German politics. Angela, Gerhard and the neo-Nazis

How the fall-out from two state elections in eastern Germany could turn out to benefit Gerhard Schroder

BAD news from Germany has not exactly been in short supply recently: slow growth, high unemployment, mass protest rallies, a weakened government. Perhaps the only element missing from the list was a comeback by the far right. And this duly came on September 19th, in elections in Brandenburg and Saxony.

The results were shocking, especially in Saxony, where the neo-Nazi National Democratic Party (NPD) took 9.2% of the votes, almost as much as the Social Democrats (SPD), and secured 12 seats, the first time in 36 years that it has got into any state's parliament. Meanwhile in neighbouring Brandenburg, another far-right party, the German People's Union (DVU), took 6.1% of the vote.

The vote for the far right reflects more than just a protest by those disillusioned with the results of unification. These parties have developed an enduring appeal. Far-right voters are often unemployed young men without a high-school diploma. In Saxony some 21% of 18-29-year-olds voted for the NPD. And the parties are becoming more professional. NPD leaders in Saxony are not easily identifiable extremists, but come from the mainstream: among their future members of the state's parliament are the owner of a driving school, a doctor and a journalist. They have built a proper party organisation and even cut a deal not to oppose the DVU in Brandenburg if the DVU does not run in Saxony. Now the two parties are striving for a joint electoral list of all far-right parties at the federal election in 2006.

Yet it remains doubtful whether the far right can repeat this week's success in the west. Far-right parties have done even better in the past, only to self-destruct, not least because of in-fighting. A press conference at which some of the party's new members of parliament were denied the microphone suggests that the NPD may not do any better in Saxony.

The bigger conclusion from these state elections is that the two main parties are being punished. This was expected in the case of the SPD, which is in government and has pushed through structural reforms. In fact, it did better than it had feared in Brandenburg, where it remained the strongest political force with 31.9%, edging out the ex-communist PDS, which had been hoping to take the top spot.

More surprising were the losses by the Christian Democrats (CDU), particularly in Saxony, where they shed 16 points, to win only 41.1%. That meant losing their absolute majority for the first time since 1990, which may force the CDU to form what some call “a coalition of the losers” with the SPD, which took just 9.8% of the votes, its worst showing in any state election since the second world war.

Although both elections were in eastern states, the CDU's suffering has changed the whole dynamic of German politics. All of a sudden, it no longer seems so obvious that the CDU will win the election in 2006, nor even the state of North-Rhine Westphalia in May 2005. It is also no longer so certain that Angela Merkel, the party's boss, will be its candidate for chancellor, nor that its programme will be as radical as she would like.

Angela's ashes

This is quite a reversal of fortunes for Ms Merkel. Against many predictions to the contrary, she has managed to fashion herself, over the past 12 months, as a reformer in the mould of Britain's Margaret Thatcher. She has also pushed aside all her male rivals within the conservative opposition parties, including Edmund Stoiber, the premier of Bavaria, who narrowly lost to Mr Schroder at the 2002 general election. Now, even as she tries to mirror Maggie, Ms Merkel faces a challenge more like the one faced by Britain's Tony Blair with the British Labour Party ten years ago: how to give the CDU, which more reform-minded leaders have been bitterly calling Germany's “second Social Democratic Party”, a serious makeover before it gets closer to taking power.

So far, she has been less successful at this second task, thanks not least to resistance from the CDU's sister party in Bavaria, the Christian Social Union (CSU), led by Mr Stoiber. Mr Stoiber still harbours hopes of a second chance against Mr Schroder. And it is the centrepiece of Ms Merkel's reform plans that sticks in the CSU's craw: her plan for a flat-fee health premium, which opponents see as a poll tax for health.

The CDU's poor showing in Brandenburg and Saxony will not make it any easier to hammer out a compromise with the CSU on health. Ms Merkel is turning up the heat. The CSU wants to slow things down, using the argument that “quality goes before speed”. Ms Merkel and Mr Stoiber plan to meet next week to try to resolve their differences.

In contrast, Mr Schroder looks surprisingly relaxed. For the outcome in Brandenburg suggests that the SPD can win elections (or at least not lose them so badly) when it defends its reforms, as Matthias Platzeck, the state's premier, did. And the more the conservatives quarrel, the more Mr Schroder seems the only politician who can stand up for his beliefs - even if this means that his party goes down in flames in 2006.

Mr Schroder may also take comfort from signs that his reforms are starting to work. Statutory health insurers are profitable again, and more long-term unemployed people appear to be seriously looking for a job, even though his tough new benefit rules will not go into effect until January 2005. And the general mood is shifting. There is growing annoyance with the “high-falutin' whining” to which Germans often default. The press has begun running stories arguing that not all is rotten in the state of Germany, and that many things have changed for the better. What is more, weekly protests against labour-market reforms are losing momentum.

Mr Schroder will still have to fight (and will probably lose) a long battle for his political survival. For that reason, he is unlikely to tackle further painful but necessary reforms. Yet, even if a sizeable minority of Germans are now voting for extremist parties at both ends of the political spectrum, most are starting to understand that, if Germany is to keep its cherished welfare state, it needs seriously to modernise it.

How the fall-out from two state elections in eastern Germany could turn out to benefit Chancellor Gerhard Schröder.

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