For decades, the German economic model was considered by many economists as one of the most robust and resilient. The country’s smooth reunification in 1990 was successful thanks to transformational political leadership unmatched in Western democracies.
In the last decade, something went wrong with how the German economy functioned. Europe’s continental powerhouse is stuttering; when this happens, all Europeans must worry. German Finance Minister Christian Lindner has said the country has become ‘the tired man’ of Europe as it loses competitiveness.
Germany’s present economic troubles are a textbook example of how success can soon become distress. When political leaders fail to understand the need to engage in soul-searching to determine how to update their economy in changing circumstances, they invariably risk a hard landing of the economy they steer.
Former German chancellor Angela Merkel was reputed to be one of the most reliable ‘steady hands’ leaders in the EU. In her 16 years in office, she was famous for sitting things out rather than taking firm action. She firmly believed in the politics of continuity built on the maxim that ‘if it isn’t broken, don’t fix it’. Still, the cracks in Germany’s industrial machine were there if only business and political leaders were prepared to be realistic in their risk analysis. They preferred to sit in their comfort zones.
Today, striking train drivers, angry farmers, a coalition government losing support, and a far-right party soaring in the popularity polls are sending shivers down European political leaders’ spines.
Extended political continuity, as practised by Merkel, is a fallacy, even if some traditional politicians still believe this is the most expedient political strategy.
Cheap Russian energy imports partly fuelled Germany’s past economic success. When Putin’s army invaded Ukraine, Germany’s vulnerability to cheap energy was cruelly exposed as the country’s Achilles heel. The energy shock smashed Germany’s industrial base, driving up costs and hammering factory output.
Today, striking train drivers, angry farmers, a coalition government losing support, and a far-right party soaring in the popularity polls are sending shivers down European political leaders’ spines
Instead of exporting luxury cars to China, Germans now import fleets of cheap Chinese electrical vehicles. Germany’s economy shrunk by 0.3 per cent last year, with the German national statistics office blaming ‘multiple crises’, including soaring living costs.
The German government faces the difficult task of plugging a hole in the budget as the economy teetering on the verge of a prolonged recession, and price hikes for energy and food impact the living standards of a large part of society.
This year does not promise any better results, with analysts predicting a “continuation of economic stagnation and shallow recession”.
In these circumstances, tax hikes and subsidy cuts are regarded by many as a complete and unacceptable political imposition. Many Germans feel tired and suffer in silence. Many others are furious at the government.
Farmers facing subsidy cuts are particularly angry. They block highways and intersections, drive into cities on their tractors and bring traffic to a standstill. People’s righteous indignation is often an unstoppable force of change.
Until a few years ago, the Germans appeared to be the least receptive to populist policies according to a YouGov survey of the EU states. This is changing fast. People are shifting to the fringes of the political spectrum, and trends are evolving towards more social division and dissolution. Consensus and constructive debate are being ignored, and confrontation and divisive political rhetoric are increasing.
The policies forged in the sterile European Commission meeting rooms in Brussels often fail to acknowledge the impact of environmentally friendly directives with inbuilt strict deadlines on ordinary people’s lives. German farmers argue they cannot deal with the pace of reform and new environmental and animal protection regulations.
The war against fossil fuels was programmed to end quickly. Most people understand that things have to change a little. But that they would feel it so directly in their purses and wallets was not anticipated. So, many now see the State as intrusive and prefer to support populists who promise to reverse painful policies when in power.
Society is changing. Traditional parties of the centre-right and centre-left have failed to connect well enough with people with genuine concerns about how their lives are evolving. Tolerance of the radical right among elites, workers, and the general public is increasing. Longstanding political boundaries and consensus are breaking.
The anti-establishment vote will continue to grow at the same time as unprecedented geopolitical risks for Germany and the EU impact the political landscape. Citizens’ anger and frustration will hopefully change how party leaders perceive and manage politics.