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Germany's 'crisis' is something other countries should envy: View

To understand the significance of the political manoeuvrings in Berlin look beyond the headlines to the economy, writes Charles Lees.

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Germany's 'crisis' is something other countries should envy: View

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By Charles Lees

Point of view

Germany’s current political interregnum is a little local difficulty not a full-blown crisis

Charles Lees Professor of politics, University of Bath

‘It was the best of times, it was the worst of times …. It was the epoch of belief, it was the epoch of credulity ’. Dickens’ 1859 description of pre-revolutionary France could easily describe the times we live in now. First we had Brexit, then we had Trump, and now we all look across the channel and wonder at Germany’s political ‘crisis’.

In Western democracies, most people’s problems are truly of the first-world variety but there is a sense abroad that things we have previously taken as given are slipping away.

In particular, significant sections of western publics have withdrawn their consent from the existing political parties and the establishment they represent. So what is going on?

Crisis? What Crisis? Deutschland AG carries on regardless

If you were to ask business interests in the newly resurgent Eurozone what is going on, the answer would probably be ‘not a lot’. This is particularly the case in Germany, where Europe’s traditional economic powerhouse Deutschland AG is driving on ahead with growth rates that leave the increasingly fragile UK economy falling behind.

German industry isn’t in crisis – far from it. Germany’s Ifo Business Climate Index recently reported that its measure of business confidence had hit an all-time high of 117.5, with almost half of all engineering exporters working on the assumption that their share of world trade will increase in the coming months.

In addition, as Germany enters its fifth consecutive year of strong growth, Ifo’s Employment Index is also at an all-time high of 113.2. Pro-business newspapers like Handelsblatt might lament the Federal Republic’s tightening labour market as a potential brake on growth but for most ordinary Germans the current economic conjuncture is good news pure and simple.

In particular, Germany has avoided the generational tragedy of mass youth unemployment that has dogged other Eurozone economies such as Spain and Greece in the years since the financial crash of 2008.

So why all of the talk about political ‘crisis’ in Germany? And does it really matter if Germany takes so long to form a functioning coalition to take over from its current caretaker government?

Well, to be fair, a great deal of such talk of crisis has come from under-informed and over-enthusiastic UK Brexiteers such as the BBC’s Andrew Neil, whose obvious schadenfreude and ill-will towards Germany provoked a retaliatory Twitterstorm last month. It should also be pointed out that voters do not always reward governments for delivering the economic goods.

We can see that in Australia, where a quarter of a century of uninterrupted economic growth has done little to pacify a fractious and grumpy electorate. We can now observe the same phenomenon in Germany, where over 12 percent of voters said thank you to Angela Merkel for the strong economy by voting for the right-wing populist ‘Alternative for Germany’, or AfD, in the recent Federal election. In doing so the AfD became the third biggest party in the Bundestag, which upset the electoral arithmetic and made it harder for Merkel to form a governing coalition under circumstances in which the left-of-centre SPD had already indicated that it was not willing to serve in another Merkel-led coalition.

However, the main reason for the prevalent rhetoric of crisis is the strong distaste amongst the political class for political uncertainty in general and minority government in particular. There are good reasons for why this is the case, not least an institutional memory of the political chaos of the late Weimar Republic and the subsequent horrors of Nazi Germany. But Germany is no longer a political basket case; on the contrary it is now in many ways the poster child for stable government and continuity of policy.

Certainly the UK’s sophomoric political elites might learn some lessons from Germany about what ‘strong and stable’ really looks like. So it’s time to say to the guardians of Germany’s enviable success: relax a little. Despite the significant pressure now being put on the SPD to help form a Grand Coalition, Germany’s current political interregnum is a little local difficulty not a full-blown crisis. And this is why.

Reasons to be cheerful (if you’re German)

First, political stability is not an end in itself. As the current farce around Brexit demonstrates, second-rate politicians of any colour can do a lot of damage to a country’s economic prospects if they are allowed to but, by and large, stability in itself does not equate to economic success. Italy, for instance, suffered chronic political instability in the 1950s and 1960s but impressively modernized its economy over that period.

By contrast, the UK economy started from a much higher base but stagnated by comparison, despite relative political peace. There is always more at stake than just stability for its own sake and sometimes – at least for short periods of time – modern economies seem to be able to function perfectly well without it.

Second, in relative terms Germany’s current ‘crisis’ does not count as instability. Some years ago, the British political scientist Chris Hanretty compared the length of time that governments persisted after an election – that is, carried on ‘minding the shop’ until a new government was formed. The average length for the UK was 3.59 days. The average for continental European governments was around a month.

However, in the Netherlands the average was over nearly 88 days and other coalition –prone countries such as Belgium and Austria had averages up in the 60s (Hanretty 2011). Thus, democracies can continue to function in a quite satisfactory fashion without a new government and without the sky falling in. This is worth noting given the rhetoric of crisis that surrounded the formation of the UK coalition in 2010, with commentators warning their readers or viewers that any delay in forming a government would risk huge capital flows out of the country and a run on the pound, or in recent weeks where many of these same commentators talked up the German ‘crisis’.

Second, all types of coalition governments – including minority coalitions - tend to be quite stable but, even when they are not, this is manageable. Data from 13 coalition-prone countries over the post-war period to 1999 show that although there was a lot of variance between countries in terms of the mean duration of governments, even countries with relatively long mean duration times, such as Luxembourg and the Netherlands, also experienced very short lived coalitions (Müller and Strøm (eds.) 2003). Despite these breakdowns, both of these countries were successful and continue to perform very well economically.

Third, governments very rarely break down because of their minority status. Analysis of why coalition governments in Europe eventually break down revealed that 27.8 % broke down because of a regular parliamentary election, 24.2 % because of policy conflict, 22.4 % because of early elections, and 15.4 % because of conflict inside one or more of the coalition partners. By contrast, only 11.2 % of coalition governments ended because of defeat by the opposition on the floor of parliament. This shows that there is, in fact, nothing to fear from a minority coalition in Germany if senior politicians had the courage to bring it about (Müller and Strøm Op Cit, 2003). 

But putting that to one side, no matter what eventually emerges from the current political impasse in Berlin, Germany’s new government will eventually discover that the Federal Republic has remained in good hands and the juggernaut that is Deutschland AG has been rolling in regardless.

Charles Lees is a professor of politics at the University of Bath’s Department of Politics, Languages and International Studies. His research focuses on comparative party systems, coalition government, politics and policy.

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