The German Federal Republic promises to be the political and economic success of Western Europe in the 1970s. Led by its forceful and charismatic Chancellor, Helmut Schmidt, West Germany is the dominant economic power of Western Europe and is rapidly becoming one of the pivotal political forces of the European continent. Needless to say, the role is not a new one: a Germany that is no longer fearful, penitent, and psychologically crushed by the outrages of WW II is cause for concern to neighbors and adversaries. Some are disturbed by the resurgence of German political and economic power and wonder if the bitter Gaullist maxim that "Les Allemands seront toujours les Allemands" will not be true again. At the same time, however, it is welcome to see, in a Western Europe staggered by political mismanagement, divided over the rise of the Left, and weakened by the international economic recession, West Germany represents a haven of political stability and economic prosperity.
The economy is the most outstanding feature of West Germany today. Resilient, disciplined, and resourceful, the German economy weathered the international economic recession on a far more even keel than its European neighbors. Like the rest of the export-oriented European economies, it was hard-hit by the downturn in world trade and the quadrupling of oil prices in 1973. Nevertheless, while an 8.5 per cent rate of inflation and a 6.5 per cent rate of unemployment earned Schmidt sharp criticism from the right and the left, these figures were downright enviable compared to the double-digit inflation and widespread unemployment of other Western nations, including the United States. Replacing the disgraced Willy Brandt, Schmidt immediately clamped down on inflation: his monetary policies were so strict that the German construction industry almost went out of business for lack of credit. Schmidt's vigorous economic measures paid off: inflation was down to five per cent in 1975 and the economy enjoyed a moderate economic comeback. Inflation is currently running at 4.1 per cent and the German economy is expected to earn a huge trade surplus this year.
German economists are happy to point out that moderate wage demands on the part of German labor unions paved the way for Schmidt's successful fiscal and monetary policies. Unlike British, French, or Italian labor unions, German labor unions practice a remarkable degree of cooperation with corporate management and do not regard government as an adversary.
For example, in 1975 and 1976, German labor unions renounced wage hikes that would have increased the buying power of German workers. Given the current rates of inflation, the decision represented a deterioration in labor's standard of living. Commenting on this remarkable economic behavior, one German economist said, "German labor unions see unemployment as the inevitable result of the international economic recession. They accept the fact that in order to remain competitive in the international market, German firms must raise their productivity and this may easily mean a greater number of lay-offs. German labor unions believe that in the long run, full employment will only be assured by a strong and healthy economy that is at once disciplined and competitive. Given the difficult economic prospects we face today, strikes would only be counterproductive.
Unemployment has not triggered social discontent in Germany. Unemployment compensation is generous--a laid-off worker receives 58 per cent of his last net income for a year. If he remains unemployed after this period, he goes on welfare and draws half of his former salary.
West Germany can afford such generosity. With inflation and unemployment under control, economic growth has upset all predictions and is currently surging ahead at a rate of 6 per cent. This year's trade surplus promises to be the envy of every European finance ministry, and the mark is already the strongest currency in the Common Market.
Gone are the days of German political timidity and self-doubt--a fact which both France and the Soviet Union find difficult to accept (see, for example, Michel Debre's recent article in Le Monde, "Is Germany Becoming a Danger Again?"). More assertive than his predecessors, Willy Brandt turned his back on twenty-five years of German guilt-ridden subservience, and pursued a vigorous Ostpolitik designed to reconcile West Germany with its Eastern neighbors and provide West German diplomacy with a greater freedom of maneuver. Despite European fears that Brandt was about to engineer another Rapallo, and bitter domestic criticism that the Chancellor was conceding too much to the Soviets, Brandt was succesful in liquidating legal and territorial disputes that had poisoned relations with the Soviet Union and Warsaw Pact countries for three decades. In 1972, Bonn took the most difficult diplomatic step of it short career and recognized East Germany. No longer a paralyzed hostage to French, Soviet, and American diplomacy, and reconciled to the division of Germany, Bonn began to defend its interests and objectives with a determination that would have been unthinkable a few years ago.
Continuing the more independent and assertive diplomatic line laid down by his predecessor, Schmidt has not hesitated to mount the continental political stage. Intelligent, forceful, and pragmatic, Schmidt has already become the leading European statesman. Despite international mutterings of "Iron Chancellor" and the "Germany of old," Schmidt has not hesitated to use German economic muscle to safeguard German interests. He has warned the European Economic Community that Germany would no longer provide open ended funds to subsidize poorly conceived Community projects or stagnant, obsolete economic sectors of other countries. "Germany," according to Schmidt, "will no longer be the 'milch cow' of the Community." Further, Schmidt has made it clear to the Italian government that Germany would end all further economic aid to Italy if the Communists were allowed to come into the government. Bonn sees no reason why it should subsidize a political movement that is anathema to the majority of Germans. Pointing to his own pragmatic and successful policies, Schmidt has urged his partners to end their continuous domestic political maneuverings and address themselves to the urgent issues facing Western Europe today, namely economic recovery and European unity.
If Schmidt has been successful in irritating each and all of his European partners, it should also be pointed out that European unity is a key concern of the Bonn government. Many convinced Europeanists hoped that the growing entente between Giscard d'Estaing and Schmidt would give way to a discreet Franco-German directorate that would carry the idea of European unity beyond its present customs union status. Unfortunately, Schmidt lost his partner less than six months ago. Giscard d'Estaing's pro-European ideas were fiercely opposed by conservative Gaullists, ever so jealous of French sovereignty. Depending on the Gaullists for a Parliamentary majority, and facing stiff opposition from the Left, Giscard was forced to mothball his call for a greater European commitment.
Despite the numerous difficulties encountered along the way, Bonn continues to push for European unity. European cooperation is unanimously supported by the German people. Unlike France and Great Britain, the direct election of a European Parliament is not a controversial issue in Germany. Most Germans would accept a reduction of national sovereignty if it would spur European integration. Bonn considers the defense of German economic interests to be far more important than a French-style reaffirmation of national independence--a vague concept which has little meaning or support in the Germany of today.
With 31 Soviet divisions on the German border, Bonn is understandably concerned with security. Here, the vital German-American relationship has changed in style but not in substance. Both Brandt and Schmidt have pursued policies more independent from Washington than either Adenauer or Erhard. For example, harsh words were exchanged between Bonn and Washington during the 1973 Arab-Israeli conflict. On the one had, Brandt was irritated by Washington's failure to consult its Allies during the conflict; on the other hand, Washington criticized West European refusal to provide the American airlift with logistical support. Washington added that developments in the Middle East concerned the security of the Atlantic Alliance, and that the Europeans, certainly the Germans, should unquestioningly support United States policy there.
Schmidt has struck an even more independent tone vis-a-vis Washington. He has criticized the Ford's administration's conservative economic recovery programs for slowing down the pace of European economic recovery. He has lectured President Ford on the need for arms standardisation on both sides of the Atlantic. Germans arms procurement is no longer completely American-oriented and Schmidt was successful in renegotiating the financing of American troops in Germany on a more equitable basis. There have also been serious differences between Bonn and Washington over nuclear proliferation. Despite American criticism concerning the lack of adequate safeguards, Bonn is going ahead with its plans to sell nuclear technology to Brazil. Bonn understands Washington's fear that nuclear by-products could be used to fabricate nuclear weapons, but it also sees no reason why it should abandon such a lucrative field to American competition.
Beyond these differences of opinion, both Bonn and Washington agree that the ties between both countries have never been stronger. Bonn remains firmly convinced that "there is no European security without the United States."
Having a large stake in the future of NATO and the Atlantic Alliance, Bonn has acted quickly to build up German military trength. Today, Germany fields the largest army in Western Europe; 600,000 men strong, the Bundeswehr is well-trained and equipped with the latest in modern weaponry including tactical nuclear weapons (placed under American command-and-control procedures.) Faithful to NATO defense guidelines, West Germany has become the privileged ally of the United States in the Atlantic Alliance.
Despite Schmidt's political and economic successes in the international arena, he faces a stiff contest in the October political elections. The popularity of the Social Democrats (SPD) is sagging and there is no hopes that they will be able to win a clear majority in the fall elections. Worse, the Social Democrats have been weakened by internal dissension. Schmidt has been hard-pressed to bring the rebellious left wing of the party under control. The "Jusos" or Young Marxist hardly support Schmidt's policies and their vociferous demands for more widespread nationalization, more welfare programs, and bitter criticism of the way Bonn is handling the Baader-Meinhoff trial have antagonized SPD moderates and conservatives, and disturbed the German electorate. Further, the right wing of the SPD is very unhappy with Willy Brandt. The former Chancellor has supported the agitation of the Jusos against Schmidt and has given every impression that he would like to oust his successor from power. Schmidt has attempted to quell the internal squabblings of the party but so far he has not been very successful.
Schmidt's greatest electoral difficulty however will be to convince the FDP or Free Liberals to remain in the government coalition. As in past elections, neither the Social Democrats nor the Christian Democrats led by Helmut Kohl will be able to win a clear electoral majority. Consequently, the FDP which controls approximately 10 per cent of the vote will hold the balance of the elections.
The main question facing the Free Liberals is whether they should remain in the seven-year-old coalition with the Social Democrats or whether they should bolt and form a profitable coalition with the Christian Democrats. Politically and ideologically, the Free Liberals are closer to the Christian Democrats, but there have also been serious differences of opinion between the leaders of both parties, Schmidt and Hans-Dietrich Genscher (Foreign Affairs minister in the Bonn government). Further, the Free Liberals could strengthen their political influence as the state (lander) level if they joined with the Christian Democrats. In lander like Hesse and Rhine-Westphalia where the Free Liberals are in the minority, a coalition with the Christian Democrats would open the way for FDP administrative posts and increased political influence. Needless to say, Genscher has used this tempting possibility to blackmail the Social Democrats for greater FDP influence in the government coalition. Genscher's gamble may backfire, however. Irritated by the FDP's maneuvers, Schmidt warned the Free Liberals that if they became too demanding, he would not exclude the possibility of forming a coalition with the Christian Democrats.
Despite its economic power and political influence, West Germany continues to refuse the leadership of Western Europe. "That would be premature, if not impossible," a German diplomat said in a recent interview. "The German nation feels too vulnerable politically, militarily, and psychologically to accept such a difficult responsibility. How can you expect us to assume a greater role in European affairs when we cannot even guarantee our own security? The Soviets view the rise of our political and economic influence with great suspicion. With 19,000 Warsaw Pact tanks stationed on our borders we cannot afford to become anything that would resemble the Germany of old. The Soviets would never tolerate it. Moreover, would Western Europe accept German leadership? Three decades after WW II the German Federal Republic continues to bear the stigma of the Third Reich. We have no political legitimacy: every time Bonn refuses to revalue the mark to help out the French franc, French newspapers publish editorials about "Iron Chancellors" and "German hegemony." We are still a very controversial subject.
"Leadership may come in the future but for now let me say that the German people are happy not to be outcasts anymore, that they can call themselves Germans without bowing their heads in shame. We have rebuilt our nation and we have taken our rightful place in the European community. We are committed to democratic ideals, European unity, and the Atlantic Alliance. We have come out of the desert."