The Outsider (Part V): ‘The Road to Groko (2002-2005)’

Rot-Gruen’s welfare reforms remained unpopular and unemployment stubbornly high. Schroeder ploughed on with his so-called Agenda 2010, which was designed to make Germany economically competitive by 2010. This proposal included the infamous Hartz reforms, named after the CEO of Volkswagen, Peter Hartz, who advised the government. According to Hartz, Germany’s relatively generous unemployment benefits had to be replaced by a harsher system that would incentivise the unemployed to take up jobs. Under Hartz’s proposal, the state would pay unemployment benefits reflecting a person’s previous salary for twelve months. After that, the unemployed would be put onto welfare.

The Hartz reforms would pose an ideological and electoral problem for the SPD for years to come. The party kept haemorrhaging members and its traditional voters. Schroeder eventually resigned as party leader but remained as chancellor. The link with the German trade union movement had become strained and disappointed trade unionists formed the Waehlerinitiative Arbeit und Soziale Gerechtigkeit (roughly: Grassroots Initiative for Work and Justice – WASG) to oppose the Agenda 2010. In parts of Germany, there were regular protests against welfare cuts. Foodbanks, known as Tafeln, became established institutions in most German towns and cities – well over a decade before they started popping up across the UK.

More generally, the Hartz reforms led to the bifurcation of the German labour market. On the one hand, the German economy has the capacity generate well-paying and secure jobs for graduates as well as (some) non-graduates with vocational qualifications. On the other hand, like the US and the UK, it has an extensive Niedriglohnsektor (low-wage sector), with badly paid and precarious work.  

This serves as an important socio-economic backdrop to Merkel’s rise to power and subsequent time in office. First, in the 2000s and early 2010s, the SPD never recovered electorally from the Hartz reforms. Second, while Germany experienced economic recovery under Merkel, it is unclear whether this was due to the Agenda 2010. Disgruntled social democrats would complain that she reaped the fruits of Schroeder’s pain. Third, the bifurcation of the labour market remained a feature of Germany’s economy throughout Merkel’s sixteen years in power. It was not reversed.  

Apart from the economy, the US-led War on Terror dominated political debate in Germany. Two years after the 9/11 terrorist attacks on the World Trade Centre and the Pentagon, the Republican US President George W claimed that the Iraqi dictator Saddam Hussein had developed weapons of mass destruction (WMDs) and was ready to pass these on to terrorist organisations. For Bush, a military campaign to remove Hussein from power was the only option. Tony Blair, the British PM, concurred, while Schroeder and the then French President Jacques Chirac begged to differ. Germany had followed the US into Kosovo and Afghanistan. It would not follow Bush Jr into Iraq.    

Curiously, and contrary to German public opinion, Merkel, as opposition leader, supported Germany’s participation in the second Iraq War – now a long-forgotten footnote in her political biography. Did she really believe Iraq was a threat to world peace? Or was this merely a tactical decision so she could patch up relations with President Bush if she became chancellor? Either way, her unpopular position would not hurt her electorally.

Schroeder’s popular anti-war stance, however, did not reverse his political fortunes. Germany’s bicameral parliamentary system had become gridlocked. In the German federal system, the Bundestag represents the national electorate and appoints the national government, while the Bundesrat represents the individual Laender (states) that make up the Federal Republic of Germany, via their Ministerpraesidenten (state premiers, state governors). The Laenderparlamente (state parliaments) and Ministerpraesidenten are elected separately by the constituents of each Land in the Landtagswahlen (state elections).

As per electoral calendar, the Landtagswahlen do not always coincide with the national Bundestagswahlen. Hence, a government with a majority in the Bundestag might lose support in the Bundesrat. This is exactly what had happened to Schroeder. During his time in power, the Bundesrat had become dominated by Ministerpraesidenten from the CDU. As a result, the Bundesrat increasingly refused to ratify Rot-Gruen’s legislative initiatives that had been handed up from the Bundestag. In 2005, the loss of North-Rhine Westphalia, Germany’s industrial heartland and most populous Land, to the CDU was the final nail in the coffin. Schroeder’s only chance was to call a snap election, which he did in July 2005 after a non-confidence motion. It was clear what the main political battleground would be: the economy, stupid!

Schroeder laid out his stall with the Agenda 2010, while Germany’s centre-right proposed more radical reforms. Taxes were to be slashed. The German tax code was to be decluttered so Germans could complete their Steuererklaerung (tax returns) on a beer mat – a popular metaphor at the time. Schroeder’s reforms to the benefits system needed to be deepened. Red tape on industry and business was to be slashed. Labour costs were to be reduced to make German workers competitive. The process of hiring and firing was to be simplified. In a nutshell, US capitalism, which had traditionally been at odds with the German model of soziale Marktwirtschaft, had become role model.

Even the CDU’s campaigning language started to sound harsher. Durchregieren was the party’s main objective. The word is hard to translate into English, but it essentially signified that the CDU and its preferred coalition partner, the pro-business liberal FDP, were aiming for a large majority in the Bundestag. Together with the centre-right’s existing majority in the Bundesrat, a Conservative-Liberal government would be able to swiftly enact its economic reform agenda. This sounded more like the UK’s tradition of ‘elective dictatorship’, rather than the more consensus-oriented European style of post-war politics. 

Despite the harsh language of Durchregieren, there were also humorous episodes. The CDU had chosen the song ‘Angie’ by The Rolling Stones, always hugely popular in Germany, as their electoral anthem. If only they had listened carefully to the lyrics and done their due diligence on British rock history. The subject matter of the mournful ballad was Mick Jagger’s affair with Angela Bowie, the late David Bowie’s firstwife. Apart from the curious cases of Donald Trump and Boris Johnson, I am not sure that extramarital affairs are necessarily a vote winner. ‘Angie’ (but not Angela) was quietly dropped by the CDU.    

In addition to the musical faux-pas, things did not go according to plan for the centre-right. Initially, Merkel had initially commanded a large lead over her social democratic rival. But on election night, 18 September 2005, the result was closer than expected, with only a wafer-thin majority for the CDU. That said, Schroeder lost his nerve and badly bungled the Elefantenrunde, the traditional post-election interview round with the other party leaders, including Merkel. He had become untenable. A lame duck. For the first time in its history, Germany would have a female chancellor, Frau Dr Angela Merkel.

As a result of the close election result, however, Durchregieren, would not be possible. Merkel’s preferred coalition arrangement between the conservative CDU/CSU and liberal FDP did not command a stable parliamentary majority. After some political haggling, the CDU entered into a grosse Koalition (colloquially Groko; grand coalition) with the SPD. In other words, Germany’s two major parties, the CDU/CSU and the SPD, would form the government for the next four years, under the leadership of Mrs Merkel as Chancellor and the SPD politician, Franz ‘Muente’ Muentefering as Vizekanzler (deputy chancellor).

Grand coalitions are not unprecedented in (West) German post-war history. From 1966-69, the conservative chancellor Kurt Georg Kiesinger had governed via a grand coalition – something that would fuel the radical German student protests of 1968. Little did political observes anticipate that Groko would become the main vehicle for government for twelve out of Merkel’s sixteen years in power.

But of all of this seemed far off at the time. What mattered was that Merkel had finally arrived in the Kanzleramt. Her journey had been marked by adversity from within her own party and other setbacks. Unlike Barak Obama, who would win the US national election three years later, she was definitely no shooting star.