The State of Germany

It is both an honor and a great delight to address this distinguished assembly. I am particularly delighted because I can tell you that if I stand before you not bent or stooping but straight and upright, I owe this to one of your colleagues who operated me for a slipped disk exactly forty years ago. At the time, one still did those operations with an axe – but it worked. My surgeon was proud that he inflicted on me only a “cosmetic scar”, as he put it. I shall be eternally grateful to him that he fixed me up in a way which made it possible for me to run six kilometers every morning until last year, when a torn Achilles tendon put paid to my morning jog.

I have been allotted thirty minutes to tell you something about present-day Germany. I propose to do this in three parts.

First, I’ll describe the state of unity a quarter century after Germany became whole and free again.

Then I shall analyze the current state of our party system, the political and societal predicament arising from the growing pressures exerted by populist movements, and the prospects of Chancellor Merkel securing a fourth term of office.

Finally, I’ll take a look at Germany’s crucial role in the European Union and its place in a world which some pundits have called the VUCA world: V for volatile, U for uncertain, C for complex and A for ambivalent. You could also say a world between two world orders: The international order of 1945 has broken down and a new order is shaping up only gradually and chaotically.

I.
On Monday it was exactly 26 years since Germany was reunified after forty years of partition. Eleven months after the Berlin Wall came down, on October 3, 1990, the German Democratic Republic, having shaken off the hated Communist regime, joined the Federal Republic of Germany. After half a century of hot war and Cold War, the country was peacefully united again.

Since then, Germany has made great strides in knitting together what belongs together. It was not an easy job. There were hundreds of books outlining how to turn a capitalist democracy into a Communist dictatorship of the proletariat – but not a single one providing any guidance for the opposite process. Inevitably, mistakes were made. But in the last analysis we have succeeded amazingly well in overcoming the incompatibilities, inequalities and disadvantages that were the legacy of partition.

Let me give you just five telling facts.

1. On average, we spent about 100 billion euros annually on bringing East Germany’s life standard up to the Western level and on modernizing its dilapidated infrastructure – all told about 2.5 trillion euros in the past 25 years. That means 4 to 5 percent of our GNP for a quarter of a century. This dwarfs the Marshall Plan, which amounted to the same percentage of the US GNP over merely four years. The result is stunning. Leipzig has a more innovative telecom system than my hometown Hamburg. Thousands of kilometers of autobahns, railways und state highways have been modernized. Formerly, it was the death strip and the barbed wire that marked the border between West and East, now you can tell that you are in East Germany by the fact that suddenly there are no more potholes.

2. Net income per inhabitant rose from 43 percent of the Western level in 1991 to 72.5 percent in 2015. Salaries and wages have reached 97 percent of the West German level. Productivity is up from 30 to 80 percent. Pensions have meanwhile risen to 94 percent and will rise to 100 percent by 2020.

3. Unemployment, while still twice as high as in the West, has dropped to 9.2 percent from 18.7 percent in 2005 (West: 5.7%; the aggregate German rate: 6.4%). Today, 7.9 million people hold a job in East Germany, the highest number since 1992.

4. Life expectancy has increased by seven years since reunification.

5. General satisfaction with living conditions is almost as high in the East as in the West – 76 compared to 83 percent. Nobody wants the GDR back.

This is true despite the downside of an overall very positive development. Let me give you some facts here, too.

1. Economic growth is weaker in the East then in the West, since the industrial output is much lower. One reason is the dramatic deindustrialization of the former GDR after reunification. Most of the goods produced in the East limped technologically 15 years behind the Western state of the art und simply did not sell any more. While several clusters of prosperity have meanwhile taken shape around Dresden, Leipzig, Jena or Erfurt, hardly any single large German corporation has its central headquarters in the East. The hallmark of the Eastern economy are small companies.

2. The six new Länder of the East comprise 62 percent of Germany’s structurally weak regions. This explains why their tax revenue does not reach more than 64 percent of the Western standard. It also explains why the eastern export quota is lower and why East Germany is less entwined and enmeshed with the world abroad.

3. While several cities and Berlin’s metropolitan region are booming, large swaths of East Germany are depopulating. Since 1990, the population has shrunk from 17 to about 14 million. This is mainly due to the westward migration of dynamic and ambitious young people; rather than waiting for the economic miracle to come to them, they decided to go west. One consequence is that East Germany is aging even faster than West Germany.

4. Only 40 percent of the East German population consider democracy the best political system. That figure is 74 percent in the West. This does not mean, of course, that 60 percent of the Easterners are in favor of dictatorship; in fact, they put great store by human rights and the rule of law. But there is a undeniable divergence of fundamental attitudes.

5. Economically, the East Germans are catching up. In most respects they have arrived in united Germany. It is certainly not without significance that the top jobs of the Federal Republic, the presidency and the chancellorship, are held by two East Germans, Joachim Gauck and Angela Merkel. What is not so easy, however, is to wipe out forty years of partition and the particular mental cast those years have imparted to almost two generations.

We first learned this early on, when the post-Communist PDS and its offshoot, Die Linke, regularly garnered one fifth or even one fourth of the vote in the new Länder. Meanwhile, Die Linke has turned its back on its Marxist past. It has pursued a pragmatic course in various regional governments, amongst them the Berlin Senate. I would not exclude the possibility that after next year’s federal elections it will become a partner in a Red-Red-Green governing coalition.

II.
This takes me to my next topic, Germany’s current political situation.
The problem today is the rise of rampant populism: of nativism, nationalism, protectionism, xenophobia and homophobia. The phenomenon is not unknown in West Germany, but is particularly pronounced and poisonous in the German East. The number of violent xenophobic incidents per one million inhabitants is three to six times higher there than in the Western part of the country, although there are hardly any foreigners at all.

I would like to underline, however, that what we are dealing with here is not an exclusively German phenomenon. It is equally manifest in the United States and in many EU countries. The names Donald Trump, Marine Le Pen, Geert Wilders (Netherlands), Norbert Hofer (Austria), Christoph Blocher (Switzerland), Beppo Grillo (Italy), Victor Orban in Hungary and Jaroslaw Kaczynski in Poland remind us like a few others in Scandinavia that we are facing a challenge to all western democracies. Frauke Petry, boss of the AfD, is but the German face of a far more general movement flaunting anti- immigration, anti-Islam, anti-globalization, anti-free-trade, anti-elite slogans. It wants to build fences and walls. Some call it identity politics. Its salient features are worries about Islamization, about losing their cultural distinctiveness, their ethnic homogeneity and, as right-wingers put it, racial purity. The specter of ethnomorphosis, –“Umvolkung” in German – is haunting them.

It seems to me that the contest that matters is no longer left versus right, it is open versus closed. The establishments parties both of the left and the right are being disrupted. The losers from globalization are challenging mainstream orthodoxy, says the American economist Nouriel Roubini. A new political alignment “erases the old left and right paradigms: labor versus capital, workers versus business, regulation versus free enterprise. Instead, the new alignment will be organized around pro- and anti-global integration forces.”

As a consequence, the partisan map is redrawn everywhere across the West. This goes for most European countries, and it goes for Germany in particular. In the first Bundestag of 1949, eleven parties were represented. After the introduction of the five-percent clause in 1953, their number was reduced to three: Christian Democrats, Social Democrats and Free Democrats. In the 1980s, the Greens joined them, after reunification the post-Communists. Now the populist Alternative for Germany is likely to poll around 15 percent in next year’s general election.

Support for the old parties is withering. The two Volksparteien, Christian Democrats and Social Democrats, used to get 90 per cent of the vote. By 2013, their joint share had shrunk to 67.2 percent. Current polls give them 51 percent (32 und 20). In recent regional elections, they even failed to marshal a majority between them; in Berlin the CDU achieved only 17.6 percent, trailing the Social Democrats’ 21.6 percent, while the Left won 16.6 %, the Greens 15.2% and the Alternative for Germany 14.2 %. If the shrinkage goes on at the federal level, the Volksparteien may no longer be able to form a grand coalition. In itself, this may not be a bad thing, for both in Austria and in Germany we have seen that grand coalitions asphyxiate the political debate. But it will get ever more difficult put to together a majority capable of effective governing and making sure that emotion does not triumph over reason in our politics. This is the more true when the fashion for referendums gains adherents. Nothing will be simple anymore.

The rise of the populists in Germany is entirely due to the refugee tsunami that swept close to a million asylum seekers and economic migrants into the Federal Republic last year. In the view of many it was Angela Merkel, who opened the flood gates. At the time, her high-minded “welcome culture” was greeted and supported by hundreds of thousands of volunteers taking care of the shelter-seeking. But the more of them came, the more the doubts kept growing that we could manage the influx. Merkel’s mantra “Wir schaffen das!” (We can do!) was not undergirded by a concrete plan how to organize, finance and administer the issue. It became less persuasive by the day as it became clear that we cannot accommodate all the downtrodden, “the tired, the poor, the huddled masses yearning to breathe free”, to quote the inscription on the Statue of Liberty. Our open arms, the welcoming culture we were so proud of – they might prove our undoing if we cannot share the burden in Europe. So limiting the influx became imperative politically as well as morally for two reasons: to assure the State’s capacity to act and to maintain the societal support for a humane reception of the refugees. “Limitation”, said Germany’s President Joachim Gauck in Davos, “is not per se unethical. Limitations helps to shore up acceptance.”

It took Chancellor Merkel a whole year to admit that letting more than a million migrants into the country in one fell swoop last year had alienated many voters, leading to very bitter losses for her party. While still not accepting a cap on the number of newcomers, she admitted that she would turn back the clock on her refugee policy if she could, ruefully adding: “Nobody, including myself, wants a repeat of this situation.” Such a repeat is obviously prevented by the Balkan countries closing their borders and by the much criticized deal with Turkey. While still almost 100,000 refugees came last January, by now it is only a monthly trickle of around 15,000. But the fear of another wave of refugees, especially from Black Africa, and the cumulation of terrorist acts keep the Germans on edge.

Driven by the refugee crisis and her response to it, Merkel has suffered a year-long decline in popularity. She is wounded although still standing. Baring untoward events, however, and in the absence of a promising competitor within her own party or any other party, the prospect of her running and winning a fourth time is by no means unrealistic.

III.
One reason why one might want to cross one’s of fingers for her is the sorry state of the European Union. The EU has been battered by a succession of unprecedented crises. The global financial crisis in 2008, triggered by the collapse of Lehman Brothers, was followed by the Greek debt crisis, the Ukrainian crisis, the crisis of the Middle East, the refugee crisis, the terror crisis and, most recently, the Brexit crisis. None of them is resolved, all of them smolder on.

Externally, the EU is encircled by a “ring of fire”, threatened by Putin’s hybrid war designs as well as by a spill-over of the oriental chaos. Internally, it is in danger of unraveling. An eastern group refuses to accept migrants; a southern group says no to strangulating austerity policies; both of them resent the preponderant influence of Germany. The former vilify Chancellor Merkel, the latter malign Germany’s Finance Minister Schäuble. While they even may have a point, the simple truth is that without Germany taking the lead, the EU
stands no chance of reinventing itself. A brief glance around the Brussels Community should suffice to convince any objective observer that none of the other current leaders has the wallop and the wallet to stop the drift and redefine the essentials of the European project. The new Angela Merkel – the one who would, if she could, “rewind time by many, many years” – is the only one who’s got the clout, the determination and, hopefully, the humility to guide Europe toward new horizons. As Gideon Rachman put it in the Financial Times the other day: “Many European governments harbor resentment against Mrs. Merkel. But they will miss her ability to keep Europe together when she finally falls.”

In my view, we simply have to give fresh punch and purpose to an association that has served us extremely well for nearly sixty years. This requires two different approaches. On the one hand we need less Europe, one the other hand we need more Europe.

Less Europa means that the Commission should finally get serious about the principle of subsidiarity. Standardizing the curvature of cucumbers, the shape of showerheads and the design of vacuum cleaners or olive oil flasks is not the be-all and end-all of European politics. Brussels does not have to decide everything. Decisions should be taken at the lowest possible level – local, regional, national and on the European level only if absolutely necessary.

More Europe means lifting our sights to higher purposes again. We need a common fiscal policy, a common social policy, a common foreign and security policy, and we should seriously envisage a single European army. All this will certainly take time to materialize. The United States of Europe may still be two or three generations away, yet the United Europe of States should at long last come into being. It may not be an ever larger, ever tighter union.

In fact, it could become a much looser consociation, with an outer ring of peripheral states participating á la carte, at their own pace and financially banking less on Brussels and Frankfurt, and a smaller, much tighter core sharing the euro and marching in step toward the old goal of an ever closer union - less than a federation but more than just a confederation.

Half a century ago, Chancellor Konrad Adenauer said: “European unity was the dream of a few. It became the hope of many. Today it is a necessity for all of us.” I think that this still holds true.

One utterly compelling reason to move speedily and unflaggingly ahead is demography. In 1900, the Europeans accounted for 20 percent of mankind. Meanwhile their share has plummeted to barely 11 percent, and it is going to drop further: to 7 percent by 2050 and to 4 percent by the end of the century. Not a single European nation will muster even 1 percent of the global population. I think this is the most powerful argument for going forcefully ahead with European integration and for resisting the nefarious trend toward renationalization or disaggregation. We simply have to hang together if we don’t want to be hanged separately. That’s my basic message.

Thank you for your attention, for your patience and for thinking along with me. Thank you very much.

(c) Dr. Theo Sommer, Former Editor-in-Chief, “Die Zeit”, Germany

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06 Oct 2016