Germany’s new Chancellor. Angela Merkel charms the world

The new German chancellor has made a promising start--but bigger challenges lie ahead

FEW political transformations have been so quick--or so complete. For years the leader of Germany's Christian Democrats (CDU), Angela Merkel, was rubbished as a dowdy easterner with little experience and less charisma. Her campaign last summer against the more impressive Gerhard Schroder, the Social Democratic (SPD) chancellor, was calamitous, as she frittered away a 20-point opinion-poll lead to finish with a smaller share of the vote than the losing centre-right candidate, Edmund Stoiber, leader of the CDU's Bavarian sister party, took in 2002. Immediately after the September 18th election, there was even talk of dumping her as chancellor-candidate in favour of an up-and-coming CDU state premier.

But this was to forget one enduring lesson of German politics in the past decade: never underestimate Ms Merkel. In 2000, she ruthlessly pushed out her predecessor as CDU leader, Helmut Kohl. She went on to brush aside challenges both to her party leadership and to her prospective candidacy. Between September and November of last year she patiently negotiated a "grand coalition" deal with her SPD opponents, helped by a disgruntled Mr Stoiber's decision to retreat to his Munich fastness. The eventual accord disappointed many: promises of (necessary) radical reforms were cast aside in favour of (unwarranted) tax increases. Dim memories were awakened of the only previous post-war grand coalition between 1966 and 1969, an undistinguished government under a forgotten chancellor, Kurt Georg Kiesinger.

Yet now, less than 100 days after taking the oath as chancellor, Ms Merkel has touched some unprecedented pinnacles. In a series of foreign forays, she has charmed and won plaudits from Washington to Brussels to Jerusalem. She gave the keynote speech at the Davos World Economic Forum. To cap it all, last weekend a German opinion poll gave her an 80% popularity rating, the highest ever recorded by a chancellor. Her party is united and confident; the SPD is glum and confused, and fears it may lose a March state election in Rhineland-Palatinate, one of its last strongholds. Even Ms Merkel's dowdiness has been swept away by a slick makeover. And, as if by magic, the German economy, once the sickest in Europe, is bouncing back: business confidence is high, exports are breaking records, and even consumers are at last perking up.

Too good to be true

Is it all froth, or is there substance behind the changed perceptions, of both chancellor and country? The chancellor is just over two months into her term, and today's outbreak of Merkel mania is unlikely to last. But on balance there are reasons for cautious optimism about her chancellorship--even if there are also grounds for continuing concern about Germany.

It is in foreign policy that Ms Merkel's impact has been most obvious. Mr Schroder had led Germany up a blind alley, falling out with the Americans over Iraq, unthinkingly supporting the French in the European Union, and cosying up to Russia's Vladimir Putin despite protests from Germany's eastern neighbours. Ms Merkel has decided to be an anti-Schroder--and, in the process, elbowed aside her own (SPD) foreign minister, Frank-Walter Steinmeier, who previously served as Mr Schroder's chief of staff.

At the Brussels summit in December, she no longer lined up behind France's Jacques Chirac but rather acted as intermediary and deal-broker between him and Britain's Tony Blair. In Washington last month, she mended fences with George Bush's administration. In Moscow, she was more critical of Mr Putin's shift to autocracy than Mr Schroder has ever been. And she assured her prickly Polish and other neighbours that she would never overlook their interests.

Sunny abroad, cloudier back home

Last weekend, Ms Merkel underlined the change of tone at the Munich security conference. She stressed the primary role of NATO in European security, and spoke out firmly about the dangers of a nuclear Iran. To the Americans and British, her message was that Germany is once again a reliable partner; to the French and Russians, it was that soft German acquiescence should no longer be taken for granted. To be sure, changed German attitudes will hardly mean a changed world. But since this is Europe's biggest and most important country, it should materially reinforce the West's foreign policy.

The picture is a bit cloudier at home. The revival of the German economy seems genuine enough. To a small extent, it reflects the reforms that Mr Schroder himself pushed through; to a greater one, it reflects the determination of German business and German workers to regain their lost competitiveness. Either way, other laggards in Europe such as France, Italy and the Netherlands will benefit as the biggest European economy picks up steam. With luck too, faster growth in the German economy, and so in tax revenues, may provide an excuse to put off the indirect-tax increases promised by the grand coalition for next year--for the risk is otherwise that a hesitant economic recovery gets knocked on the head.

Yet higher taxes are not the only concern. Although German business looks robust, the country still suffers from many familiar ills (see our survey in this issue): an over-regulated labour market, an unreformed public sector (which staged its biggest strikes in 14 years this week), poor schools and universities, and an unresponsive health system. Ms Merkel's willingness to tackle these is in doubt. That is partly because she is hobbled by her coalition partner; if things keep going well for her, she can look forward to a fresh election in two years' time after which she can govern without the SPD, and perhaps emerge as more of a reformer. But it is also because by nature she prefers small methodical steps to giant leaps and bold radicalism. At present, in short, she looks more like another Kohl than like a German version of Margaret Thatcher.

In foreign policy, that may be sufficient to improve her country's standing and weight in the world. But at home the risk remains that she will not do enough to shake Germany out of its torpor. Ms Merkel has begun promisingly. But her biggest tests are still to come.

Editorial says that the new German Chancellor has made a promising start - but bigger challenges lie ahead.

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