2013 is now upon us and when it comes to German politics it is already clear what the climax of this year will be: the federal elections in September. As 2012 drew to a close, the election campaign was already well under way. But rather than focusing on the policies needed to overcome the many issues Europe faces, the focus has been on Peer Steinbrück, Angela Merkel’s social democratic challenger. And given the general lack of scrutiny of Merkel’s politics one cannot help but feel that large parts of the German media landscape have a much too cosy relationship with the incumbent chancellor.
Headlines in recent weeks were dominated by accusations that Steinbrück had given too many paid talks while an MP and his criticism of the low salary that comes with the chancellorship. Even though the vast majority of Steinbrück’s talks were pro bono and the fees were not excessive by international comparison, most German media sought to paint the SPD candidate as greedy.
It’s another symptom of the campaign against Steinbrück that he remained the centre of attention long after a full account of all paid speeches was published. Meanwhile, the fact that Merkel’s CDU blocked an SPD attempt to achieve the same level of transparency for all MPs remained largely unreported – as did the fact that there are many MPs in conservative and liberal ranks who have significant additional income on top of their MP’s salary.
Whether you agree with all of Steinbrück’s positions or not, he has two important qualities that are in short supply in the current climate: he is competent and honest. A former finance minister whose political stewardship during the financial crisis was widely praised even beyond the borders of Germany, he has for instance published a significant paper on reforming the financial sector. His reform proposals include vital elements such as the separation of investment an retail banking, the creation of a bailout mechanism paid for by the banks, the capping of bonus payments, better oversight of hedge funds and the prohibition of speculation with commodities such as crops. He has recently also urged that eurozone crisis countries should be allowed more time to get their economies back on track and has also made comments against excessive austerity: a bold move in the current German political climate.
Steinbrück is also right to accuse Merkel the of not having communicated the real nature of the European crisis: she continues to talk about a sovereign debt crisis even though, apart from Greece, the real macro-economic instability originated in the private sector. And she looks set to continue down this path. In her new year address she warned German citizens about difficult economic times in 2013, conveniently without mentioning her own role in bringing these economic risks about.
You really do not need to know much about macro-economics to conclude that a country as export-reliant as Germany will suffer if most of its important trading partners are in a recession. If offsetting factors, such as increasing exports into the Brics countries also weaken, the German economy will face difficult times.
The Merkel government has apparently also not understood the nature of the macro-economic interconnectedness within the eurozone. Leading experts such as Paul De Grauwe of the London School of Economics and even IMF director Christine Lagarde have pointed out that a symmetric adjustment process in the eurozone (ie both deficit and surplus countries changing direction), is needed to achieve a sustainable readjustment. And what does the German government do? Instead of expanding investment, as a symmetric approach requires, the Merkel government is currently discussing an extensive austerity programme that includes a rise in VAT, a reduction of government contributions to the health system and another increase in the retirement age.
With exceptions such as Wolfgang Münchau of the Financial Times and Spiegel Online, the German media have failed to scrutinise these major mistakes in Merkel’s politics, even though we are now entering the fourth crisis year and the situation has only calmed down because of bold action by the ECB. Her U-turn politics has actually made the crisis worse.
Instead of doing the job of educating the public, most German media outlets seemingly prefer to engage in ad hominem attacks against her social democratic challenger. This, to my mind, is also why the majority of Germans still believe that Angela Merkel is doing a good job in European politics. Neither the government nor the German media have properly explained the real issues we face. Often, when I explain the alternative crisis view to one of my compatriots I get asked why this is not discussed more prominently in Germany. This is a good question for which I have no answer.
But this is also a shortcoming that can be rectified this year. Election years are years of debate and political alternatives. Peer Steinbrück is the right man to challenge Merkel’s crisis narrative and take this debate in a more constructive direction. And if the German media start to join in and scrutinise the real issues at hand, we are in for a very interesting election year.
This column was first published by the Guardian