December 2, 2012 5:25 pm
Merkel’s opponents offer too much consensus
One of the most frequently asked questions about the eurozone crisis is: “What will happen after the next German elections?” If the current coalition prevails in next year’s elections, the answer is “not much”. But suppose there were a change in the composition of the government, or even in the leadership: what would the Social Democrats do?
As Germany’s main opposition party, it keeps criticising Angela Merkel’s policies on the eurozone, but ends up supporting whatever policies she drags before the Bundestag. They did so again on Friday, when they reluctantly approved the latest bailout package for Greece. SPD members of parliament are increasingly restless. They know that when it come to the eurozone the government – a coalition of Ms Merkel’s Christian Democrats and the liberal Free Democrats – has effectively lost its parliamentary majority. Without SPD help, Ms Merkel could not govern. Yet it is incapable of using this situation to its own advantage.
The reason the SPD has not found a convincing way to say No is a combination of intellectual dishonesty and lack of political courage. The party leadership gave a narrow tactical argument of why MPs should support the motion. The Greens, the other opposition party, had already pledged to vote Yes. A No by the SPD would drive a wedge between the two parties, and this would make it more difficult to form a coalition in the national elections.
The SPD also does not want to be responsible for a Greek exit from the eurozone. The party sees itself as profoundly pro-European and is paranoid about being portrayed by others as irresponsible. Hence the dilemma.
It has been trying to solve it by criticising Ms Merkel in the Bundestag for her persistent failure to recognise the problems early enough – while simultaneously supporting her policies.
Tactics aside, what is most infuriating is the SPD’s sheer inability to explain in a clear way why the chancellor is wrong. The reason for this inability is that the party has bought into the same panoply of false crisis narratives. It bought into the lie about fiscal profligacy as the cause of the crisis, and the need for austerity to solve it. It bought into the lie that Greece is fundamentally solvent. In particular, it bought into the lie that foreign speculators have brought about the situation. This is how the party ended up supporting the eurozone’s fiscal pact, which remains a solution in search of a problem.
As a quid pro quo for support, the SPD got the financial transaction tax, another big diversion. The lack of such a tax did not cause the crisis, nor will its presence resolve it.
At each point, the SPD endorsed a narrow argument of why it was right to support Ms Merkel at a particular time. In doing so, it ended up supporting her entire strategy. Whenever the Social Democrats get infected by the need to feel responsible, they end up with the wrong policies. The SPD supported financial deregulation in the late 1990s. The SPD supported fiscal austerity. It supported a constitutional debt brake. If you add it all up, the SPD supports economic policies that have ultimately given rise to the imbalances that have driven the eurozone apart.
It is hard to see where the parties differ. On Friday, Frank-Walter Steinmeier, the SPD’s parliamentary leader, accused Ms Merkel of delaying the inevitable haircut that official creditors will ultimately face.
He is right, of course. But if this is what he believes, the right moral decision would have been to vote against a programme that stands no chance of success. He did not do so because he is afraid of making a mistake, and because voters may side with Ms Merkel because that is what has happened so far.
Most people understand that some form of transfer from Germany to the periphery will ultimately be necessary. Yet, for some reason, they also believe that Ms Merkel is the politician who will deliver the least costly solution.
Why? Under normal circumstances, one would have expected Ms Merkel might by now have lost her reputation of being a competent crisis manager. Her contribution to this crisis has been to delay resolution, but her political support is holding up. The CDU has a large and persistent lead in the opinion polls over the SPD. And she enjoys an even larger personal lead over her SPD challenger, Peer Steinbrück.
That conundrum is easily explained. The only real opposition to her policies comes from the post-communist left. With Mr Steinbrück, a former finance minister under Ms Merkel, the SPD has chosen the man least likely to offer a credible alternative. He was, after all, the architect of Germany’s anti-crisis policies until late 2009. Mr Steinbrück and Mr Steinmeier are not campaigning to get rid of Ms Merkel. They are campaigning to serve under Ms Merkel as a junior coalition partner.
The political and intellectual implosion of the SPD also answers our initial question. What will happen after the German elections? The answer is: nothing.
Copyright The Financial Times Limited 2012.
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