Germany. Merkel’s adagio

Merkel's physics lesson

The new chancellor upsets eager reformers, but slowness may yet work

SCORES of personal computers linked together can outperform a giant mainframe, argued Angela Merkel in her first big speech to the Bundestag as Germany's new chancellor on November 30th. That was the image this former physics teacher chose to describe - and justify - a fragmented programme that promises many little steps in the general direction of reform, rather than one big leap.

German businessmen had hoped that Ms Merkel might use the coalition contract, agreed last month between the Christian Democrats, their Bavarian sister party, the Christian Social Union, and the Social Democrats, as a base for more radical changes in taxation, the labour market, streamlining of the bureaucracy and support of innovation. But two of the changes most desired by business, in corporate tax and in labour laws, have been deferred at least to 2008. So have changes in health-care financing. The corporate-tax challenge was ducked even though 70 advisers had drawn up a plan acceptable to both main parties last March.

Might a recasting of energy policy go the same way? Ms Merkel promised an energy summit next year to create a better mix of traditional and renewable energy sources and improve the trading of emissions. Action is needed to stop energy-intensive industries being driven abroad by high energy prices.

Ms Merkel has much on her plate. She has to get used to the political limelight, and she has to master a potentially fractious left-right "grand coalition". By the end of this week she will have visited three big European partners, France, Britain and Poland. She plans a visit to America to meet George Bush in January. And she even has a hostage drama on her hands in Iraq, in which she promised this week not to give in to "blackmail".

Her unwieldy coalition in Berlin is also struggling to find a consistent business policy. Should it interfere with Deutsche Bahn's decision to shift its headquarters from Berlin to Hamburg? There is much pressure to keep the state-owned railway in the capital. And should Michael Glos, her conservative economics minister, defy the Federal Cartel Office and allow a takeover of ProSiebenSat.1, the biggest private television company, by Axel Springer, publisher of Bild, Germany's most influential daily? He can do it by ministerial decree. But such a decision would be risky at this early stage in the government's life.

Guido Westerwelle, leader of the opposition Free Democrats, reminded Ms Merkel that, during their joint election campaign, they had a common economic programme, including tax and labour reform, that has now been abandoned. The grand coalition would not bring the changes Germany needed, he predicted.

It is not clear if any of the opposition - Mr Westerwelle's party, the Greens and the Left Party - will benefit from coalition troubles. There are signs of strains in the Left Party, which is comprised of WASG, a party of disgruntled trade unionists, and the PDS, a descendant of the old East German Communist Party. The coalition could gain from such a fragmented opposition. But it could also be embarrassed were the opposition parties to join forces, as they might do, to challenge the government's budget plans. For the first time, the planned budget deficit exceeds investment spending, which appears to infringe Article 115 of the German constitution. An opposition vote in parliament of one-third or more would be enough to take this issue to the constitutional court.

Ms Merkel's start does not bode well for her declared ambition to give Germany a leading role in an otherwise leaderless Europe. None of the big three euro-zone countries - France, Italy and Germany - is setting a good example on economic reform, budget discipline, innovation or growth. Yet there are signs of economic recovery; and Germany, in particular, could yet surprise on the upside. Ms Merkel has shown herself a good tactician in negotiations with political rivals of various stripes. Perhaps her little steps, like the networking of those humble computers, will prove a sound long-term strategy.

Article looks at the programme of the new German government under Chancellor Angela Merkel.

• Primary Source