Germany’s nightmare

The inconclusive result on September 18th will do Germany no good

IT COULD hardly have been worse. Germany, which has Europe's biggest and, until recently, most sluggish economy, badly needs a government with a working majority and a clear commitment to further reform to bolster its incipient recovery. That is why The Economist hoped that, when Germany's voters went to the polls on September 18th, they would choose Angela Merkel's centre-right opposition over Gerhard Schroder's centre-left government.

Instead, a divided electorate has given a majority to nobody. All the political parties, and their leaders, are now engaged in tortuous manoeuvring over possible coalitions that smacks more of Weimar than of the Federal Republic. The outcome of these negotiations remains uncertain but, on almost any betting, it will produce a weak, short-lived government that has little capacity for further reform. Not surprisingly, business leaders and financial markets are upset: both the euro and the stockmarket have fallen sharply.

How did things come to this pass? Although the result was so muddy, three clear conclusions can be drawn from the election. The first is that German voters rejected Mr Schroder's coalition government, made up of his Social Democrats (SPD) with Joschka Fischer's Green Party. It is worth stressing this point, because Mr Schroder has been trying to portray the SPD's unexpectedly strong showing as an endorsement for his continuing as chancellor. Certainly, he is personally more popular than Ms Merkel. But Germany has a parliamentary, not a presidential system: it is wrong for the leader of a party that won fewer votes and seats than Ms Merkel's Christian Democrats (CDU) and its Bavarian sister party, the Christian Social Union (CSU), to insist on keeping the top job.

The second conclusion, however, is that voters were not persuaded that a centre-right coalition would be much of an improvement over Mr Schroder's lot. Ms Merkel's party did worse than opinion polls had predicted; its 35.2% was a smaller share of the vote even than in 2002, when the CSU's Edmund Stoiber lost the election to Mr Schroder. Thanks to a largely inept campaign, Ms Merkel saw a lead that had at one time touched 20 percentage points whittled away to less than a point by polling day. Voters did not warm to her personality; many were put off by her choice of Paul Kirchhof, a radical reformer who favours a flat tax, as her potential finance minister (he has now quit); others disliked the fact that she was a woman and an easterner.

Above all, though, the third conclusion is that German voters are at best divided over, and at worst hostile to, further reform. Although the SPD did better than most pundits had expected, its 34.3% of the vote was its lowest since 1990. Many SPD supporters went elsewhere or abstained because they hated the limited reforms made by Mr Schroder. This also explains the rise of the Left Party, which took 8.7%, a mixture of mostly ex-communists in the east and others from the left of the SPD following the defection of Oskar Lafontaine, who had been Mr Schroder's first finance minister. It is true that the best-performing party of all was the liberal Free Democrats (FDP). They won 9.8%, and they want more reforms even than Ms Merkel - but some of their extra support came from CDU supporters voting tactically in hopes of fending off a “grand coalition” of the CDU and the SPD.

These voters may be disappointed, for a grand coalition looks to be the likeliest outcome of the parties' manoeuvring in Berlin. And, although Mr Schroder has said he will join such a coalition only if he leads it, Ms Merkel is still the most likely chancellor - unless one of the CDU's regional heavyweights, such as Hesse's Roland Koch, steps in. Moreover, if it included sensible leaders, such as Peer Steinbruck, a former SPD premier of North Rhine-Westphalia, a grand coalition could do a few useful things, notably plugging the gaping holes in Germany's public finances and reforming its federal system.

Yet it seems more likely that a grand coalition, especially one led by a weakened Ms Merkel, would prove both short-lived and ineffective, with the two parties scampering to blame each other for unpopular measures and positioning themselves to exploit another early election. Worse, such a coalition might serve to boost extremists on both left and right. The experience of the only previous grand coalition at federal level, in 1966-69, bears out such fears, though some similar coalitions have worked at state level.

The Jamaica option

There are, unfortunately, few alternatives to a grand coalition. All other parties have refused to negotiate with the Left Party, and they should be held to those pledges. A “traffic-light” coalition of the SPD, Greens and FDP has been unequivocally ruled out by the FDP leader, Guido Westerwelle, who is committed to working with the CDU/CSU. A minority government from either centre-left or centre-right is unlikely to work. That leaves only one other option, short of a new election: a coalition of the CDU/CSU, the FDP and the Greens, known for its black, yellow and green colours as the “Jamaica” coalition.

Mr Fischer has spoken out against such a coalition. But he has also said he is giving up the party leadership, and other Greens are more interested. Even though they are at odds with many of the centre-right's policies, the Greens are at least willing to pursue economic, tax and labour-market reforms, and they carry none of the SPD's trade-union baggage. Unlike Ms Merkel, they favour Turkey's membership of the European Union. Given the rise in recent years of smaller parties in Germany, it will surely be necessary to try out unusual coalitions one day. However unlikely it seems, the Jamaica could be the least bad one to go for this time.

Yet whatever coalition, if any, emerges from the mess, it is not likely to prove either strong or stable. Germans are thus likely to find themselves returning to the polls soon, certainly long before the election due in four years' time. But however many times they are asked to vote, if their economy is to thrive, their country has no alternative to further reform. What a pity that Ms Merkel and her colleagues did not manage to persuade enough voters of that this time round.

Editorial says that the inconclusive result of the general election on the 18 September 2005 will do Germany no good.