Gerhard Schroeder will remain the German Chancellor after Germany’s recent elections, but his majority in Parliament has become extremely narrow. His Social Democrats (SPD) got 38.5 percent of the vote, and so did the Christian Democrats (CDU/CSU) of his rival, Edmund Stoiber. The main reason Schroeder won is that his coalition partner, the Greens, came out slightly ahead of the Free Democrats (FDP), who would otherwise most probably have formed a center-right government with the CDU/CSU.

Heads or tails? It looks as if the German electorate refused to make up its mind and instead simply tossed a coin. As a result, the SPD was weakened and the CDU/CSU strengthened — and now, nobody knows exactly what most Germans do want. While other EU member states such as Britain, France, Italy and Spain have clear parliamentary majorities, Germany does not. This seems to be symptomatic of the country’s state of mind: It is blocked. The election result may have fixed that paralysis for the next parliamentary term, which lasts until 2006.

The election campaign foreshadowed the outcome of the vote. It was about everything, except for Germany’s real and pressing problems. Schroeder, who still seemed to be on the losing side in August, desperately tried to avoid the most problematic issues for him, namely, low growth and high unemployment. He finally succeeded in doing so when he chose to campaign on an anti-American platform, declaring that under his chancellorship Germany would not support any use of force against Iraq even if a military campaign were authorized by the U.N.

It’s not the economy, stupid!

It was the first time in postwar German history that foreign policy had played such a crucial role in a federal election. Certainly, former Chancellor Konrad Adenauer was successful in the 1950s with his politics of Western integration, and so was Chancellor Willy Brandt with his Ostpolitik in the early 1970s. But these were sustainable strategies, not tactical pirouettes. They proved the Federal Republic to be a responsible player in European and world politics and strengthened its international reputation.

This time, the issue was not involvement, but disengagement. By asserting what he called the “German course,” deliberately dissociating himself from British and French initiatives and openly rousing anti-American feelings, Schroeder not only appealed to old resentments on the left, but also addressed a neutralist mood in the German population at large, especially among East Germans. All his predecessors had fought that German “leave me alone” version of pacifism. Schroeder has been the first postwar chancellor to exploit it for campaign purposes.

For the Federal Republic, Schroeder’s anti-American tactics may have caused strategic damage. But in purely Machiavellian terms, his modest success shows he was right. The East German voters were not only impressed by his decisive handling of severe floods in August, but also by his ad hoc neutralism with regard to Iraq in September. They saved him from defeat; a narrow majority of West German voters preferred the CDU/CSU (40.8 percent) to the SPD (38.3 percent), and a center-right coalition (48.4 percent) to a “red-green” one (47.7 percent).

Twelve years ago, during and after reunification, the question was whether the German colossus would be tempted to establish first an economic and then a political hegemony over the Continent. These fears have turned out to be mistaken. Today, German strength is not a matter of concern; German weakness is. The plain truth is that Germany is lacking any kind of expansionary drive. It has lost much of its former reputation as a model of economic efficiency, and become more inward-looking than ever. So the good news that nobody has to be afraid of Germany is accompanied by bad news: its lethargy is slowing down Europe’s dynamism.

Being the EU’s biggest member state, however, Germany cannot afford parochialism. In its own as well as in Europe’s interest, Germany must:

* Begin to understand that long overdue domestic reforms — the bold modernization of its welfare state, labor market and system of education — would work like a vitamin shot for its partners, too, not least for the European Economic and Monetary Union of which it is the most important member;

* Answer the question of what role it is willing to play in the shaping of an enlarged European Union. When the treaty on the incorporation of 10 new members into the EU is debated in 2003, will Schroeder, the center-left populist, be prepared to firmly resist the likely public opposition to letting in neighbors from the East?

* Commit itself to the strengthening of the EU’s role as a global player. Without Germany’s intellectual, financial and military contribution, the EU, an economic giant, will remain a political dwarf in world affairs. Instead of complaining about American unilateralism, Germany should help overcome the EU’s irrelevance in matters of global security and defense.

One of the first things Schroeder will have to do is to repair the damage he has done to German-American relations. The point is not that Berlin should humbly accept whatever Washington says. But it is Berlin that has to take the first step toward resuming dialogue with Washington after Schroeder slammed the door.

Second, Berlin will have to reconnect with Paris. The aim is not to create a bilateral hegemony over the enlarged EU. What is at stake is the ability of the EU to speak with one voice and act as one body vis-a-vis other powers, whether friends or not. During the last couple of years, Franco-German relations have dramatically deteriorated; the revitalization of this special relationship is a necessary (though not sufficient) condition for the EU to become a relevant player in world politics.

Finally, Schroeder and his government will have to find new ways of coping with the many vested interests that have until now obstructed attempts to thoroughly modernize Germany’s economy and society. Looking back to the four “red-green” years since 1998, one has to conclude that the neocorporatist style of “round-table” agreements between Big Business, Big Labor, and Big Government no longer works. The structurally conservative network of intertwined institutions lacks the flexibility and creativity needed to give an innovative answer to globalization. It is a pity that the German voters refused to endow the new Berlin government with a clear mandate to start fighting against the army of domestic veto powers.

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