German Elections Bad News for Neoliberals

The consensus in the mainstream press is that Angela Merkel is, in the Age of Trump, the leader of the Western neoliberal world order. Her reelection was a foregone conclusion. Stories in the run up to Sunday's vote usually mentioned -- as an afterthought -- that Germany's far-right party, Alternative for Germany (AfD), would enter parliament, the first ultra-nationalist party to do so since the defeat of the Third Reich, but that it was not much of a concern since its momentum had been zapped by Merkel's shrewd swing to the right on immigration.

Well, that's not how things turned out. Yes, Merkel triumphed, but her Christian Democrats fell significantly short of their performance four years ago, as did their coalition partner Social Democrats; add to this AfD's arrival as the third-largest party in parliament, and what you get is a lot of neoliberal hand-wringing this morning, captured by Stephen Erlanger and Melissa Eddy in "Angela Merkel Makes History in German Vote, but So Does Far Right":

The far-right party, Alternative for Germany, or AfD, got some 13 percent of the vote — nearly three times the 4.7 percent it received in 2013 — a significant showing of voter anger over immigration and inequality as support for the two main parties sagged from four years ago.

Ms. Merkel and her center-right Christian Democrats won, the center held, but it was weakened. The results made clear that far-right populism — and anxieties over security and national identity — were far from dead in Europe.

They also showed that Germany’s mainstream parties were not immune to the same troubles that have afflicted mainstream parties across the Continent, from Italy to France to Britain.

“We expected a better result, that is clear,” Ms. Merkel said Sunday night. “The good thing is that we will definitely lead the next government.” 

[snip]

Ms. Merkel’s conservative bloc won some 32.9 percent of the vote, sharply down from 41.5 percent in 2013, the early results showed.

The Social Democrats slumped to 20.8 percent, a new postwar low, down from 25.7 percent four years ago.

If the Social Democrats hold to their intention to go into opposition, Ms. Merkel will be faced with an unusually difficult task to form a working coalition. Given the numbers, it would seem that she will have to cobble together her own Christian Democrat-Christian Social Union bloc together with two other parties.

The potential new partners inhabit virtually opposite poles on the political spectrum — the pro-business Free Democrats, who won some 10.4 percent of the vote, and the left-leaning pro-environment Greens, who won about 9 percent.

At the Christian Democrat headquarters, Frank Wexler, a Berliner, called the results “a bit depressing.”

Grand coalitions had allowed the small parties to gain ground, he said. “The main parties are getting smaller,” Mr. Wexler said. To counteract the AfD, he said, “We need to address the issue of strengthening the borders.”

But Mr. Wexler said he was most disturbed by the AfD’s hostility to the European Union. “This is what Germany needs to do — be a strong leader in Europe.”

But Hans Kundnani, an expert on Germany with the German Marshall Fund, said that Ms. Merkel might fail to create the three-party coalition, putting the Social Democrats under great pressure to join another coalition rather than forcing new elections.

To Mr. Kundnani, “the big shock is not the AfD,” but the loss of support for Ms. Merkel’s conservatives and the increasing fragmentation of German political life.

Moon of Alabama sees new elections in two years. Merkel has spent too much time hovering in the center and with this election she has been flanked on the right.

In the latest London Review of Books, Thomas Meany has a strong article, "In the Centre of the Centre," on the state of German politics on the eve of the election. While he didn't predict the result, I think he nails the inherent weakness of Merkel's centrism:

Many leftists and Greens, disillusioned with their own party leaders, have been stunned by Merkel’s modernisation of the CDU and her steadfastness in the first months of the refugee crisis. Too stunned, perhaps, to notice that her trick is to avoid the country’s root problems while treating the symptoms more skilfully than any conservative politician before her has ever managed. The media, meanwhile, unwilling to address the difficulties caused by Germany’s position as the reluctant hegemon of the Continent, or the growing sense of lurking inconsistencies in the gospel of Atlanticism, prefer endless celebration of the leader: the intellectual, strong, patient, grounded, wry, compassionate, tough, reality-grasping, scientific, opera-loving, Bismarckian wunder-Kanzlerin on whom nothing is lost. One of the few things the mainstream press holds against her is that she doesn’t campaign in a way that generates copy; others dislike the way she has so thoroughly depoliticised the country.

AfD's hostility to the European Union and the eurozone is an existential threat to Germany's economic hegemony. As Wolfgang Streek made clear in a piece, "Playing Catch Up," published in May --

With monetary union set up as it is, and the path to political union foreclosed not only by member states but also by their peoples, the Merkel government, like previous German governments, has only one suggestion to offer the rest of Europe: that each country catch up with Germany by subjecting itself to its own second round of capitalist transformation – ‘structural reforms’ involving the replacement of traditional forms of social solidarity with market competition and, perhaps at some later date, the embedding of competition in modern institutions of solidarity, like the welfare state and collective bargaining. For this to happen, willing governments must be kept in power, if need be through discreet suspension of democracy, since resistance to the treatment is growing on a broad front. Here, as so often in her long career, Merkel is anything but dogmatic, and certainly isn’t beholden to ordoliberal orthodoxy since what is at stake is Germany’s most precious historical achievement, secure access to foreign markets at a low and stable exchange rate. For several years now, Berlin has allowed the European Central Bank under Draghi and the European Commission under Juncker to invent ever new ways of circumventing the Maastricht treaties, from financing government deficits to subsidising ailing banks. None of this has done anything to resolve the fundamental structural problems of the Eurozone. What it has done is what it was intended to do: buy time, from election to election, for European governments to carry out neoliberal reforms, and for Germany to enjoy yet another year of prosperity.

My preoccupation -- I think about this constantly, and have for years -- is how much longer can this political-economic system stumble forward? So many times it appears on the verge of collapse, yet it always manages somehow to stay upright. Has history truly ended or are we finally witnessing the birth of a new era?

Habermas Declares the European Union Politically Bankrupt

Thanks to a tip from my father, here is a transcript of an interview conducted by Philip Oltermann with Jürgen Habermas which appeared in The Guardian this past Thursday, "Jürgen Habermas’s verdict on the EU/Greece debt deal – full transcript." Habermas' take is pretty much non-controversial at this point. The European Union is politically bankrupt. And this bankruptcy is consistent with the "technocratic hollowing out of democracy [that] is the result of a neoliberal pattern of market-deregulation policies."

Guardian: What is your verdict on the deal reached on Monday?

Habermas: The Greek debt deal announced on Monday morning is damaging both in its result and the way in which it was reached. First, the outcome of the talks is ill-advised. Even if one were to consider the strangulating terms of the deal the right course of action, one cannot expect these reforms to be enacted by a government which by its own admission does not believe in the terms of the agreement.

Secondly, the outcome does not make sense in economic terms because of the toxic mixture of necessary structural reforms of state and economy with further neoliberal impositions that will completely discourage an exhausted Greek population and kill any impetus to growth.

Thirdly, the outcome means that a helpless European Council is effectively declaring itself politically bankrupt: the de facto relegation of a member state to the status of a protectorate openly contradicts the democratic principles of the European Union. Finally, the outcome is disgraceful because forcing the Greek government to agree to an economically questionable, predominantly symbolic privatisation fund cannot be understood as anything other than an act of punishment against a left-wing government. It’s hard to see how more damage could be done.

The European Council is effectively declaring itself politically bankrupt
And yet the German government did just this when finance minister Schaeuble threatened Greek exit from the euro, thus unashamedly revealing itself as Europe’s chief disciplinarian. The German government thereby made for the first time a manifest claim for German hegemony in Europe – this, at any rate, is how things are perceived in the rest of Europe, and this perception defines the reality that counts. I fear that the German government, including its social democratic faction, have gambled away in one night all the political capital that a better Germany had accumulated in half a century – and by “better” I mean a Germany characterised by greater political sensitivity and a post-national mentality.

Guardian: When Greek prime minister Alexis Tsipras called a referendum last month, many other European politicians accused him of betrayal. German chancellor Angela Merkel, in turn, has been accused of blackmailing Greece. Which side do you see as carrying more blame for the deterioration of the situation?

Habermas: I am uncertain about the real intentions of Alexis Tsipras, but we have to acknowledge a simple fact: in order to allow Greece to get back on its feet, the debts which the IMF has deemed “highly unsustainable” need to be restructured. Despite this, both Brussels and Berlin have persistently refused the Greek prime minister the opportunity to negotiate a restructuring of Greece’s debts since the very beginning. In order to overcome this wall of resistance among the creditors, prime minister Tsipras finally tried to strengthen his position by means of a referendum – and he got more domestic support than expected. This renewed legitimation forced the other side either to look for a compromise or to exploit Greece’s emergency situation and act, even more than before, as the disciplinarian. We know the outcome.

Guardian: Is the current crisis in Europe a financial problem, political problem or a moral problem?

Habermas: The current crisis can be explained both through economic causes and political failure. The sovereign debt crisis that emerged from the banking crisis had its roots in the sub-optimal conditions of a heterogeneously composed currency union. Without a common financial and economic policy, the national economies of pseudo-sovereign member states will continue to drift apart in terms of productivity. No political community can sustain such tension in the long run. At the same time, by focusing on avoidance of open conflict, the EU’s institutions are preventing necessary political initiatives for expanding the currency union into a political union. Only the government leaders assembled in the European Council are in the position to act, but precisely they are the ones who are unable to act in the interest of a joint European community because they think mainly of their national electorate. We are stuck in a political trap.

Guardian: Wolfgang Streeck has in the past warned that the Habermasian ideal of Europe is the root of the current crisis, not its remedy: Europe, he has warned, would not save democracy but abolish it. Many on the European left feel that current developments confirm Streeck’s criticism of the European project. What is your response to their concerns?

Habermas: His prediction of an imminent demise of capitalism aside, I broadly agree with Wolfgang Streeck’s analysis. Over the course of the crisis, the European executive has accrued more and more authority. Key decisions are being taken by the council, the commission and ECB – in other words, the very institutions that are either insufficiently legitimated to take such decisions or lack any democratic basis. Streeck and I also share the view that this technocratic hollowing out of democracy is the result of a neoliberal pattern of market-deregulation policies. The balance between politics and the market has come out of sync, at the cost of the welfare state. Where we differ is in terms of the consequences to be drawn from this predicament. I do not see how a return to nation states that have to be run like big corporations in a global market can counter the tendency towards de-democratisation and growing social inequality – something that we also see in Great Britain, by the way. Such tendencies can only be countered, if at all, by a change in political direction, brought about by democratic majorities in a more strongly integrated “core Europe”. The currency union must gain the capacity to act at the supra-national level. In view of the chaotic political process triggered by the crisis in Greece we can no longer afford to ignore the limits of the present method of intergovernmental compromise.