BERLIN, Germany – It started with a handshake, not a kiss. When Chancellor Angela Merkel and new French President Francois Hollande finally met in person on Tuesday evening, there was little of the warmth that marked her meetings with Nicolas Sarkozy in recent years.
Aides had downplayed the rendezvous as simply aimed at getting to know one another rather than about hammering out any policy. Yet the future of Europe could hinge on whether these two leaders find a way to work well together.
Rarely have two people met for the first time with so much baggage. Merkel refused to meet with Hollande during his election campaign, and made the highly unusual step of publicly backing his rival, fellow conservative Sarkozy. Hollande for his part seemed to be campaigning as much against Merkel as the incumbent, pledging to renegotiate the fiscal pact that she had championed.
Now the two have finally met face-to-face and the encounter seemed cordial if hardly warm. Following the ceremonial reviewing of the guard of honor – during which Merkel had to gently nudge Hollande in the right direction on the red carpet – the two held an hour -long meeting. They then addressed the throng of international journalists in a joint press conference during which Merkel remained stony-faced during much of Hollande’s comments, interspersed with the odd smile.
The pair did seek to downplay their differences and strike a friendly tone with Merkel even joking that the lightning that had struck Hollande’s plane on his way to Berlin was perhaps a “good omen.”
“I’m not sure whether there is sometimes more divergence perceived in the public realm than there really is,” the chancellor told the press conference. “We are aware of our responsibility, as Germany and France, for a positive development in Europe. Carried by this spirit I believe we will of course find solutions for the different problems.”
Both tried to show a united front on Greece, which risks ejection from the euro zone if it backs anti-austerity parties in the fresh elections likely after the parties failed to form a government. “Just like Frau Merkel,” Hollande said, he wanted Greece to remain in the euro zone while insisting that Athens meet the terms of the bailout agreement.
Yet when it came to the crux of the differences between the two, on austerity versus growth, it was obvious that the only thing that had been agreed so far was that they disagree.
After all, it remains to be seen how Merkel’s strict stance on rapidly reducing budget deficits can be married with Hollande’s plea for some kind of stimulus package to boost growth.
Hollande reiterated his promise to reopen talks about the fiscal pact, the agreement on strict budget discipline which he has said France will not ratify unless a growth element is also adopted.
“I said in the campaign, and I repeat today, that I want to renegotiate what was established at a certain moment,” Hollande told reporters. “Everything that can contribute to growth must be put on the table. I don’t want growth to be just a word, but tangible measures.”
He mentioned boosting competitiveness, as well as Euro bonds – essentially pooling the debt of euro zone members – something Merkel has so far flatly rejected.
He did not, however, mention tinkering with the European Central Bank’s mandate, surely a red line if ever there was one in Berlin.
For all the inauspicious beginnings, observers predict that the two will eventually hit it off. Both play on their modest, down- to-earth style and exude an air of pragmatism rather than charisma. Hollande depicts himself as “Mr Normal” in contrast to the Bling Bling of his predecessor Sarkozy, while the unassuming Merkel is often seen doing her own grocery shopping. And both are said to have a wry sense of humor in private.
Furthermore, Hollande’s gesture of appointing Germanophile Jean-Marc Ayrault as his prime minister will have gone down well in Berlin.
Yet, it is hardly a meeting of equals. Merkel is an old hand in European politics now, in her seventh year in office, while Hollande’s previous executive experience has been confined to serving as mayor of the small town of Tulle.
Furthermore Germany is the EU’s economic powerhouse, with its export-driven economy keeping the rest of the euro zone out of recession, according to figures released on Tuesday. And Berlin has long been calling the political shots in Europe, with the fiscal compact being dreamed up by Merkel, as a way of preventing EU states from getting into deeper debt in the future.
At the same time Merkel is increasingly isolated in Europe, as there is a growing realization that austerity is choking off growth. Hollande knows that other leaders, including conservatives like Italy’s Mario Monti, also want Berlin to budge on its debt reduction fixation.
Hollande came to Berlin straight from his inauguration ceremony in Paris. After beating Sarkozy on May 6 he will feel he has a mandate from the French people to push for a change of direction in Europe. Yet he also faces a tough economic situation back home, with just 0.1 percent growth in the first quarter and growing unemployment, now at a 13-year high of 10 percent. If the economy were to contract even further, it could make it very difficult to fulfill many of his campaign pledges, such as reversing Sarkozy’s pension reforms.
Merkel has her own problems, despite the strong economy. Her party, the conservative CDU, has just suffered a bruising defeat in the state of North Rhine-Westphalia. Her coalition is increasingly fractious, with Bavaria’s CSU leader Horst Seehofer publicly slamming the CDU candidate in North Rhine-Westphalia Norbert Roettgen on TV for his campaign, while the FDP is unpredictable due to an ongoing leadership crisis.
The fact that she needs a two-thirds majority in the Bundestag to ratify the fiscal compact means she is dependent on the opposition SPD. And while the party has broadly backed her euro policy, it has been emboldened by Hollande’s victory and the strong showing in NRW. On Tuesday the party’s leaders said that they would delay the vote on the fiscal pact, originally scheduled for late May, saying it wanted to see concrete growth measures as well as austerity.
That would leave time for Merkel and Hollande to agree to some sort of compromise solution.
The pair said they will seek an agreement ahead of the next big summit of EU leaders in June. “It will be very important that Germany and France present their ideas together at this summit, and we have talked about the preparation,” Merkel said.
They will see each other before that, meeting at an informal dinner of EU leaders on May 23, as well as at the forthcoming NATO and G8 summits.
However, Hollande is unlikely to show much willingness for compromise with Berlin just yet. After all his party is facing legislative elections in mid June and he will want to make sure he is not seen to be backsliding on campaign pledges.
Hollande wants his five-year term to start with his Socialist Party securing control of the National Assembly so that he can push through his agenda. Otherwise he faces a frustrating period of “cohabitation” with a prime minister from the opposing camp, such as occurred when conservative Jacques Chirac’s presidency coincided with the premiership of Socialist Lionel Jospin from 1997 to 2002.
As such Merkel cannot expect Hollande to veer from his insistence on growth measures. And for all his unassuming manner, he could well prove to be a more difficult partner than Sarkozy in the long run.
Nevertheless Merkel is also likely to stand firm on many issues. Asked on Tuesday night if she feared Hollande’s campaign promises she replied coolly: “I am seldom afraid, as fear is not a good counselor in politics.”
Tuesday, May 15, 2012 6:15 PM UTC
Wars don't just cause casualties among soldiers, they drain medical staff. I traveled to see the costs firsthand
By Michael Winship
A soldier is prepared for an operation at Landstuhl Regional Medical Center. (Credit: Reuters/Kai Pfaffenbach)
The weather’s getting warmer in Afghanistan and the war there is heating up again. That means – as it has meant every year for more than a decade — that the pace will quicken at the Landstuhl Regional Medical Center in Germany. More casualties will be brought to this largest American military hospital outside the United States. The Critical Care Air Transport teams and their C-17 Globemasters will fly in from “downrange,” as they call the Afghan battleground, and the injured will be brought by ambulance bus from nearby Ramstein Air Force Base to the hospital front door.
I spent a few days at Landstuhl recently, one of a group of writers from the Writers Guild Initiative, part of the Writers Guild of America, East Foundation (Full disclosure and just to add to the confusion: I’m president of the Writers Guild, East, the union with which the foundation’s affiliated).
For the last four years, the foundation has been conducting writing workshops. The project began with professional writers from stage, TV and movies mentoring veterans from the Iraq and Afghan wars, working with them on writing exercises and projects ranging from memoirs and blogs to children’s books, screenplays and sci-fi novels. Recently, in collaboration with the Wounded Warrior Project, the foundation started similar workshops with caregivers, the loved ones of veterans helping them through the aftermath of catastrophic injuries.
Now, Wounded Warrior had asked some of us to come to Landstuhl to meet with the medical staff there. Some 3,000 strong, military and civilian, they work ceaselessly in what has become one of the busiest trauma centers in the world, helping between 20,000 and 30,000 patients a year (not just from the battlefield, but also military and their dependents from all over Europe, Africa and much of Asia).
Landstuhl is where the victims of the 1983 bombing of the U.S. Marines Corps barracks in Beirut were brought; Bosnian refugees from the Sarajevo marketplace bombing in 1994, too, wounded from the American embassy bombing in Kenya in 1998 and the 2000 attack on USS Cole. During the first Gulf War, more than 4,000 service members were treated at Landstuhl, as have been men and women fighting in the Balkans and Somalia. Since 9/11, the hospital has treated coalition troops from 44 different countries.
They compare this hospital to the center of an hourglass; it’s the midpoint between a combat injury and treatment in the field and then subsequent care back in the States or other home country. Or it’s where a service member is treated and then sent back into battle.
The staff at Landstuhl sees the wounded at their worst. Many who arrive suffer from multiple injuries – “polytrauma” so extensive that several teams of surgeons with different specialties – neurological, thoracic, ear and eye, facial reconstruction and orthopedic, among others — may work on an individual patient, often simultaneously. Bodies are blown apart or crushed by IEDs, grenades and suicide bombs, but so skillful are the medical teams there, so advanced the techniques and technology, Landstuhl’s survival rate runs as high as 99.5 percent. (The survival rate among American wounded in World War II was 70 percent.)
But all that success takes a toll. One of the little discussed but potent side effects of war is what’s called combat and occupational stress Rreaction or secondary traumatic stress disorder. Compassion fatigue.
After all the years of fighting in Iraq and Afghanistan, many of the doctors, nurses and other staff at Landstuhl are exhausted or worse. Given what they’ve seen — the horrific wounds and amputations, the infection, agony and grief – some walk around “like zombies,” one therapist said. Feelings of empathy and kindness yield to loneliness, despair and burnout.
Many of the compassion fatigue symptoms are similar to post-traumatic stress disorder – physical effects like headaches, gastrointestinal problems, reproductive troubles, as well as mental — nightmares, flashbacks, anxiety, emotional distance, isolation and more.
Working with physically damaged men and women who are so deeply traumatized rubs off. The emotional rawness is contagious. A hospital handout on PTSD understatedly reads, “When life-changing events occur, perceptions about the world may change. For example, before soldiers experience combat trauma, they may think the world is safe. Following combat, a soldier’s perceptions may change — a majority of the world may now seem unsafe.”
That’s why returning vets may reflexively search alongside a U.S. interstate highway for roadside bombs, only shop at Walmart at 3 in the morning, or worry to excess that their children’s school will be attacked by terrorists. And it’s why after hearing the stories of their patients, reliving the horrors of war, watching them endure pain and sometimes countless operations, medical practitioners can suffer from the same fears — whether it’s the surgeon who heals the wounds, the psychiatrist who probes the mind for the source of anguish or even the clean-up staff decontaminating and removing the blood from surgical tools.
Combine that with homesickness, the high operational tempo of Landstuhl, the low tolerance for mistakes, the downtime when the mind takes over and remembers every awful experience. It’s a dangerous, often unhealthy mix.
And so, on a Saturday morning, we writers sat down with a bunch of men and women who work at Landstuhl and other nearby medical facilities. There were 14 of us and t32 or so of them. We broke into small groups – two writers working with a group of two to four hospital staff.
My colleague Susanna and I mentored four – a male Army nurse and a female Navy nurse, a physical therapist and a developmental pediatric psychiatrist. We weren’t there to interview or pry; they would tell us what they wanted us to know when they wished, their stories slowly emerging from conversation and the brief writing exercises we gave them.
The male nurse had been in Special Ops, the Navy, Marines and Army; he was reluctant to talk of what he had experienced but wanted to examine themes of good and evil in an epic novel. The physical therapist told us she wanted to explore the mind-body connection, perhaps with a blog; the Navy nurse spoke of her feelings for the soldiers she took care of from the Republic of Georgia, the former Soviet state, now independent. (By the end of the year, Georgia, aiming at membership in NATO, will have some 1,500 troops in Afghanistan.) She had learned how to bake for them the Georgian national dish, khachapuri, a cheese-filled bread; now she wants to write a cookbook.
For two days, we talked and they wrote, we recommended books and movies, they told us about the ones they loved. Tears were shed as stories and memories came to the surface, many too private to relate here. Over the coming weeks and months, we’ll stay in touch via email and meet again; trying to be of assistance as they write to express their thoughts and feelings, to tell their stories.
Do the workshops help? Hard to measure, but intuitively it feels as if they do, that in the talking and writing comes self-awareness and some measure of equanimity. And selfishly, for those of us who serve as writer-mentors, the benefits are enormous and fulfilling.
But the statistics are alarming. According to NBC News, “The Pentagon counts more than 6,300 American dead and 33,000 wounded in action in Iraq and Afghanistan. A Rand Corp study estimates that as many as 300,000 post-9/11 veterans suffer from PTSD or major depression, and about 320,000 may have experienced traumatic brain injuries, mainly from bombs.” The number of civilian fatalities in Iraq and Afghanistan remains uncertain but a Brown University study last year reported at least 132,000.
Meanwhile, there are still nearly 90,000 American troops in Afghanistan. More will die and be wounded. President Obama has pledged their complete departure in 2014.
But even after that, the work at Landstuhl will go on. There are still nearly 300,000 American military personnel overseas, plus family members. Landstuhl will take care of many of them. And, says one of the hospital’s surgeons, with a sigh of resignation, “There will always be the Middle East.”
Monday, May 14, 2012 2:30 PM UTC
After a disastrous showing in a regional election, the German leader's party is at risk -- and so is Euro stability
By Siobhan Dowling, GlobalPost
German Chancellor Angela Merkel (Credit: AP Photo)
BERLIN, Germany – It is a paradox of German politics that Chancellor Angela Merkel remains overwhelming popular, while the parties that make up her governing coalition lurch from one defeat to the next in a string of regional votes.
That was made evident yet again on Sunday when her conservative Christian Democrats (CDU) suffered their worst ever result in Germany’s most populous state of North-Rhine Westphalia. The party only managed to get just over 26 percent of the vote in the snap election, shedding almost 9 points since securing 35 percent in the last vote there in 2010.
Her junior coalition partners the Free Democrats did manage an impressive comeback, securing a surprise 8 percent and managing to return to the state parliament thanks to its dynamic leader in the state, Christian Lindner. However, the disastrous performance by the CDU will allow the Social Democrats and Greens to form a stable coalition, after operating as a minority government for the past two years.
The SPD won 39 percent of the vote in what had been its traditional heartland, largely thanks to the huge popularity of its leading candidate, state governor Hannelore Kraft. The Greens only fell back slightly, down from 12 to 11 percent, a relief given the strong showing of the Pirates who stormed into their fourth regional parliament after securing almost 8 percent. The post-communist Left Party only attracted just over 2 percent, compared to over 5 percent in 2010, and thus failing to enter parliament.
North Rhine-Westphalia is often a strong indicator of the national mood. When former SPD Chancellor Gerhard Schroeder suffered a defeat there in a state vote in 2005 he called an immediate snap general election, which paved the way for Merkel’s rise to power.
Now, seven years later, could the bruising defeat in that state again be a harbinger of change at the federal level?
Even though the CDU had been braced for defeat on Sunday, the extent of the drubbing left the party reeling. “We have been bludgeoned,” said Peter Altmaier, the CDU’s chief whip in the Bundestag, on Sunday.
Their campaign had been a disaster, with their leading candidate Norbert Roettgen infuriating voters by failing to commit to giving up his current job as federal environment minister to lead the state opposition if the CDU were defeated. As such yet another possible internal rival to Merkel has been eliminated. Yet this also signals a defeat for a man who represented the moderate center of the party, and particularly for a possible coalition with the Greens.
While the CDU in North Rhine-Westphalia are left to lick their wounds, Merkel and the party strategists in Berlin will have to assess the vote’s significance for the party’s chances of holding onto power after next year’s federal election.
The party had been working on the assumption that the FDP would continue to implode and that the CDU would need to form a new alliance either with the SPD or with the Greens, who it was assumed would fail to muster enough support for a coalition of their own.
Now the victory in a state that is home to one in four Germans points to a possible resurgence of the SPD and Green alliance. However, it might be unwise to assume that the parties could achieve a similar result on a national level and revive their coalition of 1998-2005.
After all much of the victory on Sunday is being attributed to the successful duo of the SPD’s Kraft and the Green party leader and deputy governor Sylvia Loehrmann. The two women worked extremely well together, managing to form alliances with the other parties on a range of issues, and seemed to present a less harsh, more socially oriented governing style. “We put people at the heart of this election campaign,” Kraft said on Sunday.
The SPD at a national level is far less popular, and it has still not decided who will challenge Merkel at the next federal election. The current troika of leaders, Peer Steinbrueck, Frank-Walter Steinmeier and Sigmar Gabriel lack the common touch and warmth displayed by Kraft. They are also more associated with the severe welfare cuts and labor market reforms of the previous SPD-led government, which alienated much of the party’s traditional base.
While Kraft is increasingly being touted as a possible rival to Merkel in 2013 based on her triumph on Sunday, she has so far insisted that she has no desire to switch to federal politics.
Nevertheless the North Rhine-Westphalia election has given both the SPD and Greens a much needed boost. The SPD suffered its worst ever election defeat in the federal election of 2009, attracting only 23 percent of the vote and it has struggled to make headway against the ever popular Merkel.
Their strong performances both in North Rhine-Westphalia and in Schleswig-Holstein the previous week could encourage the opposition to be more forthright in demanding more concessions from Merkel when it comes to her austerity policy in Europe.
Merkel needs a two-thirds majority in the Bundestag in order to ratify the so-called “fiscal compact” which would see EU states commit to strict budget discipline.
The SPD and Greens, already emboldened by the victory of Socialist Francois Hollande, are demanding that the vote be delayed until the French and German leaders agree to some form of growth package to complement the fiscal rectitude ordained by the pact. While the SPD and Greens have largely backed Merkel’s euro policies, they are increasingly complaining that concentrating on austerity alone is not only failing to cure the euro zone’s ills but proving to be counter-productive.
While Merkel has insisted that no more debt can be taken on as part of any growth package, Hollande’s victory and the defeat in North Rhine-Westphalia may prompt her to show more flexibility on going beyond strict austerity in Europe. However, she has insisted that any growth strategy cannot be achieved by taking on more debt and she will not see the pact itself renegotiated, considering that it has already been ratified by a number of countries as is up for a public vote in the Irish referendum on May 31.
What remains to be seen is whether Merkel’s clout in Europe will be affected by her party’s election debacle back home.
After all, the austerity versus growth debate was very much a part of the North Rhine-Westphalia campaign, with the CDU campaigning on the merits of belt-tightening and budget consolidation, while the SPD and Greens advocated a looser approach to state finances.
Kraft’s government had fallen over its budget, which envisaged taking on more debt in order to help out cash-strapped cities dealing with the long-term effects of post-industrialization in a state which has a long tradition of steel production and mining. Roettgen had sought to portray the SPD and Greens as profligate spenders, not unlike the much maligned southern Europeans. In North Rhine-Westphalia at least, it seems German voters were happy to see the purse strings eased.
Nevertheless, polls still show that over 60 percent of Germans do not want growth policies in Europe to involve taking on more debt. And around the same number approves of Merkel’s firm handling of the euro crisis.
Yet, that popularity it seems is not translating into support for her party, despite a relatively strong economy and the lowest unemployment levels in 20 years. And if the euro crisis starts to really impact the German economy, then Merkel’s own popularity, never mind that of her party, could rapidly evaporate.
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The nation's mass manufacturing strike could benefit workers across the EU
By Siobhan Dowling, GlobalPost
A masked left-wing protester holds a poster as he walks with other demonstrators at a rally to mark May Day in Berlin's district Kreuzberg, Tuesday, May 1, 2012. (Credit: AP Photo/Markus Schreiber)
BERLIN — Germany’s engineering sector has been hit by an industrial action this week. That’s a sign of just what an island of prosperity Germany has become within the ocean of troubles that is the euro zone.
While workers in many other countries fear for their jobs as their economies tumble into recession, here newly confident labor unions are demanding massive pay rises — and going on strike to get them.
On Wednesday around 30,000 workers in Germany’s vital manufacturing sector downed tools in a coordinated action that affected over 100 companies, including Daimler and Bosch. The strikes continued on Thursday with an estimated 115,000 workers staging a walk out in around 400 companies, including Porsche and Audi, as part of industrial action to secure a hefty 6.5 percent pay rise forGermany’s 3.6 million metalworkers.
Yet, while some workers in troubled countries may look with envy at their German comrades’ brazenness, in fact the action taking place from Berlin to Bavaria could end up being to the benefit of workers in Madrid, Athens or Lisbon.
After all, the stagnating wages of the past 10 years have served to tip the scales decidedly in German companies’ favor, allowing them to boost their competitiveness at a time when wages were soaring in many other euro zone countries.
That, along with actually producing high-quality goods that the rest of the world wants, has been partly to blame for some of the massive disparities within the euro zone, and to the indebtedness of countries that imported all those German goods.
“This has contributed to the imbalances in Europe, and means that Germany is also partly responsible for the current economic crisis in the euro zone,” argues Alexander Herzog-Stein, an economist with the Macroeconomic Policy Institute, a think-tank with links to Germany’s trade unions.
Now, organized labor in Germany could be riding to their fellow Europeans’ rescue, albeit largely out of self interest.
If wage hikes boost domestic consumption back home, it could go some way to correcting the imbalances that have been a hallmark of the monetary union, as German workers spend their wage increases on more products, including imports from other euro-zone states. As such, decent wages in Germany could even help generate much-needed growth elsewhere.
That could be an alternative to brutally slashing jobs and wages in troubled euro-zone countries.
What is certain is that unions here are adamant that wages have not risen fast enough, given Germany’s position as Europe’s industrial powerhouse.
Even in the engineering sector, vital to its export-led economy, wages have stagnated.
Leaders of the metalworkers union, IG Metall say the current employers’ offer of 3 percent is a “farce” and “provocation” and are hoping their action gets them their 6.5 percent. They are also demanding that employers hire apprentices at the end of their training, and that worker representatives have more say over the employment of temporary workers.
Joerg Hoffmann, regional union leader for the wealthy state of Baden-Württemberg, home to Porsche, said that a deal had to be reached by 15 May. “Otherwise we’ll show them the red card.”
The workers in the engineering sector are hoping to emulate other recent successes. Service union Ver.di secured a 6.3 percent pay increase for its 2 million members, following a series of strike actions. And just last weekend Deutsche Telekom agreed to pay its 17,000 employees an overall 6.5 percent increase over two years.
It’s a mark of the revival of confidence among the German trade unions. Now that unemployment has shrunk to its lowest rate in two decades, and with particular industries even complaining of skills shortages, this is a good time to flex their muscles.
It’s a welcome change from their relative weakness over the past decade. Their leverage had already been dented by the mass unemployment that came in the wake of reunification of East and West Germany and the subsequent collapse of East German industry. That was only compounded by the subsequent dot.com crash and the labor-market reforms that made it easier to hire temporary and part-time workers.
The upshot was that in real wage terms, German wages actually decreased over the past decade. Between 2000 and 2007, before the financial crisis even hit, nominal wages only grew by 1 percent, compared to 2.7 percent in the euro zone, and well below the rate of inflation.
At the same time productivity soared. Data released by Germany’s Federal Statistics Office on Monday showed that while average productivity in the European Union had risen by 3.4 percent between 2005 and 2010, in Germany it was 4 percent, compared to 3 percent in France and virtually zero in Italy.
And whereas overall unit labor costs had increased by 6.2 percent in that period, the rise was only 3.6 percent in Germany, and if had not been for the crisis years in 2008 and 2009 when workers were kept on even when orders were slack, those costs would have actually have decreased over the period.
During the crisis the government and companies introduced a short-work scheme that saved many jobs. However, it is also true that during that difficult period, the unions cooperated with employers to keep companies going. Many skilled workers accepted wage cuts or took unpaid leave to help companies get through the slump in demand.
Now it’s payback time. Workers know that Germany’s export sector has been booming and that many of Germany’s industrial giants are raking in the profits. Just last week Volkswagen, Europe’s biggest carmaker, announced a 10 percent increase on its first quarter operating profit to 3.2 billion euros ($4.2 billion) after seeing a record operating profit of 11.3 billion euros in 2011.
“Naturally the workers also read the newspapers, and they read how well the German economy is doing and how it is being praised,” says Herzog-Stein. “And they are asking for their share.”
On Tuesday, the unions were out in force to celebrate May Day, the traditional day of organized labor, and to reiterate their position. “After years of pay cuts in real terms, after years of efforts to help the country through the crisis and helping save many companies and jobs, it’s our turn now,” Michael Sommer, head of the DGB trade union federation said in a speech.
That sentiment was echoed in the banners held up by many union members who took part in the traditional May Day marches. One in Berlin declared, “It’s time to cough up the money.”
Unions are also demanding a general minimum wage of around 8.50 euros ($11) an hour, something that the center-right coalition has so far resisted. However, as Chancellor Angela Merkel moves to the center, hoping to poach voters from the center-left SPD and Greens, she has indicated in recent weeks that she would now back such a move.
There are some economists who worry that the trend toward higher wages, coupled with the ECB’s low interest rates, could lead to Germany’s greatest fear: inflation. However, others argue that in fact a wage hike is long overdue and should not push prices up. “Wages are rising, but this follows a prolonged period of restraint,” Andreas Rees, chief economist at Unicredit in Munich, told Reuters.
And while it could help the rest of Europe if German consumption picked up even further, it could be of benefit to the German economy. For one, it might help offset any slump in demand in recession-hit Europe. After all, even though German exporters have been able to rely on continued demand outside of the continent, particularly from China, the euro zone still accounts for 40 percent of its market.
“If there is not also a boost in domestic demand then Germany will not remain untouched by the euro crisis,” Herzog-Stein argues. “That is why, out of self interest, we need a stronger and more dynamic domestic market.”
Saturday, Apr 14, 2012 12:00 PM UTC
His controversial poem about Israel may have lacked elegance, but it was also a dire warning about war with Iran
By Steve Weissman and Frank Browning
Gunter Grass (Credit: Reuters/Susana Vera)
With his controversial poem on Israel and Iran, Günter Grass has irritated, provoked and outraged people everywhere. As Germany’s greatest living writer and a Nobel laureate in literature, he has also raised a question both inconvenient and impolite. How can decent people support a preemptive war against Iran for moving ever closer to a limited nuclear capability and, at the same time, turn a blind eye to Israel’s extensive arsenal of existing atomic bombs?
Especially in a country with so much Jewish blood on its hands, this is – or was – a question that no Good German should ask in public. It was even more verboten when asked by someone who had belatedly admitted that as a teenager he had served, however briefly, in the Nazi paramilitary unit, the Waffen SS. But the 84-year-old Grass dared to break the taboo. He spoke out and said “What Must Be Said.”
Yet why do I hesitate to name
that other land in which
for years—although kept secret—
a growing nuclear power has existed
beyond supervision or verification,
subject to no inspection of any kind?
Predicting he would be branded an anti-Semite, as he has been in full measure, Grass named Israel and called its atomic power a threat to “an already fragile world peace.” Nor did he stop there. He berated his own country for complicity by selling the Israelis “yet another submarine equipped to transport nuclear warheads.”
Germany had already given Israel two Dolphin-class submarines, and subsidized one-third of the $540 million cost of another. The Germans are planning to similarly subsidize the sale of the latest submarine.
Nuclear arms and submarines are enough to drag down any poem, and “What Must Be Said” lacks elegance and grace, at least in the English translation by Breon Mitchell. But as a poet, Grass risks even more in suggesting a political solution. Our leaders should renounce the use of force, he writes, directly countering Obama’s insistence on keeping a military option on the table. And they should “insist that the governments of both Iran and Israel allow an international authority free and open inspection of the nuclear potential and capability of both.”
No other course offers help
to Israelis and Palestinians alike,
to all those living side by side in enmity
in this region occupied by illusions,
and ultimately, to all of us.
Will any significant world leader take up the challenge and publicly support such an even-handed and common-sense approach? Not if the Israeli government of Bibi Netanyahu and his defenders in Europe and the United States have their way. Their purpose in reviling Grass as a Nazi and anti-Semite is precisely to silence anyone who might even consider following his lead.
Odds are that their campaign of vilification will succeed, at least in the short term. But they may be overplaying their hand. In Germany, most of the great and good came down against Grass and his breaking of the old taboo against attacking Israel. But once Israeli Interior Minister Eli Yishai banned Grass from entering the country, German politicians of all stripes have criticized Israel for its “absurd overreaction.” Even more encouraging, few leaders in the rest of Europe have picked up the cudgels against Grass, while several prominent Israelis have publicly rejected any suggestion that he is an anti-Semite.
One might see in all this evidence that growing numbers of people, Jews as well as non-Jews, are growing sick and tired of the old smear. Europe, the United States and several Muslim countries have enough instances of real Jew-hating that crying wolf just to stifle debate has become reckless and counterproductive. One might also see in the current furor signs that both Israel and Germany are becoming “normal countries,” though Grass would be the first to insist that he and his fellow Germans are “tarnished by a stain that can never be removed.”
But, “What Must Be Said” has little time to act as a brake on a dangerous military catastrophe, as Grass still hopes it will. For all the Obama administration’s diplomatic efforts through Turkey and others, the Israeli-American war on Iran kicked off covertly years ago with the training of dissident Mujahideen-e-Khalq terrorists and their targeted killings of Iranian scientists and engineers, as well as with the Struxnet cyberattacks on the Iranian centrifuges. Open war appears almost certain follow, and the only thing likely to stop it would be for hundreds of thousands of voices to call on world leaders to heed Grass’ warning.
Wednesday, Nov 30, 2011 7:40 PM UTC
The economic elite who caused the global recession are tasked with fixing it -- and they'll fix it in their favor
By Adam Haslett
Protesters shout slogans as they protest against austerity policies in Greece. (Credit: Reuters/Grigoris Siamidis)
“Everything seems to be running exactly on schedule here, which is not what you expect in Italian politics … It looks like by Monday the markets will have Monti as their Prime Minister.” —BBC TV Rome correspondent, Nov. 12, 2011
As we move further into the fourth year of the global financial crisis, the questions of where it will end are becoming ever more insistent. When will political leaders finally come up with a solution? When will the atmosphere of dread and panic subside? Put most simply, when will life get back to normal?
There have been recessions before. Unemployment has risen, government revenues have dropped, but after a couple of years some combination of economic policy and new consumer demand has turned the tide and Western democracies have reverted to politics as usual, with parties of the left and right arguing over the distribution of social goods within their own countries. Why isn’t that happening again?
There are plenty of answers that speak to the immediate causes: the economic stimulus packages on both sides of the Atlantic have been too small to restart substantial growth; the European Union bureaucracy has been dysfunctionally slow to respond; the euro zone lacks a process for countries to give up the currency.
But as most people can sense by now, the changes we are experiencing go well beyond these headlines. In many countries, the fundamental political and economic bargain of postwar society is in the process of coming apart. The question, then, isn’t when will public life return to normal? It won’t. Nor should we be asking when will the crisis end. It won’t end for a very long time, perhaps decades. And it will change most people’s lives more profoundly than the end of the Cold War or 9/11 ever did.
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For two and a half decades after World War II, the West enjoyed a remarkably sustained period of economic expansion. Industry thrived, wages grew, there was something close to full employment and tens of millions of people entered the new middle class. Modern consumer society was born. By the late 1960s, however, this expansion had begun to sputter out. This was not just an economic problem but a serious political one, because businesses had become accustomed to sustained growth and voters to plentiful jobs and steadily rising income. Deviation from this condition was seen as an aberration that the government was obliged to fix.
As Wolfgang Streeck, managing director of the Max Planck Institute for the Study of Societies, has recently argued, this problem of slower growth in the West from the 1970s onward — and the societal expectation that it be overcome — led to a series of crises in the capitalist system. The first was inflation. Faced with recession in the early ’70s, governments eased monetary policy, i.e., printed more money, to raise consumer demand and ward off unemployment. But by the end of the decade inflation had reached the point where investors no longer found it profitable to risk their capital in new ventures and unemployment began to rise. In the early 1980s, again faced with recession, most governments turned instead to large public deficit spending to boost consumption, and in the U.S. and Britain in particular, they aggressively took on unions in an effort to break their power to demand wage increases.
But by the beginning of the 1990s, the resulting national debt and annual budget shortfalls had begun to worry financial markets and they were turned into a major political issue. In trying to maintain economic growth while at the same time cutting the deficit, both Washington and London dramatically deregulated their financial industries, leading to what some economists call “privatized Keynesianism.” By allowing financiers to invent and market endless new forms of private debt, these governments in effect shifted the site of borrowing from sovereign states to companies and individuals who could now fund their own current consumption (and speculation) by borrowing from their own future.
What ensued were two asset bubbles, the first in Internet stocks in the late 1990s, and the second, far more devastatingly in American real estate and the financial instruments derived from it, so-called mortgage-backed securities, which brought down Lehman Brothers in 2008 and began the current crisis.
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Seen in historical context, then, what we are experiencing right now is not simply a particularly severe economic contraction in the ordinary business cycle which will eventually abate. It is the acceleration of an endemic crisis in Western economies that has been building for four decades as we have attempted to replicate the supposedly “normal” economic gains of what were in fact historically anomalous postwar years. This is not to say there hasn’t been substantial growth since the 1970s. There certainly has been. But unlike during the postwar period, its distribution has skewed steadily upward producing an ever-greater inequality of income, particularly in the U.S. While GDP has grown, more in some countries than others, real wages have stagnated over the course of the last 40 years. In addition, over the last 20 years, the deregulated financial industry has become so politically powerful it can effectively block any serious reform of its practices, particularly on a global scale where reforms are needed most, thus locking in the trend of the upward distribution of any overall economic gains.
One of the related effects of this dramatic rise of finance capitalism has been to steadily erode the general public’s ability to understand how the modern economy actually functions. Most people can understand what political forces are at play when a union demands higher wages and a company resists, citing foreign competition. We can choose which politician to vote for based on the position they take in such a conflict and have a reasonable sense of whose interests we are supporting by so doing.
But what happens when a politician says we must lend billions of dollars to undercapitalized banks or indebted countries in order to provide liquidity to the financial system, and if we don’t we will enter a depression or blow up the euro? The content, let alone the truth, of such a proposition is hard for most people to assess. More troubling still, their assessment doesn’t much matter anymore. Because the answer to the question is now considered technical and because the situation demands immediate action, the key decisions are made without democratic consultation by financial bureaucrats working with private bankers. The public is relegated to the role of bystander, reading reports of what the (supposedly neutral but in fact determinedly free-market) technocrats have decided in the name of saving the economy. Financial policy becomes more like foreign policy, conducted by an executive strong-arming a parliament or legislature under conditions of emergency.
And so people get angry: They get angry at bankers, at politicians, at entire countries for not budgeting more carefully, and at the press for failing to explain what’s going on in such a way that they can understand where their interests actually lie.
Which brings us to our current moment. In the United States the bleak economy and the increasingly oligarchic division of wealth have led to protests on a scale not seen since the 1960s. In Europe, the euro is in danger of collapse and the entire postwar project of integration could conceivably begin to run in reverse, far more quickly than most people imagine.
Under intense pressure from the bond markets, Greece and Italy have essentially suspended their democracies and agreed to the installation of European bureaucrats (and former Goldman Sachs advisors) as their prime ministers. Their assignment is to impose steep cuts in public spending, raise taxes and privatize state-run enterprises at a time when their economies are either stagnant or already shrinking. This operation will be painful, the authorities in Brussels and Berlin say, but they will save the patient.
There are sound and, in fact, quite conventional economic arguments about why this will not work. Take the example of Ireland. It accepted these same conditions in order to escape having to pay such high interest on its sovereign debt. In return, it got a European bailout. For a time, the interest rate it had to pay to borrow money declined. But once investors examined how deeply the Dublin government was cutting spending, they decided the Irish economy was unlikely to recover any time soon, there being so little demand for goods. Thus, precisely because of its austerity, Ireland’s bonds now have a higher interest rate than before the bailout, setting the stage for further disaster.
But there is another — and in many ways deeper — reason why the technocrats put in charge in Greece and Italy are likely to fail, and it is related to the larger story of where Western capitalism has been heading for the last 30 years. The decisions the technocrats make will lack legitimacy with the populations they govern. In Europe, this is made clear by the imposition of the leaders by external forces. In the U.S., the imposition of the market’s sovereignty is felt through the now unlimited corporate campaign contributions that effectively circumvent the public preference for a more equitable distribution of income by bribing the Congress. In both places, the demands of the financial elite run against the popular will, and in both places the popular will is being ignored. There is no reason to believe that these abrogations of popular sovereignty cannot be sustained for a very long time with the tactical application of force. But if they do persist they will lead us into a condition we would no longer recognize as democratic. Capitalist, yes. Democratic, no.
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I write this article from Berlin where I have been living for the last three months. I’ve had occasion while I’ve been here to talk to a lot of people from the worlds of business and finance as well as ordinary Germans. And most all of them have held Germany up as the counter-example of what I’ve been describing thus far. The economy has done quite well over the last several years; unemployment continues to decline; there has long been greater cooperation between capital and labor. And here the popular will is being followed. Most Germans don’t want to send more of their tax money south to bail out countries they see as profligate and poorly managed. And their government’s policies more or less reflect that preference. If the crisis leads more countries to be more like Germany — living within their budget, enforcing their tax laws — than so much the better, they say.
As an American, I hail from a country whose banking sector and previous government are more responsible than any other for virtually all the trends toward instability and inequality I have been discussing, so I say what follows with all due humility. German prosperity relies on exports. As global confidence in the euro zone has declined so has the value of the euro, making German goods more affordable all over the globe. Indeed, for several years now, the worse the crisis gets for Europe’s southern rim, the better the German economy does. This is not entirely the German government’s fault, and it’s certainly not the German people’s fault. But it has created a perverse dynamic in which the very instrument that was meant to bind Europe even closer together — a common currency — now threatens to tear it apart.
And this is a tension that cannot be sustained. If enough members of the euro zone are driven into recession by German demands for austerity, and if major, basically solvent trading partners like Italy are pushed toward sovereign default, then Germany’s fortunes will decline. Moral bromides about countries having to live within their means like ordinary families will do no more good for Germany and Europe than they do for alleviating unemployment in the U.S. The structure of global finance is fiendishly more complex than a family checking account and politicians who suggest otherwise, including Barack Obama of late, are doing the public a disservice.
The prospects for even a short-term solution of the European crisis seem dimmer than ever as the interests of different nations within the euro zone are increasingly set against each other in the popular press. Comity seems a long way off and the democratic legitimacy of any resolution even further afield.
It is little comfort to be able to step back and see that this crisis is part of a much broader and endemic instability in Western capitalism that continues to redistribute wealth upward, weaken democratic institutions, and concentrate power in the hands of the few. But it is this larger force, not the daily ups and downs of the current troubles, that will continue to shape our lives for decades. Even if we cannot at present see a path to reversing this force, we can at least endeavor to understand it more clearly.
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Angela Merkel and Francois Hollande in Berlin on Tuesday, (Credit: Reuters/Fabrizio Bensch) 
