The 1960s mark a dividing point in the history of
the Western world. The old generation in government
was passing; the welfare state had come to
provide a safety net; a university education was no
longer the preserve of the privileged few; the
young were freed from sexual taboos and fears,
and they discovered a new sense of identity and
mission: romantic, idealistic, searching for a cause
more worthwhile than crass materialism in a secular
age. That similar feelings were burgeoning in
the Soviet-dominated East becomes clear from
events in Poland and from the Prague Spring, but
for the most part repression kept the lid on free
expression. In the US, university students on the
eastern seaboard in particular identified themselves
in the 1960s with the civil-rights cause of
black people, though in this context they had the
support of a new-generation president in J. F.
Kennedy. Elsewhere the old generation was still in
control, typified by de Gaulle in the Elysée. In the
US the promise of the Kennedy years ended with
the president’s assassination. Vietnam increasingly
blighted the lives of youth, of the conscripts sent
to fight on the other side of the world; the war
became the focus of a new student protest movement
and aroused general disillusionment with
the honesty of those who governed.
For the West German youth there was the
added trauma of the question ‘What did my parents
do during the war?’. The almost total silence
in their country about the Nazi past only widened
the gulf between the generations. As the active
protesters in Berlin, Hamburg and Frankfurt saw
it, the ‘grand coalition’ of Kiesinger–Brandt was a
cynical closing of the ranks of the establishment.
There was a short-lived resurgence of the extreme
right, a switch of voters from the CDU, for whom
the coalition with the Social Democrats was repugnant.
Far more substantial was the movement by
those on the left who could not stomach the coalition
for exactly the opposite reason and felt disillusioned
by Willy Brandt’s political manoeuvres.
This discontent was fanned by the stirring
news of student riots in Paris and throughout the
Western world. Self-styled international student
leaders emerged and became cult figures. The
protesters were right about some of the causes
they espoused – the need for practical reforms in
the universities, for example, or the campaign
against excessive police repression, which threatened
civil liberties – but they were naive to
suppose that they could spearhead a Trotskyist or
anarchistic revolutionary movement. They themselves
were mainly the offspring of the better-off,
privileged professional and middle classes, and
workers in Germany, France and Britain felt little
sympathy for them and less urge to identify with
their manifold causes. What gave the student
rioting such potency, nevertheless, were the television
cameras transmitting into millions of
peaceable sitting rooms scenes of blazing petrol
bombs and charging policemen.
The single event that provided the spark and
allowed the ultra-left to capture the student
organisations was the brutal reaction of the Berlin
police to students demonstrating against the visit
of the Shah of Iran. On 2 June 1967, a policeman
shot and killed an unarmed student, who at
once became a martyr. Street battles followed in
several German cities. But the student movement
had no alternative to offer to German society; no
extreme leftist movement could evoke mass sympathies
with the spectacle of communist rule in
the East before everyone’s eyes. Did the student
movement, then, achieve anything beyond the
reform of its own nest, the universities? It probably
strengthened the feeling that there was a
need for change; some politicians like Willy
Brandt, leader of the SPD, understood that here
was a new electorate, a new generation to be listened
to and reconciled to the democratic institutions
of the Federal Republic created by the old
founding fathers.
By the time the general election was held in
September 1969, the grand coalition had fallen
apart. The SPD had substantially increased its share
of the vote, the German economy having recovered
under the guidance of a Social Democratic
minister working in tandem with Franz Josef
Strauss, thus ridding them of their ‘red’ image.
The CDU/CSU, nevertheless, remained the leading
party; its partner, the FDP, lost heavily and
now switched its support to the SPD, which under
the leadership of Willy Brandt offered a fresh direction
in foreign policy. Together they formed the
new government. It was the start of a new period
of SPD–FDP rule. In this way, the system of proportional
representation had in 1969 placed the
party with the largest number of votes, the
CDU/CSU, into opposition; by far the smallest of
the three parties, the FDP, had decided which of
the two major parties was placed in power. With
less than 2 million votes, and barely passing the 5
per cent threshold necessary to gain representation,
the FDP had brought about a decisive change
by switching sides. The working of democracy
under proportional representation has its critics,
but that a change of government was made possible
had strengthened parliamentary government in
the Federal Republic.
The Federal Republic now had its Kennedy in
the charismatic Willy Brandt, a youthful 55-yearold.
He had played no part in Nazi Germany,
emigrating in 1933 when only nineteen years old.
He had lived in Norway and eventually fled to
Sweden. In 1947 he resumed his German citizenship
and ten years later became a courageous mayor
of Berlin, championing the rights of the Berliners.
His anti-totalitarian and anti-communist credentials
were impeccable. A long period of office
appeared to stretch before him especially after the
electoral victory in 1972, which for the first time
made the SPD the leading party. But his trust in a
refugee, Günter Guillaume, originally from East
Germany, who served on his staff and was privy to
state secrets, proved to be misplaced. Guillaume
turned out to be a spy and Brandt, accepting
responsibility, resigned in 1974. But it had been
a remarkable five years, not least for the new
direction he had given to the Federal Republic’s
relations with the Soviet Union and its Eastern
neighbours, a policy known as Ostpolitik.
Brandt contributed to the climate of detente
between East and West; he was not simply reacting
to it. A quarter of a century after the end of
the war, he believed the time had come to normalise
relations in central Europe. The Federal
Republic’s refusal to recognise the ‘other’ German
state, the German Democratic Republic had prevented
all negotiations with the DDR which
might ease the hardships inflicted on families by
the division of Germany. In 1954 Adenauer had
solemnly pledged that the Federal Republic would
alter no frontiers by force of arms, but that pledge
had been given only to the Western allies. The
Federal Republic’s claim to speak for all Germans,
its refusal to recognise annexations by Poland east
of the Oder–Neisse (Silesia), the talk about ultimate
reunification and its strident hostility to
communism, all made it appear that the Federal
Republic was a threat to the security of the
German Democratic Republic and Poland if given
half a chance. Such views of an aggressive West
German state did not reflect reality either.
Periods of detente in East–West relations have
succeeded particular crises. The Soviet invasion of
Czechoslovakia in 1968 was followed by a decade
of diminishing tension and bridge-building.
Brandt’s policy of accepting the existing frontiers
of the Federal Republic and recognising the
German Democratic Republic required West
Germans to overcome a deep psychological
barrier and to sever certain links with the past.
But, eventually, the eastern territories were juridically
abandoned and the legitimacy of the
German Democratic Republic accepted.
The foundation of the Ostpolitik rested on five
treaties. In August 1970, Brandt travelled to
Moscow, as he said, ‘to turn over a new page of
history’, and he called for an end to enmity and for
a partnership between the peoples of Eastern and
Western Europe. After signing the Soviet–German
treaty, he visited Warsaw in December 1970 to
conclude a Polish–German treaty. Television cameras
recorded for all the world to see Brandt’s act
of repentance, when as the federal chancellor he
spontaneously sank to his knees before the memorial
to the half million Jewish victims of the
Warsaw Ghetto. The gesture graphically symbolised
the new Germany and its acceptance of
responsibility for the Nazi past. A four-power
agreement over Berlin (September 1971), a treaty
between the Federal Republic and the German
Democratic Republic (December 1972) and
finally a Czech–German treaty (December 1973)
completed the clutch of Eastern treaties.
Visiting the German Democratic Republic in
March 1970, Brandt laid the foundations for a
new businesslike relationship. The Berlin Wall,
constructed in 1961, had stemmed the haemorrhage
of population loss from East Germany and
in this negative way had created a basis of forced
stability for nearly thirty years. But the masters of
the German Democratic Republic were alarmed
at Brandt’s popularity. Even after the treaty was
signed, inter-German relations were far from
normal. The viability of the East German state
rested on Soviet support, specifically on the
Soviet veto of union with the West German
state. Brezhnev had, nevertheless, responded to
Brandt’s overtures and forced the East German
party boss Ulbricht to reach agreements. Western
recognition of the Eastern settlements was worth
a great deal to the USSR in stabilising its hold
over the East. The boost given to inter-German
trade, in addition, supported the ailing Eastern
economies; Brandt’s Eastern policy also brought
international recognition and benefits for the
Federal Republic, chief among which was the
recognition by the Soviet Union of the permanence
of the ties between the Federal Republic
and West Berlin. Moreover, movement between
the two Germanies was eased.
Brandt had thus extricated his country from
the increasingly damaging Hallstein Doctrine
whereby the Federal Republic had cut off relations
with any state that recognised the German
Democratic Republic (except for the Soviet
Union). This had increasingly narrowed West
Germany’s room for manoeuvre; now the way
was open again for renewed trade and cultural
relations with Eastern and central Europe. By
taking the initiative, the Federal Republic was
showing the world that it was no longer content
with its inferior status, an ‘economic giant but a
political dwarf’.
Willy Brandt and his FDP partner Walter
Scheel also proclaimed a new era at home. Farreaching
reforms were promised which would
deepen the attachment of every citizen to the
democratic order. The perception of government
by a remote elite, leaving the electorate either
acquiescent or in open rebellion, was to be radically
changed. The youth rebellion burnt itself
out; under Brandt’s guidance, the SDP became
more tolerant of its young socialists. He also
hoped to provide an umbrella under which views
from left to right could all shelter, though more
often than not left and right fought each other
within the party. That was to remain the SPD’s
abiding problem, the price paid for the wide electoral
support necessary to establish itself as the
senior party of government.
The Brandt government fell short of fulfilling
its high aims at home. Between 1969 and 1975,
the business cycle had turned downwards and the
annual growth of the German economy fell from
8 to 1 per cent, a fall that was particularly steep
after the huge rise in oil prices in 1973–4. The
‘economic miracle’ appeared to be over; the West
Germans could not escape the depression of the
1970s.
Brandt’s successor was Helmut Schmidt, the
most able SPD chancellor of the post-war years.
Practical, energetic and decisive in leadership, he
provided a vivid contrast to the idealistic and
emotional Brandt. But he did not suffer fools
gladly and he made many enemies, especially
among ideologues. His principle was to find pragmatic
solutions to existing problems and to get
things done. He inherited the downturn of the
economy and the consequences of the oil shock
– severe depression followed in 1974–5. The
Schmidt government managed to keep inflation
below 6 per cent. To Germans inflation was akin
to original sin. But government measures to
encourage efficiency and competitiveness to
maintain full employment were only partially successful;
even so, unemployment was kept down to
between 4 and 5 per cent. Falling economic
growth did not permit grandiose social-reform
schemes to be realised, but budgetary cuts and
financial rectitude kept the German economy in
much better shape than that of its neighbours.
Schmidt, a ‘European’, recognised the interdependence
of the Western world and worked in
close collaboration with the French president
Valéry Giscard d’Estaing.
The Schmidt years were severely strained by
an upsurge of terrorism. A prominent German
industrialist, Hans Martin Schleyer, was kidnapped
in 1977 and then murdered when
Schmidt refused to meet the terrorists’ demands.
It was just one of a series of abductions and
murders. That same year in October a Lufthansa
jet with eighty-six passengers was hijacked by
Arab terrorists to Mogadishu, where a specially
trained German force spectacularly freed the
victims. Fortunately, the wave of terrorism abated
without having turned the Federal Republic into
a police state.
Schmidt’s period in office required almost continuous
crisis management. In foreign affairs he
was particularly concerned about the rapid buildup
of Soviet missiles aimed at Western Europe
just when the US and the Soviet Union had
reached an agreement on balancing their intercontinental
missiles. Schmidt saw two dangers:
either that the US might decouple from Europe
in the event of a nuclear threat, or, more likely,
that a third world war would be fought in
Europe. Then there would be nothing left of
Germany. Until the Soviet Union disarmed its
European missiles, the only response was to build
up Western missiles in Europe as a deterrent. But
Schmidt had a hard time getting President Carter
to pay much attention to the issue.
In December 1979, with Schmidt a leading
advocate, NATO took the ‘dual track’ decision:
there would be a period of negotiation designed
to persuade the Soviet Union to withdraw its
European missiles completely (the zero option) or
to reduce them, and if this made no progress
NATO would respond by stationing US missiles
in Europe; the most dangerous of these, the
Pershing missiles, would be based in the Federal
Republic. The incoming Reagan administration
was not keen on this deal, or any serious negotiations
with the Soviet Union. Off-the-cuff
remarks by administration spokesmen that a
‘limited’ nuclear war in Europe was feasible made
the situation worse. Schmidt’s role and the
NATO decision produced a powerful resurgence
of protest outside parliament and strong opposition
within the party. But Schmidt persevered.
Reagan took up the zero option in November
1981, without results. Two years later in 1983
the US began its missiles build-up to match the
Russian arsenal, thus setting out on a path that
led eventually to the Soviet–US treaty abolishing
intermediate- and short-range missiles, signed at
the Washington summit in December 1987 by
Reagan and Gorbachev. This success owed much
to Schmidt’s original clarity of vision, steadfastness
and courage in following an unpopular policy
that at the time was characterised as an irrational
twist to the dangerous nuclear-arms build-up.
When Schmidt sought a renewal of his mandate
as chancellor together with his coalition partner,
the FDP, now led by Hans-Dietrich Genscher, the
foreign minister, in the general election of 1980,
he faced as the CDU/CSU candidate the able but
mercurial Strauss, whose right-wing politics thoroughly
alarmed the liberal reformers. Although the
economy showed no signs of improvement –
indeed, with rising inflation, rather the reverse –
the Schmidt coalition beat the CDU/CSU. The
SPD had held its share of the vote at 42.9 per cent,
the FDP had increased its share to 10.6 per cent,
and Strauss had lost votes compared to the
CDU/CSU’s results four years earlier. Schmidt
seemed set for a long period in office, but his
health had been undermined, and the increasingly
uneasy coalition with the FDP finally fell apart in
1982. The economic situation had seriously deteriorated
throughout Western Europe. In the
Federal Republic unemployment rose to over 7 per
cent and the FDP was demanding cuts in government
spending on unemployment benefit which
the SDP could not accept. The FDP now once
more switched its support to the CDU/CSU, and
with Genscher’s support Helmut Kohl became
chancellor in October 1982.
It was largely the economic situation that had
finally beaten Schmidt, though the fault lay not
with his policies but with a world recession, which
actually affected the Federal Republic less badly
than its neighbours. At times of perceived economic
crisis the majority of the electorate turned
more conservative. Kohl won the 1983 election
by a handsome margin. A new phase of CDU/
CSU–FDP government began. Unemployment
rapidly increased as the coalition fought the recession
with sound money policies, as the rest of
Western Europe was doing. The most significant
feature of the Federal Republic’s condition, however,
has proved to be its stability in difficult times.
Unlike the Germans under Weimar, the vast
majority of today’s electorate have no wish for
radical change. The new SPD leader, Hans-Jochen
Vogel, moved his party slightly to the left but
failed to capture the Green constituency. The new
protest party, the Greens, who made their debut
in 1979 and won an astonishing 5.6 per cent of
the vote, giving them twenty-seven seats in the
Bundestag, represent a mixture of left-wing causes
and concern for the environment. They struck a
genuine chord and on environmental issues continue
to exert a wholesome influence, despite their
eccentric behaviour in and out of parliament and
their lack of unity. They have added a refreshing
touch to the rather staid and mature democratic
republic that West Germany has thankfully
become. Extremism failed to win sufficient electoral
votes to gain any seats. Terrorism remained a
worrying feature of social life, but in one form
or other it had become common throughout
Western Europe, the Middle East and many
regions of the world.
Kohl’s chief problem was to satisfy Franz Josef
Strauss, his CSU coalition partner and prime
minister of Bavaria, who on most social issues
stood well to his right. Genscher wished to retain
the Foreign Ministry and was to become almost
a permanent holder of the office, but Strauss also
wanted to become foreign minister. In the end
Kohl got the upper hand and Strauss was
thwarted – but he had no other home to go to.
The two issues dominating the administration
from 1983 to 1987 were the economy and East–
West relations, which centred on the stationing of
nuclear missiles in the Federal Republic to match
the Soviet build-up and, it was hoped, pave the
way to comprehensive disarmament on both
sides. But for a while another unexpected political
development, the Flick affair, overshadowed
politics at home and worryingly raised questions
about the health of Germany’s democracy. A
large group of companies was controlled by a
senior manager of the Flick concern. He was
accused of bribing the CDU, SPD and FDP
parties and individual politicians. The FDP
economics minister Count Otto Lambsdorff had
to resign in June 1984, as did the chairman of
the CDU and the speaker of the Bundestag after
accusations of involvement. But, on the positive
side, economic recovery began in 1984 and continued
steadily until 1987. Inflation fell to its
lowest rate in decades; in 1986 there was none at
all. Exports boomed and the trade surplus grew
larger. For the great majority in work all this
promised continued stable prosperity. But the
black spot was unemployment, which hardly
improved. Nine per cent of the workforce, more
than 2 million people, remained without a job.
What was true of other Western countries was
true of West Germany: even as the majority were
increasing their standards of living, a heterogeneous
underclass was forming. These were the
‘classless’, below any recognisable class: immigrants
who could find no place in Western
society, who were either unemployed or illegally
employed at sweated wages, the mentally sick
without family ties, drug addicts and prostitutes,
some little more than children, haunting such
areas as Bahnhof Zoo in Berlin. Then there were
those sleeping rough in cardboard boxes, for
example under the arches of London’s Waterloo
railway station. Few were aggressive – the squatters
in Hafenstrasse in Hamburg were something
of an exception. In many cities unemployment
was unacceptably high, but the social climate of
the 1980s had grown altogether more harsh;
economic health was the priority. Governments
encouraged enterprise and productivity in industry,
and the devil catch the hindmost. So the
safety net was beginning to show large holes.
Ecology, the health of the earth, became a
growing concern. In Western Germany especially,
a sizeable part of the community rebelled against
a society that put material interests above all else
and was therefore damaging the environment.
There were ever more cars, and forests were dying
from acid rain. Governments began to take notice
and to discuss measures to reduce pollution. The
Chernobyl disaster in 1986 sensitised people to
the dangers of nuclear reactors. The Greens benefited
as the anti-nuclear party. There were violent
clashes between protesters and police at the sites
of two nuclear reactors being built at Wackersdorf
and Brokdorf. The government defended the
nuclear-energy option, but this was really the end
of nuclear expansion in West Germany. France,
meanwhile, took the opposite course.
West Germany was characterised during these
years by an altogether more active public ready to
join mass protests on issues that moved them. The
protesters were no longer only young people and
students, as they had been in the 1960s. It was a
welcome sign that Germans were no longer awed
by authority and bureaucracy, as they had been in
the bad old days of the 1930s. The Pershing missiles
based in Germany were the cause of continuous
and widespread protest. But Genscher’s
diplomacy maintained West Germany on a shady
path, keeping Franco-German relations in good
repair, behaving as good Europeans in the
European Community and particularly normalising
relations with the East German regime. While
reunification remained the official line, few at that
time believed they would see it happen in their lifetime.
So the West German government set itself
the task of overcoming the unnatural divisions
caused by the Wall and concluded agreement
which made travel between the two Germanies
easier. The East German regime was much aided
by the flourishing trade with West Germany, which
also gave its neighbour large credits.
With unemployment high, every legal effort
was made to stem the number of asylum-seekers,
other than Germans from the East, wishing to
enter the Federal Republic. The Gastarbeiter were
not as welcome as before, and Turkish families
who had lived for years in West Germany were
encouraged to return by the offer of a federal
grant. Few took advantage of it.
As election day in January 1987 approached,
the Kohl administration could count on solid support
from the electorate, which was enthused by
the expanding economy and prepared to overlook
the unemployment. Genscher was popular too; he
enjoyed a reputation as a skilful and successful
foreign minister who was covering more air-miles
than any of his predecessors. Kohl was rather
underrated, as it turned out, and was regarded as
stodgy, with an unfortunate flair for putting his
foot in it. That the television stations repeated his
1985 Christmas address in 1986 by mistake
seemed a typical mishap. A more serious incident
occurred during Reagan’s visit in May 1985. To
mark the anniversary of the ending of the Second
World War, as a gesture of reconciliation the US
president and the federal chancellor paid their
respects at a German military cemetery, but the
choice of Bittsburg was unfortunate, because it
contained many SS graves. There were protests,
and Reagan was embarrassed. Kohl made another
gaffe in 1987 when he likened Gorbachev’s propaganda
to that of Joseph Goebbels. But in truth
these were really just minor embarrassments. No
one would have believed how surefootedly the
chancellor, with Genscher’s help, would overcome
the obstacles of reunification as the decade drew
to its close.
The election for the Bundestag in January
1987 gave the CDU/CSU 223 seats and a 44.3
per cent share of the votes, the FDP coalition
partners secured 46 seats with 9.1 per cent of the
vote and the SPD 186 seats and 37 per cent of
the votes. The Greens advanced spectacularly
with 42 seats and 8.3 per cent of the votes; no
other party secured even 1 per cent of the vote.
Support for extremist parties such as neo-Nazis
was insignificant before unification. In 1989,
West Germany, on the occasion of the fortieth
anniversary of the foundation of the Federal
Republic could feel it was prosperous, mature,
and that democracy was firmly established. They
could look confidently to the future unaware of
the problems that lay ahead.
The years from 1987 to 1990 were dominated
by the question of the two Germanies and their
relationship. It ended surprisingly with their sudden
reunification (see Chapter 76). Kohl benefitted
from the gratitude of the Germans in the east
who helped him to secure a convincing victory
in the general election in December 1990.
The derelict state of the new federal Länder in
the eastern half of Germany, an economy that had
already faltered in its trade with the communist
bloc and then in 1990 was unable to meet
Western competition, a German workforce whose
productivity was low after decades of the communist
command economy – all these created far
deeper problems for the Western half of Germany
than was anticipated by the Kohl government.
Kohl had promised to revive the east without
raising taxes. The DDR currency was exchanged,
within certain limits, on a ratio of one to one with
the sound West German mark. To do otherwise,
the Kohl government had feared, would have
stimulated a mass migration to the prosperous
Western Länder. Aid had to be poured in speedily
to narrow as quickly as possible the gap
between the standards of living, pay, salaries and
pensions between east and west.
Even so, more than 300,000 Germans moved
from the east to the west in the year after unification.
The difficulties, the costs and the time
it would take to raise the eastern economy to
Western, free-market standards were badly underestimated.
Kohl’s forecast during the 1990 election
campaign of ‘blossoming landscapes’ in the
east by 1994 was soon regarded as unlikely to be
fulfilled. His undertaking that ‘nobody after unification
will be worse off’ was rapidly abandoned.
Despite the billions of Deutsche Marks poured
into the eastern Länder and despite efforts to privatise
state industries, the majority of Germans
living in the east continued to face severe problems.
Material benefits still lay in the future for 3
million workers, one-third of the workforce in the
east, who were unemployed or on special programmes
designed to mask the true extent of
unemployment. Disillusionment and frustration
led to growing support for extremist groups, even
for neo-Nazis. Anger was turned on the hapless
foreign asylum-seekers who had taken advantage
of Germany’s hitherto generous immigration provisions
– 190,000 had entered in 1990 and
250,000 in 1991. The fire-bombing of hostels
and violent demonstrations shocked democratic
opinion in Germany and the West, but unemployed
eastern Germans continued to resent the
help given to foreigners, which they claimed
deprived ‘fellow Germans’ of their due. After half
a century of brown and red dictatorships, this was
evidence of a distinct deficit in ethical values.
The number of foreign immigrants was actually
less than the number of ethnic Germans
who had lived for generations in the Soviet Union
and Eastern Europe and had now migrated to
Germany. They had been encouraged in quite
different circumstances, before unification, to
come back to the land of their great-greatgrandfathers.
During 1990 and 1991 alone,
almost three-quarters of a million took advantage
of this opportunity. One of the consequences
of recession and of pressure to enter the West was
that efforts to halt the flow began to play an
increasingly important role in German and in
West European politics.
Former citizens of the DDR in the 1990s had
to make many painful adjustments before they
could expect living standards comparable with
those in the West. Some lessons were psychological,
such as not waiting to be told what to do
but taking the initiative; others were more practical,
such as adapting to the needs of the market,
working effectively to raise productivity and learning
the skills of market management. Another
hurdle was to overcome the corruption of the
past, the evidence of which lay in twelve miles of
files in the former secret police (Stasi) archives.
These preserved denunciations by tens of thousands
of informants who had reported on their
neighbours, employers, employees, teachers and
students. It was not easy to accept that the old
system could not be divided into the good (such
as the guarantee of employment) and the bad
(such as the Berlin Wall), that a government and
society have to be judged as a whole. It was difficult
for East Germans not to be resentful of the
West Germans who came over to patronise them
and fill the best managerial posts; and it was
hard for them to have to wait for an indefinite
number of years for the promised land of plenty.
Meanwhile in West Germany there was resentment
about the sacrifices necessitated by the
transfer of money to the east, the higher taxes and
high interest rates. The East Germans were
blamed for their own plight, for their unrealistic
expectations of achieving overnight what had
taken the West Germans decades to accomplish.
The shock to the economic system of providing
aid for 17 million East Germans was felt
throughout Europe. High interest rates slowed
down hopes of recovery in France, Britain and the
rest of the European Community. Germany could
no longer act as the powerhouse of trade and lift
the Community out of recession. Unemployment
in the Community was running at around 10 per
cent and in some countries was even higher in
1992. Europe in the early 1990s was mired in
recession, instead of enjoying the expected ‘peace
dividend’ from the collapse of communism. The
former Soviet Union stood on the edge of an economic
abyss. The enormous German effort to
transform had begun to show results. Islands of
industrial revival as around Dresden are developing,
but much of the eastern Länder are in a sorry
state, the young and enterprising moving west.
The east and west remain economically, socially,
psychologically divided.
For two generations Germany’s formula for prosperity
and stability has been to follow consensual
policies between three partners – the state, the
employer and the employee. Deliberately reversing
the structure of the Nazi state with its slogan,
‘one country, one people, one leader’, post-war
Germany ensured that decision-making was distributed
by a federal structure of checks and
balances. This has made it difficult to change
fundamental polices such as rigid labour laws and
generous state benefits, which place heavy burdens
on employers and tax-payers. Labour became
too expensive, so foreign workers were brought in
legally or on the black economy, investment in
technology to replace labour was increased, and
products were manufactured outside Germany; all
these factors drove unemployment up to the highest
levels since the 1950s. In 1997 the first signs
of recovery became apparent. An artificially low
rate of exchange favouring exports helped German
industry to increase productivity, but even then
employment was slow to pick up. The bankrupt
eastern Länder of the former German Democratic
Republic were another German drain on
resources. Despite the transfer of over DM900 billion
of West German tax-payers’ money there are
still not enough modern factories and services to
provide work; unemployment is even higher in the
east than in western Germany, with more than
one in seven out of work. Kohl’s vision of ‘flourishing
landscapes’ proved to be a sad delusion; the
gap between east and west will not be closed until
well into the new millennium. In the face of all
these problems, German democracy has remained
solid. The post-war racist excesses of extremists
have been confined to a minority and condemned
by the majority.
The Kohl era came to an end in 1998 after
sixteen years in power. Internationally they had
been years of achievement and success. Kohl was
credited with unifying Germany, gaining the trust
of its Western allies and the Soviet Union, presiding
over a mature democracy. The Bundestag
elections saw the CDU and its Bavarian CSU
partners garner the gratitude of the population in
the east and substantially raise its vote in 1994.
But over the next four years the Kohl chancellorship
no longer looked unassailable. German
exports were suffering. The generous social provisions,
pension rights, protection of the workers,
the cost of subsidising the new eastern Länder,
were exacting their toll on the economy. The
economy was stagnant and unemployment rose to
4.2 million or about 11 per cent of the workforce.
Social welfare and unemployment payments were
generous. Germany was mindful of the last
Weimar years. Schröder campaigned in 1998
promising to reduce unemployment from just
over four million by a modest half a million
during his period as chancellor. The CDU vote
fell especially precipitously in the eastern Länder
where employment was exceptionally high, excommunists
and the SPD benefited. There was
also an alarming rise among the young for antiimmigration
racist neo-Nazis. Overall, the SPD
in coalition with the Greens were able to form
a coalition under Schröder with a convincing
majority in the Bundestag.
Early on, Schröder appeared to be on target to
make good on his promise to reduce unemployment.
The international value of the mark fell, or
rather the euro declined in value. On 1 January
1999 the Monetary Union began and Germans
gave up their beloved stable mark. Kohl had
agreed to Germany joining and Schröder followed
through. The boost given to German exports by
this devaluation did not last. The problems were
fundamental: inflexible labour, workers’ rights
were well protected and making them redundant
expensive for employers who were consequently
reluctant to risk taking on too many. The welfare
payments required high taxation; the unions were
powerful and went on strike when their wage
demands were not met. The unemployed did not
have to accept jobs that were of a lower kind than
what they had before. During the last years of
Weimar longer term unemployment meant dire
poverty and had paved the way for the Nazis.
That was the ‘lesson’ learnt. But high taxes and
social security were undermining German enterprise
and the ability to adapt to change.
Unemployment began to rise again. The
opposition accused Schröder of breaking his
promise to bring it down. In the autumn of 2002,
with an election pending, unemployment had
climbed back to over 4 million. It looked as if the
SDP–Greens might well lose the general election
of 2002 in a close-run contest.
Three events revived Schröder’s chances. An
astonishing scandal broke over the heads of the
CDU and Kohl. The amount of money that could
be contributed to political campaigning was limited
by law. In the 1990s, the party treasurer
admitted that large sums had been secretly contributed
to party coffers by some businesses in
return for favours. Kohl admitted knowing and
was implicated. A criminal investigation into
Kohl’s conduct began and was only finally halted
on his agreeing to pay a substantial fine. Then during
the summer of 2002 the Elbe burst its banks
and caused horrendous floods. Schröder was seen
everywhere in the affected regions, the concerned
and active chancellor. Proposed tax cuts were
postponed to help the stricken regions. The
opposing chancellor candidate Edmund Stoiber
was wrong-footed. Stoiber was prime minister of
Bavaria and so in any case handicapped, but he
was also stiff and lacked charisma, unlike
Schröder. Finally there was the growing crisis with
Iraq. Stoiber was diplomatic about Germany’s
likely role, Schröder reflected the popular mood
declaring that under no circumstances would
Germany join in any war against Saddam Hussein.
When the elections were held in September,
with the CDU/CSU previously neck-and-neck
with the SPD, both parties polled approximately
the same votes, 38.5 per cent, but with the gains
the Greens made, the SPD/Green coalition had
survived.
The popularity of Schröder was based on weak
foundations. The aura of his robust stand against
participating in the Iraq war could not outlast its
conclusion for long. Fences with the US needed
mending; especially with President Bush who
took Germany’s abandonment of the alliance personally.
But Germany had demonstrated once
again that the people overwhelmingly opposed
any military action beyond its own frontiers. It
was reassuring for the rest of Europe how pacific
the Federal German Republic had become, how
European minded though, thereby opening a gap
with Blair’s more realistic alignment with the US
– but then Britain did not have to live down the
Second World War. Schröder’s headache at home
was how to get Europe’s biggest economy out of
stagnation. The backing of his own party, split
between the more centrists and left, is always
problematical. At least he can count on the
backing of his coalition partner, the Greens. The
parliamentary majority of nine is dangerously
small if some SPD members of parliament choose
to abstain from backing the government. On the
other hand, the small majority ensured more discipline.
The party does not wish to face another
election too soon which it would be likely to lose.
During the previous summer of 2002 Schröder
had assigned to a group of experts the ‘Hartz
Commission’ – Peter Hartz at the time was the
personnel director of Volkswagen – to come up
with recommendations on reform in the economy.
In the summer of 2003, the party backed
Schröder’s reform plan which abandoned hallowed
workers’ rights.
Full unemployment pay would only be paid for
one year instead of two years and eight months
and then lower welfare rates would apply; laying
off workers would be made just slightly easier,
more flexibility in rates of pay would be introduced.
None of these changes are earth shattering;
the unique industrial feature of co-determination
by workers and managers, however, was left in
place. Reforms pointed to a new direction of the
social compact of worker–employee relations and
social welfare entitlements provided by the state
for the people. The non-wage labour costs had
exceeded 40 per cent – too high in a competitive
international age, taxation was too steep and even
so the budget deficit exceeded the 3 per cent limit
set by the European Union’s Growth and Stability
Pact. To lower expenditure, health entitlements
would be pruned. Small independent businesses
based on craft skills would also find it a little easier
to establish themselves. There would be no
sharp shock treatment as the very name given to
the reforms ‘Agenda 2010’ revealed.
It is all probably too little too late. German
industry and services will need to find the creativity
in a recovered world market to pull
Germany out of its low growth rate and reduce
unemployment to acceptable levels below 5 per
cent, a reduction that in 2005 could only be
dreamt about. Yet standards of living remain
among the highest in Europe. Germany is not a
country in crisis and government remains stable
and democratic. The neo-Nazis remained on the
fringe rejected by the overwhelming majority of
people. The 2004 Länder elections starkly confirmed
the continuing east–west split despite the
1.25 trillion euros transfer to build up the east
since 1990. Unemployment and discontent is
high benefiting extreme parties there on the left
and right. A long and painful road of welfare and
labour law reforms lies ahead to make Germany
more competitive.
World History
