Germany’s government. A cumulus of discontent

Doubts are growing about Angela Merkel, at least at home

NOT a bad week, Angela Merkel, the German chancellor, may have thought as she flew back to Berlin from this week's whirlwind visit to China. Once again, she had cut a good figure abroad by being both friendly and firm in Beijing, not least over human rights and Iran's nuclear programme. Before she went, the Bundestag, the parliament's lower house, had passed her tax plans. Even better, economists now say that Germany's upswing could become self-sustaining, as consumption and investment recover.

But Ms Merkel had little time to dwell on the good news. A host of problems awaited her in Berlin, suggesting that, after six months in office, her government may no longer be given the benefit of the doubt. The tone within the grand coalition of Christian and Social Democrats has become rougher. Worse, critics say that the government is doing nothing but raise taxes, because Ms Merkel's light-touch leadership is in fact the result of a lack of clear plans. To stop the clouds building, she must get through some reforms worthy of the name, notably in health care.

A shift in the political climate in Germany was perhaps to be expected. Thanks to more competition and a new generation of journalists, the media are now more aggressive than they used to be. What is more, those who supported Ms Merkel and her more radical reform ideas before last year's elections are starting to show their disappointment. Germany's leading weekly, Der Spiegel, now frequently lays into the government for its failings.

Albeit mostly in private, business leaders are starting to complain that they do not understand what is going on. Some Christian Democratic politicians, especially state premiers, are publicly wondering whether the coalition is really worth the hassle. Economists are calling for faster reforms. Even Horst Kohler, the federal president, who owes his own job to Ms Merkel, has become cautiously critical of her government. Two-thirds of Germans are said to be unhappy with the government's performance, even though a similar proportion still think that Ms Merkel herself is doing a good job.

Is the grand coalition getting stuck before it has really got started? To find the answer, it helps to keep in mind the government's original programme. In its first few months, it did not want to move too quickly. Its priority was to create calm after last year's political turmoil, to avoid bickering and to make time for repairing the public finances. Measured against these aims, the results are modest but reasonable--although more spending cuts would have been better than sticking to the decision to raise taxes.

Only in recent weeks has the coalition begun to discuss harder reforms. Besides health care, these include corporate-tax reductions and more labour-market reforms. In none of these will it be easy to find a compromise that is any better than the lowest common denominator. In health care, for instance, Christian Democrats want to start decoupling contributions from wages by introducing a small flat-rate premium. But the Social Democrats want to keep the link to pay, and to tax other types of income to boot.

The crunch will come this autumn, when Ms Merkel and her Social Democratic vice-chancellor, Franz Muntefering, may need to engage in some serious horse-trading. If they fail to strike a deal, post-war Germany's second grand coalition risks going down in history as a failure, for there will be little time to put things right before the end of its term. In the first half of 2007, much of Ms Merkel's energy will be absorbed by her presidencies of the European Union and the G8 big-country group. By early 2008, Germany will be in a period of permanent campaigning: a string of important state elections will lead up to a federal election due by September 2009.

One reason why many observers are so pessimistic is that the coalition has shown little ability to strike sensible compromises. A case in point was the "parental payment", a new benefit meant to encourage families to have children, with a specific incentive for fathers to take two months of parental leave. After resistance to this "nappies internship" within the Christian Social Union, the Christian Democrats' socially conservative Bavarian sister party, the benefit was extended at greater cost. More recently, the Social Democrats got a stricter anti-discrimination law only by accepting extra tax breaks for farmers, many of them Bavarian.

As tensions between the parties increase, political management is getting worse. The anti-discrimination law ran into loud criticism among Christian Democrats, for whom such legislation is a prime example of unnecessary red tape--and another sign that they are losing their political identity. To calm their anger, Ms Merkel had to commit her first unfriendly act against her coalition partner, calling the Social Democrats "averse to change", a compliment they promptly returned. The Christian Democrats are also about to lose one of their best parliamentary leaders, Norbert Rottgen. Last week, he announced that he would become director-general of the Federation of German Industries at the end of the year--a switch of jobs that was widely interpreted as the decision of a man who had lost faith in the possibility of significant change.

The danger for Ms Merkel is that, unless she makes big progress with reforms, such episodes could create a "cloud of discontent" over the government, in the words of Wolfgang Nowak, head of the Alfred Herrhausen Society, Deutsche Bank's think-tank. Yet even if heavy political weather turns the grand coalition into an increasingly painful affair, it would be wrong to expect either partner to leave. That would probably trigger a new election. As long as the Germans remain undecided about whether they are ready for more reforms or prefer to keep muddling through, a new vote could well produce the same inconclusive result as the last one.

Even so, it may be time to change the prevailing perception of Ms Merkel. It has long been the conventional wisdom that it would be a mistake to underestimate her. This is still true, but the high expectations that exist for her government, at home and (especially) abroad, may nonetheless prove hard to live up to. The weekly Die Zeit recently argued that, whatever the risks of an underestimate, one should also not overestimate what the chancellor can do, at least with her present coalition.

Article says that doubts are growing about the government of Angela Merkel, at least within Germany. Can she and her 'Grand Coalition' deliver significant reforms?