preserve deals that give easterners equal pay by 1994 and that enshrine the 35-hour workweek in west Germany.

Still, the battle could damage Kohl's mandate enough to make him ineffective. Already, major polls show that 79% of east Germans would vote against Kohl if an election were held tomorrow. Nationwide, he's a bare point ahead of the rival Social Democratic Party. The betting is that if things become too bleak, the Chancellor will push the ejection button. Kohl, who has been in power for 10 years, has often said he will not preside over a so-called unity government where he is forced to share powers with his sdp opponents.

Kohl, of course, has some cards left: He does not have any major challengers in his own party, and many Germans are still inclined to give the man who engineered reunification a chance to finish the job.John Templeman in Bonn Edited by Stanley Reed


Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus