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10/15/2009

It sounded like a realistic scenario. During the German election campaign, the Social Democrats repeatedly warned that a government pairing Chancellor Angela Merkel with the business-friendly Free Democrats (FDP) would roll back social services and cut unemployment benefits. A wave of "social cold-heartedness" threatened to break over Germany.

Yet with coalition negotiations -- aimed at hammering out the government's policy goals for the next four years -- reaching their climax in Berlin, Merkel and the FDP are trying hard to polish their image. Indeed, far from stomping on the underprivileged, the coalition has elected to pull them up by their bootstraps -- sort of.

On Wednesday, for example, the two parties agreed to make minor adjustments to Germany's unemployment benefits that would slightly improve the lot of some of those on the dole. Those collecting unemployment will be allowed to earn more money from part time jobs than before, without having to fear benefit cuts. The parties also agreed to raise the total value of assets a long-term unemployed person is allowed to have before it negatively affects his or her welfare benefits under the country's Hartz IV program. Nor, they agreed, would Hartz IV recipients be disqualified because of home or apartment ownership. Currently the government can eliminate benefits if it deems a recipient's home to be inappropriately large.

'I Want to Be the Chancellor of all Germans'

In addition, while stopping short of introducing a minimum wage, the coalition partners have decided to ban "immoral wages," a rule that would outlaw pay that was more than a third less than average in a given industry. And Merkel has spent much of her time since the Sept. 27 elections courting Germany's trade unions and doing her best to live up to her post-election promise "I want to be the chancellor of all Germans."

Still, coalition negotiations have not been free of controversy. Merkel's conservatives and the FDP would like to finish up talks by the end of this weekend and have the new government in place by the time the European Union summit begins on October 29. But one of the central promises made by FDP Chairman Guido Westerwelle during the campaign was that he wouldn't sign any coalition agreement that didn't include significant tax cuts.

Just how he intends to live up to that promise remains unclear. Merkel too has indicated her desire for a tax cut, but with German finances in a shambles, she has declined to sign off on a precise timeline of the kind demanded by the FDP. Merkel's Christian Democrats are likewise leery of the three-step progressive tax system preferred by their partners. So far, nothing concrete has come out of the working group devoted to coming up with a common position on tax policy.

And it is likely that nothing concrete will be agreed on. So far, Merkel has seemed to prefer the general to the specific. German commentators on Thursday don't expect that to change.

The Financial Times Deutschland writes:

"After 10 days of intensive coalition talks between the conservatives and the FDP it looks as though the coalition agreement for Merkel's next government will be remarkably similar to her campaign: lots of talk, no commitment. It seems that Merkel's preferred modus operandi -- that of extended consideration and the delaying of decisions until later -- has been adopted by the coalition talks. It has become Project Haze."

"There is, of course, nothing wrong with taking the time to reflect. But when it morphs into a lack of candour, it becomes problematic. Indeed, it currently looks as though the coalition agreement will be fuzzy on exactly those points that will become impossible to ignore in the next 12 months: social services and budgetary policy. In both cases, the government's answer will be decisive for Germany's future direction."

"A coalition agreement that avoids the most pressing issues of the day gambles away the most valuable assets a new government has: momentum for a new beginning and the support of the electorate. Even if Merkel's new government isn't a completely blank slate, it has just one week left to demonstrate that a coalition between the conservatives and the FDP wants more than just a continuation of the departing grand coalition."

The center-left Süddeutsche Zeitung writes:

"On Wednesday, the party general secretaries once again went before the press following another round of coalition negotiations. The so-called statement from Ronald Pofalla (CDU), Alexander Dobrindt (of the Christian Social Union, the CDU's Bavarian sister party which shares power with Merkel at the national level) and Dirk Niebel (FDP) will linger as one of the most unpleasant memories of these coalition talks -- even if the remaining days of talks are overshadowed by violent storms or foul odors from the Berlin sewer. The appearance of the general secretaries was an embarrassing orchestration of misinformation."

"The first two times the three called a press conference, they had nothing to say. During the third one, they tried to sell moderate improvements to unemployment benefits as a breakthrough, despite the fact that the improvements were part of the campaign platforms of both the CDU and the FDP and regardless of the fact that the mini-development ... apparently took days to agree on."

"It has become a favored tactic of Angela Merkel's to lower expectations to such a degree that whatever the result, it seems like a huge success. Anyone who paid attention to the G-8 in Heiligendamm (in 2007) learned their lesson in this regard."

The leftist Berliner Zeitung writes:

"What a nice gesture. The new government wants to triple the assets a Hartz IV recipient is allowed to keep before being penalized and to raise the limit on extra income that can be earned in a month. That -- and not, for example, drastic tax cuts -- is what the CDU and FDP have agreed to in their negotiations. That may sound like a great social deed, but only a small number of Hartz IV recipients will actually profit from being able to keep greater assets. Most have never had any assets."

"So the federal government will create a little more social justice and it can put up a huge sign that reads: We don't leave the needy in the lurch. Nor do we need the Social Democrats or the Left Party to ensure that. ... It has a lot to do with Germany's middle class, which in recent years has had to learn just how unsecure their jobs have become and just how quickly one can fall into the dismal social abyss of Hartz IV (which provides just €359 per month, plus the cost of 'adequate' housing to the typical single jobless after they receive one year of full unemployment benefits)."