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September 18, 2005
David Warsh, Proprietor


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Rooting for Leipzig

Looking back at the history of the last thirty years, it is clear that there was no one correct way to open up a national economy to global markets in the late 20th century. Not Margaret Thatcher or Ronald Reagan or Lee Kwan Yew. Not Helmut Kohl or Willy Brandt or Francois Mitterand or Rajiv Gandhi. Certainly not Augusto Pinochet or Carlos Salinas de Gotari or Boris Yeltsin.

What’s interesting is that so many leaders who grew up under communist governments made memorable contributions:  Andrei Sakharov, Deng Xiaoping, Lech Walesa, Karol Wojtyla (as Pope John Paul II), Janos Kornai, Vaclav Havel, Vaclav Klaus, Mikhail Gorbachev.

It is this that makes the ascent of Angela Merkel more than somewhat interesting.  She may become chancellor after today’s election in Germany, if her Christian Democratic Union Party can win enough seats to form a government. Pollsters last week described the vote as being too close to call.

Is she wins, not only would Merkel become the first woman to lead her country in a very long time (since the Empress Theophania, in 956-991), but she grew up in the communist east as well. It is as illuminating to advertise her as the new Theophania as to describe her as Germany’s answer to Margaret Thatcher — that is to say,  not very helpful at all.

Germany is at a crossroads. Having spent most of six months in Berlin last year, I can attest that life there is extremely pleasant and comfortable — if you’ve got a job. But the unemployment rate, which in 1998 ended Helmut Kohl’s sixteen-rear reign, is stuck seven years later above 10 percent, as high at 20 percent in some cities in the east. Nearly five million people are out of work.

Meanwhile, the very companies whose manufacturing success have made Germany the largest exporter in the world are expected to come under increasing pressure in the coming years, especially from Chinese and Indian firms eager to enter their markets. In other words, no diminution of global competition is in sight.

Between the continuing high bill for unemployment benefits, soaring medical costs for a rapidly-aging population, a boundlessly complicated tax system and a plethora of workplace red tape, the economy is under enormous fiscal strain. It basically hasn’t grown at all for five years.

Yet even the modest combination of tax cuts, benefit trims and user fees that German Chancellor Gerhard Schroeder has been rolling out over the course of the last two years has met from considerable opposition his own Social Democratic Party’s left wing.

That’s why, frustrated by defeat in a regional election in May, Schroeder called Sunday’s election, nearly a year ahead of schedule. Until recently, Merkel and her Christian Democrats had been expected to win big. But a series of false steps in August, stemming mainly from her inexperience, have put the outcome in some doubt.

Monday Merkel will count the votes and try to form a collation government of some sort.

Whatever happens next, however, two things are already clear.

One is that Merkel, 51, is potentially a remarkable leader, as her biography makes clear. A physicist by training, she became involved in the East German democracy movement while working at the Institute for Physical Chemistry in Leipzig.  It was in Leipzig that began, in September 1989, the regular Monday night demonstrations at Saint Nikolai Church which, two months later, led to the collapse of the East German government in Berlin.

(At the superb Forum for Contemporary History, a Leipzig museum, one of the best installations is a fifteen-minute film that cross-cuts between the triumphant 45th Congress of the ruling German Communist Party and news photography of the events around the country that led to the collapse of the regime. Hilarious!)

After East Germany’s first democratic elections, Merkel entered its government as deputy spokesperson.  A few months later, in 1990, she became the token “Ossie” woman in the newly-unified national government as minister for women and youth.  In those days, Chancellor Kohl, her mentor, routinely called her “the girl.” She moved up as minister for the environment in 1994.

Attractive, if anything but charismatic, Merkel once said, “Anyone who really has something to say doesn’t need make-up.” In a series of crafty moves after the Kohl government was defeated in 1998, she moved into the Christian Democratic Party leadership and eventually became its candidate — no mean feat for Protestant woman from the communist east (the north east, no less) in a party dominated by conservative Catholics from the south. 

Circumstances prepared Merkel for a life of carefully-guarded perpendicularity. Her father, Horst Kasner, a Lutheran minister, moved his family from up-and-coming Hamburg in West Germany to a village 50 miles north of East Berlin in 1954 because the church asked him to. His daughter was three months old. People moved freely between the two Germanys in those days, mostly from east to west. The Berlin Wall wouldn’t be built for another seven years.

Thus Merkel grew to adulthood in a society governed by one of the most hypocritical and repressive regimes on earth. That said, in its determination to escape the privation, humiliation and sorrow inflicted on it by defeat in World War II, East Germany was hardly less achievement-oriented than West Germany was.

(In the east they dropped the ubiquitous masculine and feminine endings with which die Deutsche Sprache habitually assigns gender to every noun.  In East Germany here were only Students; in West Germany — and now all of Germany — there are also Studentettes.)

Early on, Merkel learned to keep her own counsel. According to an article by Judy Dempsey in the International Herald Tribune last week, she was fourteen when her father came under intense pressure from the Stasi, the East German secret police, for his Christian teachings and his interest in the work of Soviet physicist Andrei Sakharov, perhaps the most prominent Russian dissident. Her mother lost her teaching job in the swirl of 1968.  Merkel simply doubled her efforts to excel in what was in many ways, a more egalitarian and less materialistic culture than the West.    

But thirty years later, when Merkel began to espouse enthusiasm for German reunification, she stood up to her father, too. “I wanted a democratic East Germany,” Pastor Kasner told Dempsey. (He is still thoroughly active at 79.) “But the people wanted the Deutsche mark.  The revolution is over now.”

The other clear thing is that real possibilities for growth in Germany lie in opening up the east. Betrand Benoit, the exemplary correspondent for the Financial Times, noted the other day the fastest growing city in all of Germany is probably Leipzig. That was where BMW chose to build its new plant four years ago, after looking at 249 other European cities.  The Bertelsmann Foundation recently called it “the entrepreneur-friendliest city in Germany.”

Leipzig has all the familiar advantages of a boom town  – strong universities, a good airport, plenty of open space surrounding it, a hungry workforce and showpiece medieval center (including Bach’s St. Thomas Church) that planners long ago protected from through-traffic. The result is a cosmopolitan city poised for future growth. Nearby Dresden is not far behind, having become Germany’s semiconductor hub, its great river-front palaces intact, its fire-bombed neighborhoods long ago restored.

True, much of the former communist east remains in a state of gross underdevelopment — Brandenburg, Mecklenburg and Pomerania contain wide swathes of forest and farm punctuated by the occasional heavily polluted industrial and arms-manufacturing center. On the other hand, they amount to a green belt a couple hundred miles wide ringing the great capital city of Berlin.

For the cleverest thing that Chancellor Kohl did was to move the federal government from its home in Bonn far to the east to the traditional Prussian capital and spend vast sums of money on the city’s unification. The move virtually assures that serious deal-making eventually will move east as well, from the Rhineland banking centers of Duesseldorf, Cologne and Frankfurt.  Berlin has had its ups and downs since 1990.  But its location will continue to draw economic development to the east.

Angela Merkel is not yet surefooted. It is possible that she might fail. She was headed for certain victory until she named a flat-taxer named Paul Kirchhof as shadow finance minister. But everybody is learning here.  Kirchhof’s real aim was tax simplification — by one count, the German revenue system rests on 185 different forms with which to report or qualify income.

Suppose the former judge-turned-professor had followed Ronald Reagan’s lead and built some symbolic progressivity into his proposal? Not one single bracket of 25 percent but two, of 25 percent and 30 percent? Merkel and her team might not be so nervously awaiting the returns.

The point is that there’s a virtuous circle to be started within Germany itself, an arbitrage of character.  It involves turning to the curious goodness that was fostered among those who stood up to the corrupt government in the communist east, as an antidote to the tendency to overreach that became endemic in the west.

Anyone who really has something to say doesn’t need make-up.” That leaning against the wind, speaking truth to power, is what Mrs. Merkel is all about.  It might work as well against the current climate of greed and fear as it did against communist oppression.

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