Article for the Berliner Republic
By Poul Nyrup Rasmussen
President of the Party of European Socialists
The German election results have been met with dismay by many media commentators across Europe. Angela Merkel’s failure to achieve a majority is bad news for reform in Germany and across Europe they say. The difficulty in forming a Government will create uncertainty and inertia and is bad news for Germany and Europe they say. I disagree. It is obvious that a weak coalition that was unable to continue the SPD’s reforms would be bad for Germany and Europe, and that weeks of difficult negotiations are far from ideal. But I believe the SPD should be congratulated for stopping Angela Merkel and the CDU. As I told journalists on the night of the elections “Europe has been spared the worst of Angela Merkel’s neo-liberal policies”.
This is the message that too many media commentators do not want to hear. But the fact is the German elections did produce a crystal clear result in that respect. Germans rejected the neo-liberal solutions to Germany’s woes offered by the CDU and its allies. The German electorate is obviously sophisticated – it did not vote for a change of Government for the sake of it. They understood that the solutions offered by the opposition were far more unpleasant and unpalatable than the controversial but necessary reforms carried out by the SPD. All credit to German voters for not believing those well-paid preachers of crude neo-liberalism who tell them that their life style is unsustainable while the average income has not grown for ten years. Congratulations to German voters who rejected the idea of tax reductions for the rich, while schools and universities are under- funded. Who can disagree with German voters for saying no to further liberalisation of the right to fire workers while nearly 5 million people are unemployed? German voters were correct to wonder how a reduction of income for the majority of employees could help boost consumer spending which is so desperately needed to overcome the weak demand in the German economy. In short, the German people rejected the conservative-liberal reform package with a clear majority. The maths is clear - 51% of the German electorate voted for parties of the left, only 45% for Christian Democrats and Liberals. Even though Germany is in a difficult economic situation, and in spite of its high employment, the German people have not voted for a change of political direction. Instead, the majority of the German electorate want policies that benefit the whole country and not just the few.
This is a strong message from the German electorate not only to German parties, but to the whole of Europe. Nicholas Sarkhozy will be hoping that the French people do not see through his neo-liberal policies in ther same way as German voters saw through Merkel’s. Those in the European Commission and elsewhere who had been hoping for the election of Angela Merkel as Chancellor as the cue for a lurch to the right will remain frustrated. This is good news for Europe and offers us hope for elections in Italy and France.
But there is one thing that puzzled me about media commentary. I never understood why so many identified a possible conservative government with the ability to deliver successful reforms. Ms Merkel was an inconspicuous member of Helmut Kohl’s government for eight years. Merkel was a member of, and the FDP Leader Guido Westerwelle was Secretary General of coalition party in a government that was notorious for avoiding the risks of reform policies. In spite of all their bold talk in recent weeks about taming the trade unions and creating a new economic miracle in Germany, neither Merkel nor Westerwelle have a track record of achieving reform. When in or near government last time neither achieved the reform they say they would achieve now.
Instead it was Gerhard Schröder’s government that risked its political existence for a radical reform package. Not only has the SPD delivered reform, it has already proved successful. Economically, Germany is back on track, as not only its export figures indicate. Seen from outside, it is admirable how Gerhard Schröder stuck to reform policies he was convinced about. Despite strong resistance from within his party and from trade unions Gerhard Schröder has done what needed to be done.
So, for all those who look for political leadership and energetic reform policies – do not look to Angela Merkel and Guido. They have proven in the last Kohl government that they are toothless when it comes to bold action. It was a social democratic government under Schröder’s leadership that started reforms of an inflexible and over-regulated labour market. Taxes are at the lowest level in German post-war history under social democratic leadership. The pension funds were reformed, and a major health care reform has proven to be successful over the past year. Those, who look for further reform policies in Germany, ought to be calling for a new Government under the Leadership of Gerhard Schröder.
Ignoring media commentary however, there are other reasons for some unease among European socialists at the German election result. The SPD lost more than 4 % support in this election; a new rival on the Left has entered the Bundestag. They have attracted most of those former supporters of the SPD who opposed Gerhard Schröder’s ‘Agenda 2010’. Even though there is a theoretical majority for the Left in Germany, the anti-reform attitude of this odd combination of East Germany’s reformed Communists and West German left radicals makes it hard to imagine any coalition for the foreseeable future. The SPD has paid a high price for the courage it showed in undertaking reform. The question for our German colleagues now is how to persuade those who deserted the party to join their ranks again.
However, the problem faced by the SPD is likely to be small compared to the one facing the CDU. Although they have lined up behind Merkel for the moment, Merkel has appealed for time to negotiate a coalition and effectively delayed an inquest into their electoral failure. And what a failure! The third successive failure to achieve a majority.
What can Socialists and Social Democrats learn from the defeat of neo-liberalism in Germany? In my view it is the same lesson as we should learn from the French and Dutch referenda ‘no’ votes.
Globalisation means that Europe’s economies must evolve and Governments need to bring in reforms. This is not about competing with China and India on wages or a race to the bottom of social or environmental protection but adjusting our social and economic model to modern realities. But reform must be combined with assurances about the future of social protection. It is the mistake of conservatives to talk endlessly to voters about the need for social and economic reform without offering anything in place of the old rights and benefits. So while globalization does necessitate reforms these must be accompanied by honest and open measures to modernize social protection – and modernization must not be another word for cuts. It is this that the German people did not trust Merkel to do. Conservatives are correctly seen as wanting to roll back the welfare state without actually modernizing to any real extent. However, learning the lesson that reform must be combined with solid assurances about social protection is just the beginning.
Socialists need to offer a vision of the new social Europe. People know that the ‘job for life’ is a thing of the past. People know that globalisation means increased economic competition. What is lacking in people’s understanding is a clear picture of the social model, the types of social protection, on offer in societies where the old certainties are crumbing. Socialists played a major role in creating the post-war welfare states. Socialists must now rise to the challenge of creating a renewed vision of a Social Europe in a globalised economy.
There can be no doubt that the lack of such a vision is what is creating the insecurity felt by so many Europeans today. Of course, the different countries in the European Union are not going to adopt the same welfare systems – each will have their own means of financing health care, providing education, giving income protection during times of unemployment etc. But the differences between the so-called Anglo-Saxon and continental model, between the Nordic and Rhineland models are not so great that Socialists in Europe cannot be capable of agreeing a vision – a set of guiding principles.
Here I believe policies developed by Socialist and Social Democratic Governments in Germany, UK, Sweden and Denmark deserve serious scrutiny. ‘Flexicurity’, a concept developed when I was Prime Minister of Denmark, can certainly make a contribution. What flexicurity offers is the combination of flexibility with security. Increased labour market flexibility was accompanied by guarantees of income protection during periods between jobs alongside training and active support to re-enter employment. A similar approach has been adopted in the UK with considerable success. Even here, there is a difference in approach between socialists and conservatives. Not only because conservatives (especially in France and Austria) talk about flexicurity but only want the flexi – but also because socialists have a more positive vision of labour market reform. For conservatives labour market reform means making it easier to hire people and to reduce workers rights. For socialists it also means action to help individuals overcome obstacles to entering the labour market with measures such as training, child care facilities and anti-discrimination legislation.
Creating a vision of a social Europe for the 21st century is the ambition of the Party of European Socialists. Indeed it gained the support of Party Leaders earlier this year to begin a dialogue between the parties to see what progress could be made. I am proud to say we are kicking off that dialogue with a conference in Brussels on October 11.
Germany, and the rest of Europe, also face a more immediate problem – unemployment. Here again Socialists must find a new way forward. The Labour market and tax reforms favoured by neo-liberal will not create one single new job on their own. The countries of Europe need to invest in growth. Impressive investments have already been announced in Spain and Portugal – involving public and private money. But there is a need for further investments in other countries, for better European co-ordination of investments and economic policies, and for simultaneous investments in technologies and infrastructures that will benefit the whole of Europe.
It is true that in this respect Germany is in a unique position. There can be no doubt that with the enormous burden of unification it is not easy to spend money on growth initiatives. However, the country is now waiting for a signal of hope that its citizens can trust its future economic prospects. Germany has to overcome its weak internal demand. Again the Party of European Socialists has a mandate from its member parties to develop a growth and investment strategy for Europe. German SPD Minister Hans Eichel has taken the lead in discussions which will result in a proposal being put to party leaders in October.
There is evidence, beyond the German elections results, that the long dominance of liberal economics is coming to an end. European social democrats have also won electoral victories in Spain, Portugal, Britain, Bulgaria, Norway and look capable of success in Italy and Austria. It is no longer sufficient to call for a reduction of taxes and services to look modern and fresh. Instead, there is a majority for modern social democracy in more and more European states. This gives me hope that Europe will finally accept structural reforms that, far from threatening the social cohesion of European societies, will renew and enhance confidence and well-being in our communities.
The German people should not listen to those who want to turn the defeat of conservative-liberal reform ideas into a victory at the negotiating table. A government formed by Liberals and Christian Democrats will lack legitimacy, regardless what the media and so-called experts will say. Whatever government will be formed in the end; it has to listen to the people. They have rejected neo-liberalism for the third time since 1998, in spite of an armada of journalists, economists, and elder statesmen who continue to tell them that they are too rich and idle. The country is waiting for progressive economic thinking. The SPD should not hesitate to offer it. And Europe’s socialists are right behind them. Whatever the outcome in Germany, socialists across Europe should take heart and grow in confidence in developing and presenting a real alternative to neo-liberalism. Social Europe has been given a real boost by the failure of conservatism at the hands of German voters.
