Dim hopes

Germany: If only the policies were as clear as the election results. Angela Merkel has succeeded in trouncing her opponents, and she will be able to govern Germany with her partners of choice — the economic liberals from the FDP. But the major risk for Germany is now that Merkel won’t use that mandate, and instead stick to the middle of the road, no-choice policy of the past four years.

For the Merkel who campaigned in 2009 didn’t sound much like the status quo challenger who led a feisty campaign to defeat the Gerhard Schröder and his social democrats (SPD) in 2005. The victory of her own Christian democrats (CDU) was so narrow then that she had to govern in tandem with her adversaries. But the constraints of a coalition can’t explain the lack of major intiative. Merkel even presided over the rolling back of some of Schröder’s labour market reforms.

In theory the German chancellor should be freer now to do what she thinks is best. But the thinking may have changed. She said during the campaign that she would reign in the FDP’s free-market enthusiasm if she were to rule with them. Yet the FDP’s approach is far from the market fundamentalism that was in vogue in some countries before the financial meltdown. It may be that Merkel has decided the country can’t swallow radical reforms. But how would she know, since she hasn’t tried?

Germany is a fast-aging country with crying needs of reforms of the funding of its healthcare and pension systems. The economy is one of the most severely hit in Europe, the result of too much reliance on exports and a shortage of acquisitive consumers. The banking system is in disarray. On all these issues, the FDP has come up with strong proposals for reforms. With 15 per cent of the vote it is the big winner of the election, while Merkel’s CDU fared worse than in 2005. Maybe this should give her time for pause.