The situation in Germany at present is full of puzzling contradictions. On the one hand the government suffered humiliating setbacks, on the other hand, chancellor Merkel gets high approval ratings.
The background to this is an economic situation which, after nearly two years of growth, is now contradictory. This is in marked contrast to other European countries, where the situation is unambiguous: they suffer from recession or depression. The German economy contracted in the last quarter of 2011 (by 0.2 per cent). But since then business climate indexes hint at a return to slow growth. The IFO business climate index increased for the fourth time in February. Last month, there was the lowest monthly unemployment figure for 21 years and employment is at a record high.
But analysts warn that the German job miracle is levelling out and economically all is not what it seems on the surface. The number of working poor in low pay jobs is continuously increasing. A recent report showed that over 23% of workers are below the official low wage threshold of 9.15 euro an hour. While employment has boomed, the new jobs have been mainly part time workers. Between 1991 and 2011, the number of full time jobs fell from 29.3 to 23.9 million, while the number of part time jobs rose from 5.7 million to 12.5 million. But having a full time job is no guarantee against poverty wages, 800,000 full time workers get less than 6 euro an hour.
At the same time, there is bad news from important economic sectors. The purchase manager index fell in February and March. It is now below 50 (48.1), the threshold indicating an economic contraction. Last January, the engineering industry (still one of the most important industries in Germany, with 950,000 workers) saw incoming orders six per cent lower than in January 2011. Production in December was 1.9 per cent lower than the year before. The industry association, VDMA, expects stagnation this year. The construction industry grew by 12.5% last year (the biggest growth for 20 years), but for this year a growth of only 2.5 per cent is expected. Last December, German exports fell by 4.3 per cent (from November).
Several companies announced job losses. The worst case is the bankruptcy of the drugstore chain Schlecker, where 12.000 employees, mainly women, might lose their jobs.
Collective pay bargaining is taking place now in several industries, especially in metal industry and the public sector. In the public sector, there was a wave of warning strikes, with 130,000 workers participating in a first wave and a second wave taking place. The union demands a pay increase of 6.5% (but with a minimum rise of 200 Euros) per month and a guaranteed and unlimited job for those who finish their apprenticeship. After years of belt-tightening, workers want to get a share of the recent economic growth. But even this 6.5% percent demand does not make up for what the union leaders say is a 8.7 percent drop in real wages over the last ten years. The employers have offered 3.3 percent over two years. Trade union leaders called this offer an insult and threatened to hold a ballot for full, unlimited, strike action in parts of the public sector. But it is still open if this will take place or whether a compromise will be found as happened in the previous years.
The government boosts about a massively reduced budget deficit of one percent of GDP. But it is exclusively the result of the economic development. According to the IMF, the structural deficit (if the business cycle is subtracted out) has increased from 1 to 1.4 per cent since 2009. There are signs that the increase in tax income is levelling out. In January, tax incomes fell for the first time since July 2010 (by 0.4 per cent).
So it is not sure if Germany is in a recession or has returned to slow growth. But it is clear that the high growth rates of 2010/11 are over. At present, there is no feeling of crisis in the population. Certainly people are aware of the international crisis and worried about possible effects on Germany but they think that Germany has come through the crisis with a black eye. This, however, did not lead to any political stabilisation.
Despite this relatively good economic situation, the government has problems. For several months, political news were dominated by the dealings of Federal President Wulff, his resignation and the election of a successor. In Germany the Federal President has few powers. But it is the highest public office. Like the monarchy in countries like Britain, it has the purpose to give the illusion of national unity and to hide the real class antagonisms.
Wulffs forerunner, Horst Köhler, suddenly resigned in 2010. He had openly said that there are economic interests behind the military engagement in Afghanistan, which contradicted the official propaganda about humanitarian motives. After criticism, he resigned. While Köhler resigned for telling the truth, Wulff became a victim of his lies. Several newspapers reported about affairs during Wulffs time as state prime minister in Lower Saxony before becoming president. It became clear that he had personally benefited from very close relations to top business people. When the public prosecution department started investigations into possible corruption, Wulff had no alternative but to resign in February. The fact that Wulff was then eligible for the presidential pension, the Ehrensold (honour reward), of 199,000 euros a year, did not go down well with the population.
So twice in rapid succession a Federal President resigned instead of doing his full term of five years. Of course, this did damage to the prestige of this institution which only exists for its prestige.
This was also a blow for Chancellor Merkel, who had proposed and pushed through Wulffs election in 2010. An additional complication facing Merkel was the extremely small majority of the government parties in the Federal Assembly. The Federal Assembly is a body that has the sole purpose to elect the Federal President. Its party political composition is determined by the party political composition of the Federal Parliament (Bundestag) and the 16 state parliaments. In 2010, Wulff was elected only in the third round of voting. The federal government parties have suffered losses in state elections since, shrinking their majority further.
In 2010, the Social Democrats and Greens ran Joachim Gauck as presidential candidate. He is presented as having been a civil rights activist in the former GDR. In reality, despite imprisonment of his former naval officer father in Siberia between 1951 and 1955, Gauck enjoyed privileges under the Stalinist regime. He joined the opposition as the political revolution of 1989 was well under way. His main activity was to help to divert the mass movement away from its initial move in the direction of establishing a genuine socialist democracy and onto the road of the restoration of capitalism.
Gauck a right wing Christian Democrat
After German reunification, Gauck ran the office responsible for the documents of the former GDR state security (secret service). The capitalist media attribute a high moral authority to Gauck because of this and present him as a moral institution. But an opinion poll in 2010 showed that this office, founded and moulded by Gauck, has not much respect among East Germans. Only four percent said that they fully trust it, while an additional 12% said that they have much trust in it. The political opinions of Gauck are in no way progressive. He talks permanently about freedom but this is his synonym for anti-communism. He never criticises attacks on freedom or civil rights under capitalism or shows any sympathy to movements from below. Last year, Gauck ridiculed the Occupy movement as unspeakably stupid and he called the reactionary and racist author and politician Thilo Sarrazin courageous.
Politically Gauck is simply a right wing Christian Democrat. But since he has no party membership card, Merkel did not want Gauck to become president in 2010 because he was of no use to her inner-party power play. At that time, both the Social Democrats and Greens stood Gauck in a manoeuvre to win votes in the Federal Assembly from dissident members of Merkels coalition government and thereby weaken her. Now they were even more successful. The Free Democrats declared that they would support Gauck, this time. This forced Mrs Merkel to support Gauck, as well. It was a nuisance for Merkel to support a candidate that she prevented from running in 2010. We also saw Social Democrats and Greens jockeyed one of the most right wing German presidents in the past war history into presidential office.
The Free Democrats manoeuvred to support Gauck as a show of strength to stop their decline. They are in their worst ever party crisis. In opinion polls, they are constantly below the five percent hurdle necessary to be elected to parliament. There are state elections in Saarland in March and in Schleswig-Holstein and North-Rhine Westphalia (NRW) in May. In NRW, the FDP attempted to blackmail the minority government of Social Democrats and Greens by threatening to vote against the budget in the second reading to get concessions for the third reading. But they did not read the standing orders of the state parliament properly. A no vote in the second reading meant the budget failed. This led to the second resignation of a regional government in Germany this year, following the collapse of the Saarland coalition in January. Early elections in North-Rhine Westphalia will be held in May and the Free Democrats will probably not be re-elected to the parliament of Germanys most populous state. According to opinion polls, Social Democrats and Greens will get a majority in NRW, this time.
The Left Party
The Left Party quite correctly also voted against this budget but is now in danger of not getting the five percent necessary to be re-elected into the state parliament. During the last two years, the Left Party faction in the NRW parliament wavered between principled opposition to cuts and demanding reforms, to having illusions of pushing the Social Democrats and Greens, as a whole, to the left. In reality, the Left Party gained some concessions last year but this time the NRW government refused to use increased tax revenues of 4.1 billion euro to subsidise child care and affordable housing, for example.
The Left Party faction gained the abolishment of tuition fees and it supported extra-parliamentary mobilisations (e.g. against fascists). Now the Left Party should concentrate on the central social questions: wealth and poverty, redistribution, the financial crisis of local councils etc. It should link the election campaign with mobilisations in May against the policy of the ECB and Merkel (see below) and support the strike movement in the public sector. But in local councils the Left Party often acted opportunistically. Together with new competition from the Pirate Party and the Left Partys poor showing in polls at national level, this endangers its re-election to the NRW parliament.
Nationally, the Left Party remains in crisis and is torn between different wings. In opinion polls for the Bundestag (national parliament), the party stands between seven and nine percent, down from the 11.9% it won in 2009. Oskar Lafontaine, the former social democratic leader who helped found the Left Party in 2007, returned to politics a few months ago after serious illness. Lafontaine might be the partys leading candidate in the 2013 general election and there is speculation that he might stand for party Chair again at the party congress in June this year. Lafontaine certainly stands for a more radical and anti-capitalist rhetoric and could mobilise more support than other candidates. But the main question remains, will the Left Party present itself as an anti-capitalist opposition or as a moderate reform party that seeks government coalitions with the social democrats and the Greens to administer capitalism.
Sozialistische Alternative (SAV, German CWI section) members are active in the Left Party and fight for a socialist programme and combative policies. To strengthen the left inside the party, SAV members decided to join the broader left wing grouping, Anti-Capitalist Left, within the Left Party.
Conflicts over Greece and euro-crisis
The crisis of the Free Democrats weakens the government. These problems are increased by disagreements in relation to the euro crisis. In February, there was an opinion poll among German business managers where 57% were in favour of the reintroduction of the Drachma in Greece. While the government is against this, this mood in business is reflected in the government parties. On 27 February, the Merkel government failed, for the first time, to get the symbolic so-called Chancellor majority (i.e. 311 votes) in a parliamentary vote. Only 304 of 330 MPs in the coalition voted for the second rescue package for Greece, 20 voted against or abstained (6 were prevented from taking part).
The ratification of the new EU Fiscal Treaty needs a two thirds majority in both chambers of parliament. The Social Democrats announced that they would only vote for it if a financial transaction tax and growth-enhancing measures in the euro zone are introduced. The Free Democrats are for the introduction of a financial transaction tax only for the whole EU (which, for example, Britain strictly opposes). Chancellor Merkel says that she could imagine its introduction just in the euro-zone. So the conflict over the Fiscal Treaty (which is a prestige issue for chancellor Merkel) and a financial transaction tax could lead to a change of coalition government, including the Social Democrats. General elections are due in 18 months. But a possible collapse of the fiscal treaty (e.g. after an election victory of Hollande in France) or further electoral disasters for the Free Democrats, could lead to early elections in Germany or to a coalition with the Social Democrats before the next elections. A return to government of the Social Democrats would open a bigger political space for the Left Party.
Up until now, Chancellor Merkel has enjoyed the highest approval ratings for years. There are high approval ratings for her handling of the sovereign debt crisis, as well. There is a commonly held view that on this issue Merkel does not spend the money of German tax payers lightly. The German media propaganda that Greek governments want money but do not observe their commitments has also had an effect. In one poll, held in the first half of February, only 27% said that Greece would seriously try to obverse its commitments. Of course, the mass media does not say that these commitments, enforced by Merkel and the Troika (EU, IMF and ECB), forced Greece into an unprecedented economic disaster. Only during the last months were there reports in the German media of the growing misery of the Greek population, which has begun to alter the outlook of many Germans. The anti-capitalist organistaion, Attac, left trade unionists and other left groups started a campaign against the policy of the German government and the troika in relation to Greece and the Euro crisis. This will culminate in a demonstration in Frankfurt (the seat of the European Central Bank) on 19 May. Supporters of SAV (Sozialistische Alternative) have made this event a focus of their campaigning activities for the next two months.