The Millionaire Party Germany's Free Democrats Accused of Serving the Rich

Tax cuts for hotel owners, Health Ministry jobs for insurance lobbyists: Germany's Free Democrats, junior coalition partner in Chancellor Merkel's coalition, are reviving their reputation as a party of the wealthy. By SPIEGEL Staff

The cleanup of their election-night party was hardly complete before officials at FDP headquarters discovered their next reason to celebrate. Sixteen days after the business-friendly party's resounding success in Germany's September parliamentary election, it received a €300,000 ($430,000) contribution from a Düsseldorf-based company called Substantia AG. But it wasn't the company's first contribution. Between October 2008 and October 2009, Substantia deposited the impressive sum of €1.1 million into FDP accounts, in what was one the largest political contributions in party history. Yet another superlative had been added to the Liberals' year of superlatives.

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Photo Gallery: The FDP and Friends
The generous Substantia AG is part of an empire owned by one of Germany's richest citizens, August Baron von Finck, 79, who for years has shielded a portion of his billions in assets from the German tax authorities at his castle in Weinfelden, Switzerland. The Finck family, which derives some of its wealth from the hotel industry, holds the majority stake in the Mövenpick Group, which operates 14 hotels in Germany.

When the last payment was deposited into the FDP account on Oct. 13, party leaders had just begun negotiations with Chancellor Angela Merkel's Christian Democrats (CDU) and their Bavarian sister party, the Christian Social Union (CSU)in Berlin over the new administration's coalition agreement and reforms for Germany following the late September general elections which returned Angela Merkel to the Chancellery. These negotiations ended in an agreement that included a windfall for hotel owners throughout Germany: a reduction in the value-added tax for hotel stays from 19 to 7 percent. It was a gift to the industry worth billions and a classic case of client politics. The baron was pleased.

'Party for the People?'

In the election on Sept. 27, the FDP captured close to 15 percent of the vote, the most impressive result in party history. The longer the Liberals celebrated on election night, the bolder was the language being used at party headquarters in Berlin. Some were even convinced that the FDP would overtake the Social Democrats in the next election. Party Chairman Guido Westerwelle announced that from then on the Liberals would be a "party for all the people."

Less than 100 days after the FDP became part of the new coalition government, the self-adulation has given way to reality. The promise of a new big-tent party has proved to be a disappointment, now that the FDP has returned to its former self -- as Germany's most consistent client party.

While ordinary citizens must adjust to leaner times, which will include such hardships as reductions in pension benefits and higher health insurance premiums, the classic FDP base can look forward to a relatively rosy future. For pharmacists, tax accountants, financial service providers, private patients, hotel owners, pharmaceutical companies and wealthy heirs, it took only weeks to realize that they stand to benefit from the Liberals being in power.

There was a time when the FDP sought to shed its image as the "party of higher earners," a term that slipped into a strategy document drafted by the hapless former party leader Klaus Klinkel in 1994. Although the phrase was quickly purged from the documents, it wasn't forgotten.

Westerwelle, aware of the explosive nature of the expression, was determined to come up with a different term. But since the party returned to power in the fall, Kinkel's message has become a leitmotif for the Liberals, after all. Since then, hardly a week has passed without some new giveaway being handed to the party's base, triggering a festive mood among German tax accountants, pharmacies, hotel owners and asset management companies.

Yielding to Temptation

One could call it a coincidence that the party's biggest donors happen to come from precisely those corners of society. On the other hand, it may not be a coincidence at all. "With the FDP's entry into the national government, corporate lobbyists are gaining influence," says Elmar Wigand of the group LobbyControl. Shortly before his death last December, former FDP Chairman and longtime Liberal Otto Graf Lambsdorff warned his party against yielding to this temptation. The FDP, he said, could not lose its "appreciation for compromise," nor could it give in to "relentless pressure from lobbying groups."

But his words were quickly forgotten. "The FDP is pursuing pure client politics in the administration. It addresses the tax concerns of a certain class, but that's it," says Hildegard Hamm-Brücher, the former grande dame of the Liberals. The FDP is everything but a party for all the people, she adds, because it offers no solutions for society's most pressing problems. "If it doesn't change its course, the FDP will not capture more than 10 percent of the vote in the next election."

It is not unproblematic for democracy when parties only feel obligated to the 15 percent of society that voted for them. The Liberals, at any rate, don't seem to have realized yet that they now bear responsibility for 100 percent of society.

It is, of course, part of political competition for parties to develop different key priorities. The Greens have always sought to promote green business, and the Social Democrats paid attention to the concerns of trade unions for decades and the conservatives to those of the churches. But they all eventually realized that as governing parties they have an obligation to the entire country, and that giving preference to their own clientele has its limits. This is what differentiates them from opposition parties.

Top Echelons of Government

But so far the FDP has behaved immoderately, as if it were still in the opposition. It was in that position for 11 long years, and during those 11 years certain industries in Germany had no natural advocate within the top echelons of government. The longer they were forced to wait on the sidelines, the bigger their expectations became. So far, the FDP has not disappointed.

Last week Health Minister Philipp Rösler (FDP) demonstrated the extent to which the Liberals are focusing on their minority. He appointed Christian Weber, a top lobbyist for private health insurance companies, to head a special Health Ministry department dealing with fundamental issues of health insurance.

Until now Weber, the deputy head of the Private Health Insurance Association (PKV), spent his time sitting in his Cologne office, wearing a dark tailored suit and writing a book with a defiant title ("Private Health Insurance Has a Future!"), all the while looking on as the Social Democrats deliberately promoted "a weakening of the PKV." The customers of private health insurance companies were put at a disadvantage by a law enacted by Merkel's previous government, pairing her conservatives with the SPD, under which a three-year waiting period was imposed on high earners wishing to switch their health insurance coverage from the government system to private insurers.

But with the FDP's entry into the Health Ministry, a new era has begun for Weber and his private insurance companies. In their coalition agreement, the Liberals ensured that the waiting period for switching from government to private coverage would be reduced to 12 months. The CDU and the CSU, initially opposed to the plan out of concern for the government health insurance system, eventually gave in.

Even More Changes

The FDP's soft spot for the rich isn't difficult to trace -- up to 50 percent of its members are privately insured. Close to half of FDP members consider themselves part of the upper-middle or upper class of society.

In his new policy-shaping position at the Health Ministry, Weber will likely add even more changes to health care. His appointment fits with the image of a party that is extremely headstrong when it comes to setting its political priorities. Close to 90 percent of Germans are enrolled in the statutory health insurance system, while only 10 percent enjoy the privileges of private insurance.


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