IT MAY be a small consolation, but the United States is not the only major industrial nation that dwelt in a governmental twilight zone this month. While it is not on the verge of a default and its bureaucrats have been reporting for work, Germany is in political limbo.
Nearly a month after Chancellor Angela Merkel appeared to win a convincing victory in national elections, negotiations over the formation of her new government are moving at a glacial pace, and some German officials are speculating that it could be 2014 before a new administration is in place. In the meantime, Berlin is treading water, and major decisions — including on managing the continuing troubles of the European Union — are on hold.
Ms. Merkel, whose conservative alliance fell just five votes short of a majority in the 615-member Bundestag, probably feels some sympathy for President Obama’s complaints about a minority seeking to leverage policy changes after losing an election on them. The left-leaning Social Democratic party, which finished a distant second in the Sept. 22 vote and is Ms. Merkel’s first choice for a coalition partner, has been setting a high price for its support, including a bid for the tax increase that it proposed and Ms. Merkel explicitly rejected during the campaign.
While the conservatives are resisting the tax plan, it appears that any agreement could lead to some shifts in both Germany’s domestic economic policy and its attitude toward the European Union. One could be the introduction of a
minimum wage, which Germany lacks; the Social Democrats want to set it at the equivalent of $11.55 an hour. They also seek to control the Finance Ministry, which has steered Berlin’s handling of the bailouts of Greece, Spain and other E.U. members.
Both changes might leave Germany better off. While the country’s unemployment rate, at 5.3 percent, is far below that of both the euro zone and the United States, inequality is relatively high. According to a survey by the Economist, twice as many Germans as French work in low-wage jobs, and the distribution of household wealth is more unequal than in any other euro-zone country.
Ms. Merkel is unlikely to alter her insistence that Greece and other debtor countries adopt stringent austerity measures and liberalize their markets in exchange for bailouts — a stance that most Germans support. But a Social Democratic finance minister might allow for a somewhat more flexible approach just when it is needed: Ms. Merkel’s current finance minister has already acknowledged that
Greece will need another bailout.
There’s a possibility that Germany’s political negotiation could swerve toward U.S.-style dysfunction. Social Democratic leaders appear divided over whether to join a Merkel-led government, and, even if they agree, a pact could be rejected in a referendum by the rank and file. In the event of such a breakdown, Germans could be forced to return to the polls. Like Mr. Obama, however, Ms. Merkel appears to have the weight of public opinion with her. Polls show that voters would reward her coalition and punish the left in the event of a new election. That suggests that, in the end, Europe’s dominant politician will launch her third administration on her own terms.