- The Washington Times - Saturday, September 10, 2005

GENEVA — Europe expects changes affecting the entire Continent if the conservative Christian Democrats win Germany’s general elections next Sunday, as seems likely.

But defying negative opinion polls, Chancellor Gerhard Schroeder and his Social Democrat-Greens coalition has been acting as if it can hold onto power for another term.

With the challengers 11 points ahead of Mr. Schroeder’s alliance, political analysts see the latter’s main hope in the 35 percent of voters still undecided. At stake are the future of the European Union’s biggest power, its crippling economic problems and its impact on trans-Atlantic relations.

As the showdown at the ballot box approaches, Mr. Schroeder intensifies attacks on the opposition and its leader, Angela Merkel, 51, raised in former communist East Germany, who hopes to become Germany’s first woman chancellor.

Her policies, Mr. Schroeder told his party’s congress, “would mean minus policies,” and Germany would become “a cold and inhuman society.”

Yet it was under Mr. Schroeder’s leadership that Germany stopped being “Europe’s powerhouse.” Crippled by a sagging economy, unemployment and the growing ranks of old-age pensioners, Germany has become to many “the sick man of Europe” — the term used to describe the decaying Ottoman Empire before its demise at the end of World War I.

‘Coddling,’ taxes blamed

To Alain-Gerard Slama, a French commentator, Germany today is burdened by “too much social protection, too many subsidies, too many taxes and too little freedom to cure the ailing enterprises.”

Brushing aside criticism of his economic performance, Mr. Schroeder sought to galvanize voters by styling himself the “chancellor of peace” for his opposition to the war in Iraq. He won the 2002 elections mainly by faulting war preparations by the United States, a strategy that strained German-U.S. relations.

A number of his supporters believe the shrewd and experienced politician can somehow swing voters in his favor. He has capitalized on Mrs. Merkel’s lack of political know-how and her frequent gaffes during a generally lackluster campaign.

Rivals disagree

Her economic program raised some eyebrows among her supporters. To cope with Germany’s deficit — nearly 4 percent of gross domestic product and violating the EU’s currency stability pact — Mrs. Merkel wants to raise the Value Added Tax to 18 percent, introduce a flat 25 percent income-tax rate and limit the influence of Germany’s large labor unions.

Mr. Schroeder responded to her proposals with a populist slogan of raising tax rates for the rich, an idea that has often won votes for the Social Democrats in the past.

After a series of electoral skirmishes, opinion polls remained on Mrs. Merkel’s side, giving the Christian Democrats 43.5 percent and 7.8 percent for the business-oriented Free Democrats who are likely to form a partnership with the conservatives.

In foreign policy, the conservative candidate offers a bold, multifaceted program of improving Germany’s trans-Atlantic relations — still suffering from Mr. Schroeder’s campaign against the war in Iraq — and strengthening the country’s links with the East European members of the EU.

icking new friends

Mrs. Merkel and her advisers — particularly Wolfgang Schauble, the veteran Christian Democratic foreign policy specialist — would like to reduce Mr. Schroeder’s involvement with France and Russia and build closer European integration while treating the United States as a partner, not a competitor.

Said Mr. Schauble: “This triangular relationship involving Berlin, Paris and Moscow was a dangerous development. It was dangerous for the smaller countries in Europe because they perceived it as an axis.”

Mrs. Merkel and her advisers would prefer to see an influential “inner circle” that would include Britain and Poland, the latter being the largest of the recently admitted EU members.

“Germany cannot go over Poland’s head,” Mrs. Merkel has said.

Turkey disparaged

And in a recent statement, Mr. Schauble has added: “Germany’s interests and foreign-policy views are anchored in a European position and a trans-Atlantic partnership, both going hand in hand.”

A very controversial aspect of Mrs. Merkel’s foreign-policy views is her opposition to Turkey joining the European Union. She has been skeptical of Turkey’s credentials, despite the EU’s formal praise for the recent reforms by Ankara to conform to the union’s requirements.

She feels the large Muslim country with a population of 70 million should be granted a “privileged relationship” status, an idea angrily dismissed by Turkish Foreign Minister Abdullah Gul as “immoral and illegitimate.”

Mrs. Merkel is not alone in her views of Turkey’s EU candidacy: Opinion polls across Europe show some 56 percent of its people oppose Turkey’s integration, which is based mainly on its 5 percent territorial foothold on the Continent.

Iran, Iraq too near

German conservatives are also concerned about possible changes to the European Union from the accession of Turkey, which has borders with Iran and Iraq.

Mr. Schauble has said that “Europe will not exist if its frontiers stretch to Iran and Iraq.”

Part of the electoral campaign focused on the fact that Germany’s reunification came at a staggering and initially unexpected cost that weakened its own economic strength. In a relatively short time, Europe’s “locomotive,” accounting for 30 percent of the output of the 12-nation euro-zone, began sputtering.

In contrast to Mr. Schroeder’s somewhat strained populist optimism, Mrs. Merkel’s has been blunt in her assessment of Germany’s prospects. She insists that to stimulate job creation, its labor costs must decline. Among the measures she has suggested is to reduce the contributions to unemployment insurance, close the tax loopholes of the rich and slash the bureaucracy, described by the Der Spiegel weekly as the only field “where jobs are being created.”

11 percent jobless

The number of unemployed recently passed the 5 million mark — 11 percent of Germany’s labor force. Another 5 million Germans hold what have become known as “mini jobs,” paying about $500 a month.

The alarmingly low birth rate and the growing army of old-age pensioners are other daunting problems. It is estimated that the equivalent of $91 billion — 29 percent of the German government budget — goes for pensions. Retired people make up a third of the electorate.

While paying jobless Germans hefty benefits — though less since last year — Berlin has had to open its doors to workers from the newly admitted EU members to the east, particularly Poland. They are paid about 25 percent less than their German counterparts and are a boon to employers, but do not solve Germany’s unemployment situation.

Because of its steadily dropping birthrate, Germany’s active population is decreasing by an estimated 50,000 a year. Even more alarming are forecasts for the more distant future: Analysts expect that by 2050, Germany’s present population of 84 million will have shrunk to 50 million, while that of Turkey could reach 100 million.

To spur the birthrate, Mrs. Merkel thinks the government should encourage newlywed couples with a tax rebate of about $10,000. There are no accurate estimates on how such a scheme might affect Germany’s large and growing budget deficit.

‘Germany is ill’

“Germany is ill, but this should not be a reason to rejoice because her weakness spreads all over Europe,” opined the conservative French daily Le Figaro.

Commented Alfred Grosser, a prominent French authority on German affairs: “The economic situation [in Germany] is deteriorating, promised reforms are blocked … The Socialist party is more threatened than others; the morale of the population is at its lowest.

“What a contrast to the mood of 1990 after reunification. Who could have believed that the absorption of the East German economy and society would become one of the causes of today’s weakness?”

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