Germany’s government. The Merkel method

Ahead of Angela Merkel's visits to America and Russia, there is much interest in her views--and her methods

IS SHE up to the job? During the election campaign last summer, her political foes tried their hardest to spread doubts about whether Angela Merkel had the right stuff to be chancellor. Now, even before her first 100 days are up, it is safe to say that she has: few government leaders have had such a smooth start, and some 60% of Germans think she is doing a good job. That is not a bad platform from which to start her first tour beyond Europe, which will take her this week to Washington and Moscow.

A much harder question is whether her government will prove to have the right stuff to tackle Germany's intractable problems. In the months to come, Ms Merkel's grand coalition of her Christian Democrats with the Social Democrats will be put to the test. This week's cabinet retreat marked the end of the honeymoon between the two parties that began when the coalition was formed in November.

Already the press is talking of a "Merkel method", particularly evident in foreign policy. Many decisions by Gerhard Schroder, her Social Democrat predecessor, seemed to come straight from the gut, but Ms Merkel's appear to be born at the back of her brain. Rather than charging ahead, she carefully analyses a situation and then takes pragmatic, problem-solving action. It is as if this doctor of physics sees political configurations as a science experiment, in which she lets different forces play out before intervening.

This approach has served her well to overcome her party rivals. Instead of fighting with them directly, she let them tire each other out and ended up on top. Ms Merkel seems to have done something similar at the European Union summit in December, when she coaxed France's Jacques Chirac and Britain's Tony Blair into a budget deal. Of course, it helped that she also revived another German tradition of writing a big cheque, even finding some extra cash for Poland at the last minute.

This is not the only reason why some foreign-policy analysts talk of the second coming of Helmut Kohl, a former chancellor and Ms Merkel's mentor. In her tour of Europe before Christmas, she manoeuvred Germany back into the position of the EU's "honest broker". Yes, the Franco-German friendship is crucial, was the message in Paris, but it should not be too close for comfort. Yes, she said in London, my economic thinking is more British than Mr Schroder's, but Germany will not ditch its social-market economy. When Germany takes over the EU presidency in early 2007, she hopes to find some way of reviving the EU's moribund constitution.

In transatlantic relations, Ms Merkel is demonstrating that she knows all about force and counterforce. With her pro-American credentials not in doubt, she can be more candid than Mr Schroder, who won re-election in 2002 by openly opposing the war in Iraq. This week she said that "an institution like Guantanamo Bay in its present form cannot and must not exist in the long term." Yet such statements contain nothing aggressive, argues Ulrike Guerot, of the German Marshall Fund; rather, they are the basis of a revitalised relationship. Her visit to George Bush is mainly intended to get to know each other, though she may also announce an increase in non-military aid to Iraq. (This week it also emerged that German spies in Baghdad had helped the Americans pick bomb targets during the war in Iraq.)

Ms Merkel's trip to Russia is likely to bring further careful corrections. She will give Vladimir Putin a harder time than Mr Schroder ever did. Western concepts of democracy cannot just be schematically grafted on to Moscow, she recently said, but added "I do admit that I'm concerned about some recent developments, such as the new laws against NGOs." On the vexed issue of Iran, Franz-Walter Steinmeier, her new foreign minister, has set the pace. By breaking the UN seals on its nuclear installations, Mr Steinmeier said this week, Iran "has crossed a line which the Iranians knew would not remain without consequences". This must put in doubt any further negotiations between Iran and the EU three of Britain, France and Germany.

Domestically, it is too early to know if the Merkel method will work. Since last September's election, which she saw as a rejection of rapid reforms, she has often sounded almost like a Social Democrat. But she also has a multi-stage plan to give Germans back their "belief that politics matter", in her own words. The first stage is to boost the country's morale, which she is trying to do in speeches. "I want to encourage you to find out what you are capable of. I am convinced you will be surprised," she said in her new year address.

The second stage is to help the economy with spending measures worth euro25 billion ($30 billion) over the next four years, whose details were announced this week. This hotch-potch of measures will try to push up demand this year, while still making it possible to keep the promise to cut the budget deficit below the EU's stability-pact ceiling of 3% of GDP in 2007.

So far, at least, the economy seems to be perking up, though one would be hard-pressed to attribute this in any way to actions by the new government. The general mood has improved and most economists have raised their growth estimates for 2006 to as much as 2%. The big risk is that the value-added tax increase planned for 2007 could nip the incipient recovery in the bud. And the longer-term question is whether the third stage of Ms Merkel's plan will ever happen: getting her grand coalition to agree on reforms to meet the country's structural problems.

Although there are many reforms on the government's to-do list, such as measures to help the long-term unemployed and energy policy, the one to watch is health-care finance. The Christian Democrats want a new flat-rate insurance premium, decoupling health-care contributions from salaries. But the Social Democrats want to keep the link to pay, and to find other forms of income, such as capital gains, as a new financing source.

If Ms Merkel can broker an intelligent compromise on health care, other reforms, such as an overhaul of the tax system, or of the equally messy federal system, may start to look possible. Only then will the "Merkel method", which is now best known as a way of modelling heat exchangers, come to stand for cool, level-headed politics as well.

Evaluation of the first 100 days of the government of German Chancellor Angela Merkel.

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