In order to take over the leadership of Europe, reunified Germany first needs to solve a number of delicate structural problems

It is the third world economic power, the most important country in the European Union, a colossus which, after 40 years, has finally regained its unity; its leader, after a rather difficult beginning, has now substantial popular support, and is also appreciated abroad.
Still, Germany is going through a period of difficulties and stagnation, which has led some to see this as the “great sick country” of the early third millennium. This statement is backed by a full set of numbers: ever since reunification, economy has grown at a rather poor rate: 1.5% per year; the number of new jobs made available is less than 50% of the European average; its citizens’ purchasing power is even slightly declining; growth estimates for the years 2001 and 2002 have been adjusted several times to reflect the downward trend; the budget is starting to display a deficit which is raising doubts as to the stability of the recent tax cuts and as to Germany’s ability to honour its commitments with Europe. As the end of the Deutschmark reign approaches, with the final takeover by the Euro, Germans’ confidence in looking at the future also seems to be declining. They are as wealthy as the American, they have the longest holidays in the world and an unusually generous retirement plan: despite this (or maybe because of this) they no longer have that driving force which some time ago produced their legendary post-war “miracle”. If we were to view the problem from a malicious point of view, we could lay the blame for this decline on communism. Indeed, Germany’s problems actually started when, once the Berlin Wall was pulled down, it was able to reach its most ambitious and difficult objective: the reunification between the Federal Republic, mainstay of NATO and of the European Community, and the German Democratic Republic, pearl of the Warsaw Pact and show-off country for Marxism-Leninism. The whole process took place in such a tumultuous manner that there was no time to prepare a rational plan of action. In order to immediately grasp the opportunity offered by Gorbaciov’s weakness, many mistakes were made, such as for instance that of setting an equal exchange rate for Eastern and Western Marks. But, above all, the DDR economic and industrial apparatus, which was said to be the engine of the Soviet block, surprisingly turn out to be much more obsolete and inefficient than generally expected, and, save for very few exceptions, its enterprises proved unable to compete on the free market. The gulf which had opened up between the two Germanies during the 45-year separation period also involved people’s way of thinking: even the Saxons, who had been considered in the past the most laborious people among the Germans, had adapted to the customs of the communist countries: “The State only pretends to pay me and I’ll only pretend to work” The privatisation of State-owned industries proved complicated and scarcely profitable, the reconstruction of facilities proved very expensive, the conversion of market economy proved slow and chaotic, the recycling of millions of government employees proved problematical, also from a psychological point of view. Public funds for approximately 1,400,000 billion (an amount equivalent to almost two thirds of the exorbitant Italian national debt) produced, during the five-year period following reunion, a growth rate ranging between 8 and 10%, with a real housing boom. After which everything stopped. Since 1997, the economy of the five eastern Laenders has only grown on average by 1.2%, versus the already poor 2.2% rate displayed by the western regions. The jobless rates are 18.6% and 7.7% respectively. Over the last few months, first hints of recovery have started showing, but even if the eastern Laenders were to double the growth rate of the western regions, it would take thirty years before their per-capita income could be expected to equal that of their neighbours. Although the reunion difficulties are the chief cause for the German crisis, another difficulty certainly also exists. This is the overcoming of the so-called Rhenish capitalism, on which the country has built its fortune, but which, in the age of globalisation and flexibility, has started to show signs of wear. This is mainly based on four pillars: planning; a very advanced workers’ statute of rights; a social security plan which is extremely generous but also very detailed; a strict interlacement of interests between banks and industry. Created in the 50s by Ludwig Erhard, the Adenauer Minister of Economy, with the name of “social market economy”, the German model was improved by the social democrat governments of the 70s and 80s, and was given the finishing touches, from a civil rights point of view, by Helmut Kohl. Gerhard Schroeder has two feathers in his cap, so far: 1) a general tax cut, which over the next five years is expected to bring citizens total savings for almost one hundred thousand billions and facilitate new business investments; 2) a reform of the pension plan which has proved quite revolutionary for Germany, also approved thanks to the partial agreement of the Opposition. However, the difficult part will be achieving a liberalisation of the labour market, and above all the review of unemployment benefits. One of the absurd aspects of this country is that, despite the existence of about 4 million unemployed, there are about 1.5 million jobs, mainly for unskilled workers, which nobody is willing to accept. Schroeder has recently publicly railed at this category: “Our society” he thundered “does not provide for the right to idleness. Whoever turns down a reasonable job even though he is capable of working should be liable to sanctions”. Entrepreneurs obviously welcomed this remark, but trade unions turned up their nose. The German unemployment benefit system dates back to as early as 1927, before Hitler, and its application has been extended more and more with the growth of affluence. Nobody can deny that today it is often counterproductive: there are many loopholes and many dodges to turn down a job without losing one’s unemployment benefit. But, exactly as in the case of the retirement plan, a reform is essential in order to reduce a level of expenditure that is difficult to support, also with a view to curb mass immigration, which most Germans do not see with a friendly eye. The urgency of structural reforms aimed at cutting public expenditure and at increasing growth potential increases as the negative economic trend worsens. Indeed, as economy gradually proceeds towards an even though moderate recessionary phase, Schroeder’s task to come to terms with the various taboos of the “Rhenish model” becomes more delicate, with considerable risks of losing majority. The Chancellor’s fortune is in fact the weakness of the Christian-Democrat opposition, which is still unable to recover from the scandal over slush funds which first wrecked the father of reunification, Helmut Kohl, and then his successor Wolfgang Schaeuble. In its eagerness to change, the party has placed its trust in a protestant woman politician brought up in the DDR: Angela Merkel, who Kohl used to patronisingly call “the girl”. Even though honest and full of good intentions, the new leader has proved a bit of a failure, and the party is already very doubtful about the possibility of presenting her, next year, as its candidate for Chancellery. The President of Bavaria, Edmund Stoiber, undisputed head of his Land, would certainly prove a more qualified leader for the country, but he appears to be rather unpopular in the remaining part of Germany; his Saxon colleague, Kurt Biedenkopf, is clever enough, but too advanced in years; on the other hand, the high-flying Bundestag group-leader, Friedrich Merz, is still regarded too inexperienced to join the fray. But despite all its problems, at the moment, only Germany is capable of taking over the leadership of the European integration process, after the stranding of the Nice summit. As to the need to proceed towards an advanced form of federalism, the majority and the opposition are substantially in agreement, and Schroeder took responsibility last month to launch a new Union plan partly following the patter of the German constitution. The suspicion shown by Great Britain, France and Spain is however making his job rather hard, and is an evidence, at the same time, of the fear displayed by the other countries as to the possibility that Germany might, in view of the Eastward opening, be willing to create a new Europe in its own image and likeness and therefore easier to dominate. Even those who are not particularly fond of the Germans should however hope for this country, which is responsible for one third of the EU product, to solve its problems as soon as possible and resume its leading function. What history teaches us is that the weaker Germany is, the more instable Europe becomes. Even the integration of the ex-Warsaw Pact countries would become difficult if Germany did not prove at its best in exercising its leading role. The objective, of course, should be a more European Germany, rather than a more German Europe, but some recognition as to the fact that Germany, with its 81 million inhabitants, versus the 55-60 million of Italy, France and Great Britain, is now at least prima inter pares will, in the reorganisation of European institutions, prove inevitable. (traduzione Interpres sas-Giussano)