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Letter From Berlin

Parties Plan to Bash CEOs in Election Campaign

By SPIEGEL Staff

With five months to go before Germany's general election, the political parties on the left and right plan to win votes by giving chief executives a hammering in their campaigns. The crisis has shifted the balance of power from big business to the government, and CEOs are now fair game.

When Josef Ackermann, the CEO of Deutsche Bank, arrives in the Chancellery in Berlin on Wednesday, the politicians will be all smiles. How are you, Mr. Ackermann? Coffee or tea, Mr. Ackermann? Chancellor Angela Merkel, Foreign Minister Frank-Walter Steinmeier and others will listen to the banker and make him feel that they want to cooperate with him to find a way out of the crisis.

Cooperation is something they want. On the one hand.

On the other hand, this is an election year in Germany. And any campaign speech works best when it contains a scapegoat. Who would be better suited to that role right now than someone like Ackermann, an executive and a banker, someone who can be accused of sharing the blame for the crisis? Neither Merkel's conservative Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social Union (CSU), nor Steinmeier's center-left Social Democrats will want to miss out on that opportunity.

The SPD at the weekend agreed on an election program to capitalize on voters' anger over excessive managers' pay by pledging to raise the tax burden on the very rich and to relieve low earners. It wants to raise the highest tax rate to 47 percent from 45 percent and use the proceeds to boost spending on education. It also plans a tax on stock market deals to curb short-term trading.

The hoped-for images of unity at the so-called economic summit at the Chancellery this Wednesday will be misleading. The meeting of top CEOs, union leaders and politicians is meant as a show of harmony, a united effort to haul Germany out its worst recession since World War II.

Corporate CEOs in for a Drubbing

In reality, however, the conservatives and the SPD -- who are locked in a power-sharing grand coalition that both are keen to end after the September 27 election -- have long been working on programs and speeches to pillory corporate executives.

There will be two sides to the economic summit. The first is the factual and superficial level, at which Merkel will seek to convince her guests of the need for a steady-handed policy in the turbulent weeks ahead.

This week, Germany's leading economic institutes will unveil their economic forecasts, followed by the government's own forecasts, and in May the government will issue its tax revenue. There is no doubt that the figures will show steep declines.

The mood will continue to worsen and calls for a third economic stimulus program, on top of the two already passed in December and January totaling over €80 billion, will become louder. But Merkel and Steinmeier want to avoid fresh government measures for the time being. Instead, they want to wait and see how the will focus on the effects of the first two stimulus programs.

Measures to combat the downturn will still be on the agenda, and they will cost the government money -- but they cannot be referred to as a third economic stimulus program.

The other side of the economic summit is more exciting. The Wednesday meeting will present the country's political and economic elites in a new configuration. The crisis has led to a shift in power, and this will become abundantly clear at the meeting.

Role Models No Longer

In the first half of the current decade, the corporate world dominated public debate. The former president of the Federation of German Industry (BDI), Hans-Olaf Henkel, formed a shadow government of sorts in his talk-show appearances, helping shape government policy with a simple formula: What is good for business creates jobs, which in turn serves the common good.

Corporate executives, with their supposed efficiency and savvy, became the role models of the era. Politicians, on the other hand, were seen as laborious, feeble and disoriented.

Business dominated the political world, but now that relationship has been reversed, and the economy has becomes highly politicized. Because so many bank executives have failed, it is now up to politicians to save what can be saved, and they're no longer prepared to be treated like junior partners. The executives, discredited as they are, lack the confidence to challenge the new hierarchy.

On Wednesday, the captains of industry are likely to keep a low profile at the Chancellery. Their belief in the market's ability to heal itself has been shattered, and they disoriented. Dieter Hundt, president of the Confederation of German Employers' Associations (BDA), has suddenly turned into a critic of globalization. "Unbridled capitalism has failed," says Hundt, who now advocates a strong government that exerts far more control and supervision over financial markets.

Hundt has also dropped his objections to politicians interfering in the labor market. His complaints about the supposedly bloated social welfare state are now a thing of the past, and he has even said that he very much welcomes the government's increased support for short-time working schemes.

Who would have imagined that companies are now pinning their hopes on the government? "The political establishment must now define the basic conditions of economic activity," says Hans Heinrich Driftmann, the new president of the Association of German Chambers of Industry and Commerce, who advocates a "market economy of responsibility."

Hans-Peter Keitel, the head of the Federation of German Industries, already has a good handle on the new tone when he talks about "excesses when it comes to executive bonus payments" and "exaggerated profit objectives."