POLITICS: A Conservative Woman For Germany’s Challenges

By IPS Correspondents Reprint | | Print |

Peter Deselaers

BERLIN, Nov 22 2005 (IPS) - After months of political limbo, conservative Angela Merkel was sworn in Germany’s first woman chancellor Tuesday.

“This is a strong sign for many women, and surely for some men, too,” said Norbert Lammert, president of the Bundestag, the German parliament. Merkel is not only the first female leader of Europe’s biggest economy, but also the first politician from the former communist East Germany to lead the country.

She takes office at a time when Germany faces strong challenges, despite some recent improvements. Economic growth is too slow to create enough jobs for the roughly five million unemployed, the pension and healthcare systems and the federal structure of the country need further overhaul, and the state deficit will exceed the limit for the European currency zone for the fourth consecutive year.

The 51-year-old Merkel, leader of the Christian Democrats (CDU), will have to face these challenges in a coalition with her strongest opponent in the elections, the Social Democratic Party (SPD). This ‘grand coalition’ resulted from the elections in September, when the CDU and its Bavarian sister party, the Christian Social Union (CSU) got only four more seats than the SPD. Neither CDU-CSU nor the SPD could find another coalition partner to form government.

The coalition of the CDU, CSU and SPD has agreed to bring the budget deficit below the European Union (EU) limit of three percent of the gross national income (GNI) by 2007. The coalition plans an increase in value added tax (VAT) from 16 to 19 per cent in 2007, in the hope that the economy will have consolidated its recently begun recovery by then.

Germany’s economy is strongly export driven, while private consumption is low, and expected to suffer further from the VAT increase. Further taxes planned include three percent on incomes above 250,000 euros a year, reform of company taxation, and legalisation of real estate investment funds.

The new coalition has signalled continuity in foreign and development policy; former Social Democrat minister for economic cooperation and development Heidemarie Wieczorek-Zeul will continue in the same post. Outgoing foreign minister Joschka Fischer from the Green Party will be replaced by Frank-Walter Steinmeier, a Social Democrat.

Germany will continue to seek a permanent seat in the United Nations Security Council, and the coalition has said it will stay on course to increase development aid to 0.33 percent of GNI in 2006, reaching 0.51 percent by 2010 and finally 0.7 percent by 2015.

But NGOs should keep an eye on the engagement of Germany in multilateral development organisations because these were criticised in part by the CDU during the election campaign, Kathrin Buhl from the foundation Nord-Süd-Brücken (North-South-Bridges) that supports east German non-governmental organisations (NGOs) told IPS.

The coalition treaty says that multilateral development cooperation will be increased, and bilateral development cooperation will be reduced to 60 countries.

The coalition agreement also calls for fair market access for developing countries, but Buhl fears that “there could be negative turnarounds in the area of trade when profit interests of German companies are placed above the interests of development, environment, social or peace aspects.”

Michael Glos, the new economics minister from the CSU, which has its electoral backbone in rural Bavaria, will have a strong voice in trade policy.

Merkel, who grew up in a Protestant family in communist East Germany, rose in the CDU after the reunification of West and East Germany 15 years ago. Before then she worked as a physicist.

Under the last conservative chancellor Helmut Kohl, she first served as minister for women and youth, and later headed the environment ministry.

Merkel is the eighth chancellor. She received the key to her office from former Social Democrat chancellor Gerhard Schroeder, who had headed a ‘red-green’ coalition government of the SPD and the Green Party. He had called early elections in the hope of bagging a stable majority for his coalition.