German Government

Business leaders turn against Angela Merkel

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I know, I know: loss of focus. Source: Reuters

Berlin’s grand coalition is looking tired and German business is getting tired of it. Seeking her fourth term in office, Chancellor Angela Merkel ran a listless campaign earlier this year and nearly three months after the election still has no government. For weeks, business leaders wrestled with the possible ramifications of a coalition of Ms. Merkel’s conservative alliance with the pro-market Free Democrats and the environmentalist Greens party – only to see those talks collapse.

As the chancellor now pursues what was always her preferred alternative of a new alliance with the Social Democrats, these businessmen are growing restive and letting it be known that things can’t go on the way they have been. “Where is the leadership regarding a modernization of Germany?” asks Martin Herrenknecht, head of the eponymous machinery firm, a global leader in heavy tunnel-boring machines. “Where is a pioneering program for our future in 2035? It’s incomprehensible how Angela Merkel as chancellor can remain mute and passive on two such decisive issues.”

Twelve years is a long time for a democratically elected leader to hold power, and it’s starting to look like Ms. Merkel is running out of steam. Even Britain’s “iron lady,” Margaret Thatcher, was able to hold onto power for only 11 years. France altered its constitution to trim the president’s term to five years after François Mitterrand’s two terms of seven years proved at least four years too long. Former Chancellor Helmut Kohl held on for 16 years under the extraordinary circumstances of the collapse of Communism and the reunification of Germany, and ultimately a campaign financing scandal tarnished his reputation.

“Under this chancellor we are able to observe the development of an autocratic style of government. That is not the democracy we need.”

Heinz Hermann Thiele, chairman, Knorr-Bremse

It’s not the present that worries these business leaders, but the future. Germany is booming now, but is badly lagging in digitalization, innovative startups and even in physical infrastructure – issues which have been neglected under 12 years of Ms. Merkel’s regime. Germany is strong, affirms Reinhold von Eben-Worlée, head of the Association of Family Companies, “not because of but in spite of the last three governing coalitions.”

The grand coalition, combining the two mainstream parties to yield a large majority in parliament, has led to an absence of debate as there was no real opposition to challenge the government. “Under this chancellor, we are seeing an autocratic style of government developing,” says Heinz Hermann Thiele, board chairman of brake-maker Knorr Bremse. “That is not the democracy we need.”

Too many decisions were taken by party leaders in back rooms and never debated in parliament, these businessmen complain. “The politics of back room leads to nothing but bad choices,” says Hans-Werner Sinn, an outspoken conservative economist. The worst of these bad choices for many business leaders was Ms. Merkel’s unilateral decision in 2015 to open Germany’s borders to a million refugees from Africa and the Middle East. Another was her abrupt decision in the wake of the Fukushima nuclear accident to pull Germany out of nuclear power.

Both parties in the outgoing grand coalition suffered substantial losses in the September election – 14 points between them – and yet Ms. Merkel’s first pronouncement afterwards was that she didn’t see the need to do anything different. “If everything stays the way it is, the chaos will continue,” says Mr. Thiele, with reference to the immigration problem. “I wouldn’t want to imagine what this country will look like in 30 years if immigration continues to get free rein.”

It was primarily the rise of the eurosceptic and anti-immigrant Alternative for Germany (AfD), which won 12.6 percent of the September vote to become the third-largest party in parliament, which has put Ms. Merkel in her current fix. Since neither the AfD nor the Left party, the rump of the old East German Communist Party, is considered a viable government partner, the grand coalition is now her only alternative for a majority.

“My recommendation would be for a minority government,” says Mr. Thiele. “That forces the chancellor to discuss critical issues transparently in public and in the parliament. There cannot be any more decisions made late at night in a back room.” Such a government – which could pass legislation only with the support of non-government parties on specific issues – would be a novelty in Germany and a road Ms. Merkel has said she prefers not to go down.

But for many of these business leaders, it is an alternative that is preferable to renewal of the grand coalition. As Mr. Von Eben-Worlée says, “In the end, a minority government could offer more opportunities than risks for everyone.”

Handelsblatt publisher Gabor Steingart took part in the interviews and reporters Anja Müller and Thomas Sigmund contributed to the story. Handelsblatt Global editor Darrell Delamaide adapted it into English. To contact the authors: steingart@handelsblatt.com, mueller@handelsblatt.com, sigmund@handelsblatt.com and d.delamaide@extern.handelsblatt.com.

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