Germany’s Scandal Could Bring Modernization

Two things you probably don’t know about Germany: In a Swiss survey of world competitiveness, the country comes in 44th of 47 in its people’s flexibility in the face of new challenges and 39th in its government’s capacity to adapt to a global economy.

Outside Germany, old ideas about the strength of the country’s economic capabilities still dominate. It’s a safe bet to say Germany’s debilitating economic rigidities are much less widely known than former Chancellor Helmut Kohl’s exposure as a man who hid millions in so-called political contributions; or the weakened state of his Christian Democratic Union, a stanchion of postwar German democracy; or the rise in neighboring Austria of a nasty political party of the extreme right to a place in national government.

From whatever angle, the truth is that Germany is not in terrific shape, but not in a situation frighteningly worsened by the political mess. Consider these often overlooked chunks of mitigating reality:

* Kohl was handily voted out of office in 1998 after 16 years of diplomatic brilliance but stagnant domestic and economic performance.

* The CDU, in its current trough, is still running at about 30% in the polls in a country where political majorities are virtually unknown.

* Germany, however deep in scandal, has entered the new millennium mostly free of power politics or nationalist heavings, a continuation of its pattern of the past 50 years.

So, in a country with more than 10% unemployment, deep cultural resistance to basic economic change is probably a greater threat to national stability than today’s scandal and storm of turpitude. In comparison with Kohl, Richard M. Nixon was a sitting president whose exposure as a liar and miscreant during Watergate shook American institutions on a daily basis. The old chancellor’s disgrace is a psychic whack on the head to German self-esteem, but it resounds outside the functioning of the current Social Democratic government.

Providentially, this historic downfall helps discredit the worn-out German model of economic risk-aversion that Kohl so embodied. Germany voted Kohl out in 1998, but only the current scandal has created enough introspection and talk of renewal for the country to acknowledge that its old economic formula is near lifeless. In the best case, a rejuvenated CDU could emerge from the scandal far less attached to the German conservatism of high social costs, rigid labor market rules and faint encouragement of new economic ideas (in the Swiss competitiveness survey, Germany ranked 32nd in entrepreneurship). Pushing this optimal scenario, which accepts the notion that the Social Democrats of Chancellor Gerhard Schroeder, with their new tax reform, are evolving beyond their old left reflexes, you could wind up with two big German political parties competing as modernizers rather than as defenders of the status quo.

Alongside an existential crisis like West Germany’s during the missile debate of the early 1980s, when allegiance to the Atlantic Alliance wobbled under Soviet pressure, the current troubles look much less acute. Yet who can promise that the CDU will not swing in the direction of Joerg Haider’s Freedom Party in Austria, with a program of smirking apologies for its earlier praise of elements of the Nazi past?

Germany has never been immune to the unreasonable or the abject, but a sharp plunge to the right appears to be an alternative without prospects. Of all the effects of the European Union’s unexpectedly decisive moves to isolate Haider’s Austria, at least in spirit, probably the most significant is a demonstration of Europe’s willingness to preemptively intervene in the German domestic political debate should it improbably stray from its democratic habits.

Happily, the CDU has no “werewolf” faction of rear-guard reactionaries. Politics trumps emotion and ideology in postwar Germany, and economics subordinates all three. The Kohl scandal is a moral disaster without a clear end, but it also can be a shortcut toward the future for a country that may be encouraged to rework its economic and social self-image beyond the failing Same Old Thing.