Business bosses are growing impatient with a drifting government
| BERLIN |
“I SUPPORT the euro, but not at any price,” said Wolfgang Reitzle, chief executive of Linde, an industrial-gas producer, in a recent interview. He is not alone. Many German business leaders are wondering if the apparently never-ending euro-zone bail-outs, to which Germany is the biggest contributor, are beginning to outweigh the (considerable) advantages of the single-currency area.
Their concerns are aggravated by what they see as political drift in Berlin. Many German bosses, say those close to them, have lost faith in the ability of Angela Merkel’s government to steer Europe out of trouble. Looking towards Berlin from their fastnesses in the Ruhr and southern Germany, they see only weak leadership, perverse decision-making and poor communication. These days many no longer bother making the trip to the capital.
Now differences over the euro are adding to the headache. In September Mrs Merkel must secure parliamentary ratification of a deal she agreed with other euro-zone leaders in July to expand the powers of the single currency’s bail-out fund. Dissent from some FDP deputies, and even from within the CDU itself, could force her to rely on support from the opposition.
Many business leaders complain that the government, which yokes together the conservative Christian Democrats (CDU) with the pro-business Free Democrats (FDP), is plagued by in-fighting. The CDU wants to keep taxes high to help reduce the budget deficit. But the FDP insists that reducing the burden on taxpayers was part of the deal they agreed when the parties formed their supposed “dream-team” after elections in September 2009.
Aside from the euro, bosses’ biggest beef is the government’s decision, in May, to close all of Germany’s nuclear-power stations by 2022. The move followed a moratorium initiated by the government in the wake of the nuclear disaster in Japan, just before an important regional election that the CDU feared losing. Many saw it as an unprincipled U-turn. Only last autumn the government had agreed to extend the lives of some nuclear-power stations by an average of 12 years. The new policy was thought up “without true awareness of the consequences,” said Dieter Zetsche, head of carmaker Daimler, in an outspoken interview with Bild, a tabloid. Most bosses think that they were not consulted properly, if at all.
Some consequences of the new nuclear policy became apparent on August 9th when RWE, a big energy firm, said the move had cost it €900m ($1.3 billion) in the first six months of 2011. A day later E.ON, another power firm, noted an “adverse effect” from the policy worth €1.7 billion in the second quarter alone; it said it might have to cut up to 11,000 jobs. Bayer, a chemical firm, said it was considering moving production to countries where electricity prices have a more certain future.
Some in the business world are starting to feel nostalgic for earlier governments they think were better at getting things done. Before joining forces with the FDP Mrs Merkel led a “grand coalition” with the Social Democrats (SPD). In December 2008, with the world’s economy sagging, she summoned senior German businessmen to discuss a set of stimulus measures, including subsidies for retaining staff on shorter hours rather than laying them off. The package worked.
Some even look back fondly to Gerhard Schröder’s “red-green” coalition, which ruled Germany between 1998 and 2005. Mr Schröder was nicknamed the Genosse der Bosse(bosses’ buddy) for seeing through unpopular labour and tax reforms. Many now credit those with ensuring that Germany got through the economic crisis relatively unscathed.
Today German bosses feel that they have few buddies in Berlin. Some of the biggest pro-business officials in the ministries have been assigned to new jobs. These include Markus Kerber, formerly Mrs Merkel’s chief economic adviser and now director of the Federation of German Industry, and Jens Weidmann, once Mrs Merkel’s chief financial adviser and now head of the Bundesbank.
Business leaders respect Wolfgang Schäuble, the finance minister. But he too is about to lose good staff: Jochen Sanio, head of BaFin, the financial watchdog, and Rolf Wenzel, who runs Mr Schäuble’s financial-markets department, are both on the way out. The glum mood is not helped by reservations about Philipp Rösler, the new FDP leader, as economy minister.
The business associations, most of them sitting in Berlin, feel that government is no longer listening. So do senior bankers. In May, sensing the breakdown in communication, Mr Reitzle suggested creating a platform for national discussion on the sorts of important topics that are otherwise left to television talk-shows.
Yet however disgruntled Germany’s business leaders may be, they are not the only cause for Mrs Merkel’s concern. During her recent walking holiday in the mountains of south Tyrol a number of CDU heavyweights, fearing drift and a loss of the party’s identity, called for an emergency party congress. A poll of members of the CDU and its sister party, the Christian Social Union (CSU), found that most are against bailing out euro-zone countries. The German press, meanwhile, has been wringing its hands over the European Central Bank’s decision to buy Spanish and Italian bonds (see article). Many Germans see the purchases as a dangerous deviation from orthodox monetary policy, and a step towards fiscal support.
Unlike her counterparts in France, Britain and Spain, Mrs Merkel did not feel compelled by crisis at home to cut short her holiday. She insists that the decisions taken at the July summit are sufficient to preserve the euro. Her grip on her party still seems secure. But she has returned to Berlin facing a worryingly high in-tray.
