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Vietnam

After Britain and France, will Vietnam be the next country to enact same-sex marriage?

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Now that the House of Lords has approved changes to the same-sex bill in Parliament in the United Kingdom, same-sex marriage is set to become a reality in England and Wales (a separate Scottish bill is set to follow) under Conservative prime minister David Cameron.vietnam

That follows the final enactment of same-sex marriage in France earlier this summer — though the center-right and far right have vocally opposed it, the Assemblée nationale passed the measure with ease in June, fulfilling one of president François Hollande’s key campaign promises.

Great Britain (once Scotland joins) will become the 14th nation-state to have enacted legal same-sex marriage, joining France and eight other European countries,* as well as Argentina, Brazil, Canada and South Africa.  That doesn’t include México City or the 13 states (and the District of Columbia)** in the United States that have enacted marriage equality, which comes with the full set of rights and privileges of federal law following the recent U.S. Supreme Court ruling in United States v. Windsor that rules the 1996 Defense of Marriage Act unconstitutional.  Last month, Germany’s constitutional court delivered same-sex partnerships a key victory by ruling that they are entitled to the same tax rights as other married couples.

So what’s the next horizon in what’s become a global fight for LGBT rights and marriage equality?

Vietnam.

Probably not what you were thinking, right?  After all, Asia has not typically been the most hospitable battleground for LGBT rights.

Moreover, Vietnam is a socialist republic and a one-party state ruled by a party, the Đảng Cộng sản Việt Nam (Vietnamese Communist Party), that’s been enshrined through Vietnam’s constitution as the sole organ of political affairs since 1975, when North Vietnam formally overran South Vietnam, thereby uniting the entire country under communist rule.  The Vietnamese government is repressive on just about every other vector — press freedom, internet freedom, and of course, the kind of political freedom that would allow a challenge to the governing elite.  Though the country has been transformed economically as its one-time Marxist roots have been eroded into a more state capitalist approach, and its top destination for exports is now the United States (relations between the two countries have now been normalized for nearly two decades), the zeal for liberalization hasn’t met with the same enthusiasm in other quarters.

Vietnam is most well-known internationally for its economic growth — it’s a ‘Next Eleven‘ country and, while its GDP growth has slowed in recent years, it’s still poised to become a breakout economic power in southeast Asia.  It’s also a party to the ambitious Trans-Pacific Partnership negotiations that could ultimately establish a free-trade zone among the United States and other South American and Asian countries.

It’s less well-known for its positions on social justice, but it would be a huge coup for the global marriage equality movement — with over 90 million people, it’s the 13th most populous country in the world, and it would be the first Asian jurisdiction to recognize same-sex marriage.  Continue reading After Britain and France, will Vietnam be the next country to enact same-sex marriage? →

Italy

Italy’s problem with racism goes far deeper than recent slurs against Cécile Kyenge

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It seems like barely a week goes by without another story coming out of Italy about another racial slur hurled at the Mediterranean country’s first black government minister, Cécile Kyenge. Italy Flag Icon

This week’s row comes from Roberto Calderoli, a member of the Lega Nord (Northern League), the autonomist right-wing party that has in the past allied itself with Silvio Berlusconi, though it’s not part of the current ‘grand coalition’ led by center-left prime minister Enrico Letta.

Calderoli, speaking over the weekend, railed against Kyenge, arguing that her success encourages ‘illegal immigrants’ to come to Italy, that she should be a minister ‘in her own country,’ and added this gem:

“I love animals – bears and wolves, as everyone knows – but when I see the pictures of Kyenge I cannot but think of, even if I’m not saying she is one, the features of an orangutan,” Mr Calderoli said in a speech to a rally in the northern city of Treviso on Saturday.

Calderoli’s comments were unthinkably crass but, unfortunately, they are not atypical in the three months since Kyenge came to power, nor are they incredibly out of the norm for a political culture that has long treated racism with a wink and a smile, such as when Berlusconi himself described Barack Obama, the first black president of the United States, as particularly ‘suntanned.’

Kyenge (pictured above with Letta), an Italian citizen who was born in Congo, came to Italy in 1983, when she set up a practice as a doctor in Modena, in the central Italian region of Emilia-Romagna.  Earlier this year, she was first elected to Italy’s Camera dei Deputati (Chamber of Deputies) as a member of Italy’s center-left Partito Democratico (PD, Democratic Party).  Letta appointed her as the government’s minister for integration, in part due to the work Kyenge has done since founding DAWA, an association designed to promote multicultural awareness in Italy and to foster cooperation between Italy and Africa.  Prior to becoming an Italian deputy, Kyenge served as a provincial councilor in Modena for four years, and she’s a proponent of a jus soli, a law that would grant citizenship to those children of immigrants who are born in Italy.

In short, Kyenge personifies a new kind of 21st century success story for first- and second-generation Europeans in a world where globalized ties are now bound to blur ethnic, racial, national and cultural borders.

It’s worth bearing in mind that this isn’t the first time Calderoli has been accused of racism or insensitivity.  He was forced to resign as a minister in a previous Berlusconi government in 2006 after purporting to wear a t-shirt showing the printed cartoons of a Danish newspaper depicting the prophet Mohammed.  (Having returned to a subsequent Berlusconi government a few years later, it was Calderoli who drafted the election law that now virtually everyone in Italy agrees is worthless).

Nor is it the first time Northern League politicians have made controversial statements about Kyenge — one of its local politicians earlier in June called for Kyenge to be raped, so she would understand how victims feel, and in April, another European Parliament member, Mario Borghezio, called her part of a ‘bonga, bonga government’ and argued that she wanted to ‘impose her tribal traditions from the Congo.’

Kyenge has accepted Calderoli’s begrudging apology, but it’s not even the only incident this week — members of the far-right Forza Nuova (New Force) party held an anti-immigration protest featuring nooses in Pescara in central Italy.

In the long run, it may well be that Kyenge’s graceful responses to unacceptably mean-spirited and racist comments convince more Italians that there’s no place for racism in Italian public discourse — she has the power to turn ugly incidents like Calderoli’s slur into what Obama himself might call a ‘teachable moment.’

But that task is made equally difficult by the integration portfolio that Kyenge holds, which means that she is responsible for policymaking on immigration and the nearly 4.5 million foreign residents who live in Italy.  Even as Kyenge tries to deflect tensions, Calderoli and other Northern League politicians may be using outbursts about Kyenge as a deliberate strategy to inject racial resentment as a potent political wedge issue.

Although migrants have been coming to Italy since the 1970s, which makes immigration to Italy a more recent phenomenon than in other European countries, about two-thirds of Italy’s current foreign residents have arrived in the past decade.  The net result is a country that hasn’t had time to develop the political or cultural institutions to cope with a very rapid influx of foreigners, let alone to develop the vocabulary of multiculturalism in a country that can be sometimes quite insular in a way that’s both profound and provincial, troubling and quaint Continue reading Italy’s problem with racism goes far deeper than recent slurs against Cécile Kyenge →

European Union, United States

Goodbye WTO, hello TTIP — United States and Europe hope to create world’s largest free trade zone

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Guest post by Michael J. Geary

The United States and the European Union expect to begin negotiations next month on the Transatlantic Trade and Investment Partnership (TTIP) in Washington, DC.  Their ambitious aim is to create the world’s largest trade and investment bloc that covers a combined consumer population of over 800 million people.  If the U.S.-E.U. talks prove successful, TTIP will become the biggest trade deal in history.USflagEuropean_Union

U.S. president Barack Obama announced, to mild surprise, in his February 2013 state of the union address before the U.S. Congress that the United States would begin TTIP talks with the European Union.  His announcement followed the publication of a report from the High Level Working Group, which had spent a year examining  various options for expanding transatlantic trade and investment.  The HLWG concluded that any deal between the United States and the European Union, in order to capture the most gains, would have to be comprehensive and include sensitive issues such as government procurement, a reduction in non-tariff barriers (NTBs), intellectual property rights, and employment and labour sectors.  In May, Obama nominated his close economic advisor and free trade proponent, Michael Froman, to become the next U.S. trade representative.  Froman’s selection was, therefore, an important sign that the Obama administration is serious about completing not only TTIP, but the Trans-Pacific Partnership (TPP) as quickly as possible.

The trade and investment pact features a number of ambitious goals.  At the most fundamental level, U.S. and European leaders hope to reduce the existing transatlantic tariffs and other barriers that amount to approximately 3.5%or less on a range of goods.  That will be by far the easiest element of TTIP to negotiate.  A recent report from the Bertelsmann Foundation showed that a 3.5% reduction in tariffs would increase German exports to the United States by 1.13% and increase German imports, respectively, by 1.65%.  Deeper trade liberalisation, including a reduction in NTBs would lead to even greater economic benefits in for U.S.-German trade.  That, in turn, will significantly affect traditional intra-European trade flows, such that trade between Germany and other member states will decline significantly upon the completion of a comprehensive TTIP accord. The Bertelsmann report showed that, in the long term, French exports to Germany would fall by 23%, Italian exports to Germany would decline by 30% and British exports to Germany would drop by fully 41%. Such a comprehensive transatlantic deal would therefore mark a major realignment of traditional European trading patterns, offset by access to a wider US market.  That pattern, moreover, is likewise is reflected in Bertelsmann’s assessment.  For example, exports from Ireland, Italy, Greece, Portugal, and Spain to the U.S. increase by an average of 86%, which presents a major boost to those European countries most adversely affected by the ongoing sovereign debt crisis. Aside from the potential boost to transatlantic trade, the European Commission argues that TTIP will generate close to 2 million additional jobs, half of which would be created in the United States.

Securing a comprehensive transatlantic trade agreement, however, will not be easy.   Continue reading Goodbye WTO, hello TTIP — United States and Europe hope to create world’s largest free trade zone →

European Union, United States

Spying on the Europeans — PRISM repercussions as Obama heads to Europe

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Michael J. Geary and I argue in The National Interest this morning that the repercussions of reports of the PRISM program within the U.S. National Security Agency mean that U.S. president Barack Obama will face tough questions when he goes to Europe for the G8 summit in Northern Ireland and additional meetings in Berlin. USflagEuropean_Union

At a time when Europeans are already concerned about the extent of their own governments’ intrusion into their private online lives, the revelations of the voluntary cooperation of service providers like Facebook and the like in allowing U.S. surveillance of foreign communications are already being met with skepticism from top U.S. allies at a crucial and ambitious time for the Obama administration’s European agenda:

The timing of the scandal could not have come at a worse time in EU-United States relations, with both sides set to embark on negotiations for what would be a landmark free-trade compact, the Transatlantic Trade and Investment Partnership (TTIP).

Above all, German chancellor Angela Merkel is expected to seek assurances from Obama in their one-on-one meetings in Berlin.  But with Germany having this week agreed to TTIP negotiations (leaving France as the remaining obstacle), and with the eurozone crisis still not fully over, certainly the Obama-Merkel meeting should have more important business than PRISM.

Ironically, the NSA gathered more pieces of intelligence within Germany during the month of March than any other EU country.  A spokesman for Merkel, the first chancellor from the former East Germany, where memories of Stasi surveillance are still fresh, said she would raise the issue with Obama. Her justice minister Sabine Leutheusser-Schnarrenberger stressed, “the suspicion of excessive surveillance of communication is so alarming that it cannot be ignored. For that reason, openness and clarification by the US administration itself is paramount at this point. All facts must be put on the table.”

Ultimately, the Obama administration and the NSA will be less vulnerable to the wrath of European regulators than the companies participating in PRISM themselves.

But Microsoft, Google and other service providers, including Facebook, YouTube, Apple and AOL, could face even more blowback than the U.S. government or the Obama administration. Their apparently voluntary participation in U.S. government’s PRISM program could open them to European lawsuits or otherwise subject them to additional regulatory scrutiny. Significant elements of their businesses are already subject to restrictions within Europe—Google faces strict restrictions on its StreetView program and Facebook’s facial-recognition capability is banned altogether. As PRISM continues to dominate world headlines, Facebook on Wednesday opened its first servers outside of the United States in northern Sweden—its presence there, which like much of Scandinavia is a bastion of government transparency and personal freedom, will come increasingly under the thumb of EU regulators.

I argued yesterday that Sweden is unlikely to come to the rescue anytime soon with respect to Facebook and PRISM.  More likely is that the European Parliament will work to pass the new data protection directive that it’s been considering for the past two years and that would place additional restrictions on the processing of personal data, though time is quickly running short with European elections set for May 2014.

Photo above is a popular graffiti slogan in Germany, showing former interior minister (and now finance minister) Wolfgang Schäuble — critics claimed Schäuble’s focus on counterterrorism measures approached levels of civil liberties intrusion similar to the East German secret police and intelligence force, the Stasi.

Germany

As U.S. awaits DOMA decision, Germany’s constitutional court weighs in on gay rights

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By the end of June, the U.S. Supreme Court will render decisions in two of the most important legal cases to affect same-sex marriage in the United States: Hollingsworth v. Perry, which could result in the repeal of California’s Proposition 8, a ballot measure that overturned the state legislature’s enactment of same-sex marriage, and United States v. Windsor, which could strike down the U.S. Defense of Marriage Act.  DOMA, a 1996 law that prohibits same-sex couples from federal benefits of marriage, has been struck down by lower U.S. courts as a violation of the ‘equal protection’ clause of the 14th amendment of the U.S. constitution.  Others have argued that it violates the right of states to determine their own marriage laws and the ‘full faith and credit’ clause of the U.S. constitution that requires states to recognize the law, rights and judgments of the other U.S. states. Germany Flag Icon

Both decisions are among the most highly anticipated opinions of the Court’s summer rulings.

But Germany’s top constitutional court, the Bundesverfassungsgericht, got out in front of the U.S. Supreme Court last week with a landmark decision of its own that in many ways mirrors what proponents of same-sex marriage hope will be a harbinger of the U.S. decision on DOMA.

In a decision that could place pressure on chancellor Angela Merkel in advance of Germany’s federal election in September, the constitutional court ruled that same-sex couples in registered civil partnerships are entitled to the same joint tax filing benefits as those in opposite-sex marriages, exactly the rights that DOMA was originally enacted to prohibit in the United States.  The decision put the fight for German same-sex marriage on the front page of European newspapers in a summer when the parliamentary battles to enact same-sex marriage in the United Kingdom and France have otherwise dominated headlines.

It’s surprisingly in many ways that France and the United Kingdom have been more progressive on same-sex marriage rather than Germany.  Although polls show nearly two-thirds of the British and the French support same-sex marriage, a February 2013 poll showed that three-fourths of Germans support same sex-marriage.  Moreover, UK prime minister David Cameron is the center-right leader of a Conservative Party that faces its most pressing political pressure today from the right, not from the center, and the virulent anti-marriage rallies in France and the widespread opposition to same-sex marriage on France’s center-right means that French president François Hollande’s push for marriage equality, a policy that he campaigned on in 2012, has met significant turbulence.

But Germany’s evolutionary approach to marriage equality has taken a more subdued path through the constitutional court in Karlsruhe as much as through the Bundestag, Germany’s parliament.  Former chancellor Gerhard Schröder and his coalition partner Volker Beck successfully pushed for the enactment of the Life Partnership Act in 2001 when the Sozialdemokratische Partei Deutschlands (SPD, Social Democratic Party) controlled the government in coalition with Beck’s Bündnis 90/Die Grünen (the Greens).  Following the German constitutional court’s blessing of the law in 2002, the Bundestag followed up in 2004 with revisions to the law that increase the rights of registered life partners, including rights to adoption, alimony and divorce, though not parity with respect to federal tax benefits.

Since taking power in 2005, chancellor Angela Merkel has not pushed additional rights for same-sex couples, which puts her at awkward odds with her coalition partners, the Freie Demokratische Partei (FDP, Free Democratic Party), which supports marriage equality and whose former leader Guido Westerwelle (pictured above with Merkel), Germany’s foreign minister and its vice-chancellor from October 2009 to May 2011, is openly gay.

Both Merkel’s Christlich Demokratische Union Deutschlands (CDU, Christian Democratic Party) and the CDU’s sister party in Bavaria, the more socially conservative and Catholic-based Christlich-Soziale Union in Bayern (CSU, the Christian Social Union in Bavaria), have been traditionally opposed to gay marriage, and as recently as March, the CDU and the CSU reaffirmed their opposition to extending tax benefits to same-sex partners, even though the February 2013 poll showed that two-thirds of CDU-CSU supporters favored same-sex marriage outright.

Despite parliamentary inactivity in Berlin, last week’s decision by Germany’s constitution court, however, is just the latest decision from Karlsruhe that has edged same-sex registered partnerships ever closer to full marriage equality.  Continue reading As U.S. awaits DOMA decision, Germany’s constitutional court weighs in on gay rights →

France

As Hollande marks one year in office, would Dominique Strauss-Kahn have been better for France?

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Today is the one-year anniversary of François Hollande’s inauguration as the new president of France, having swept to the Elysée Palace with a mandate for a more subdued presidential administration and a leftward turn after the ‘bling bling’ administration of center-right president Nicolas Sarkozy.France Flag Icon

Hollande won’t face voters again for four more years, and by 2017, Hollande’s reputation may well have recovered, but at the one-year mark, he’s had a horrific presidency so far:

  • France slipped back, as a formal matter, into recession today, with a GDP growth rate of -0.2% for the first quarter of 2013 with an unemployment rate of over 10% and eclipsing the previous high in 1997. 
  • Barely a month into his administration, Monsieur Normal appeared to be unable to stop a fight between his current partner, Valerie Trierweiler, and his former partner, Segolène Royal, when Trierweiler tweeted her support for Royal’s opponent, thereby ending Royal’s chances to become the president of France’s parliament, the Assemblée nationale, and making Hollande look as if he couldn’t even control matters within his own relationship.
  • The traditional Franco-German axis that’s powered European integration for decades remains at a frigid impasse, despite the widespread belief that German chancellor Angela Merkel has outfoxed Hollande and is winning the policy war on how to address the ongoing eurozone economic crisis.
  • He worked to implement a 75% income tax rate on income above €1 million per year, though France’s constitutional court has ruled it unconstitutional on technical grounds, all the while keeping in place strict targets to reduce France’s budget deficit and retaining a rise in the retirement age from 60 to 62 implemented by the Sarkozy administration.
  • Budget minister Jérôme Cahuzac stepped down in April 2013 after it was revealed he had a Swiss bank account and had potentially committed tax fraud.
  • Altogether, Hollande’s approval ratings are the lowest of any president after one year in office, and fully 73% of French voters are dissatisfied with Hollande and 68% are dissatisfied with his prime minister, Jean-Marc Ayrault.

It’s been, from a political perspective — and even from a policy perspective — a bit of a disaster.  Hollande’s chief accomplishment, enactment of same-sex marriage in France, has been accompanied by vigorous opposition from Sarkozy’s party and from the far right, inspiring massive anti-marriage rallies and even an uptick anti-gay violence.

It’s enough to make you wonder — what would have happened if Dominique Strauss-Kahn had never been alleged to have sexually assaulted a maid in a New York hotel, had stepped down with his head held high as managing director of the International Monetary Fund to run for an almost certain nomination as the presidential candidate of France’s Parti socialiste (PS, Socialist Party) and proceeded to challenge Sarkozy?  Strauss-Kahn today, as a matter of coincidence, re-emerged to open a bank in South Sudan, one of his rare appearances since the debacle that led to his arrest in May 2011.  Although U.S. prosecutors dropped charges of attempted rape and other sexual abuse charges in August 2011, Strauss-Kahn’s political career was finished.

Though it’s subject to a ‘grass is always greener’ caveat, there’s good reason to believe that a Strauss-Kahn presidency would have been a smoother affair than the embattled Hollande administration.

Despite whether it would have been better or worse, a Strauss-Kahn presidency would have been an incredibly different beast from the outset.

It seems unlikely that Strauss-Kahn would have ever campaigned on a pledge to raise the top rate of tax to 75%, let alone attempted to enact it, when it’s such an outlier among peer tax regimes.  It seems more likely that Strauss-Kahn, as a relative moderate within the Socialist Party, would have been more receptive to implementing labor market reforms designed to make France more competitive — perhaps a gentler variant of the Hartz IV / Agenda 2010 reforms that Germany enacted under social democratic chancellor Gerhard Schröder in the early 2000s.

But as a former IMF chief and a former finance minister under the government of prime minister Lionel Jospin from 1997 to 1999 who worked to reduce the budget deficit to prepare for French entry into the eurozone, Strauss-Kahn would have come into office with an unrivaled economic credibility that would have allowed him to challenge Merkel on the direction of economic policy in the eurozone with vigor — and then some.  It’s not hard to imagine Strauss-Kahn pursuing a relatively ambitious reform program domestically while simultaneously calling for less punishing austerity measures in the more devastated southern European economies.

Certainly, Strauss-Kahn’s candidacy and his presidency would have been plagued with the same sort of scandalous affairs that brought his career to such a  screeching halt in 2011.  It’s difficult to imagine Strauss-Kahn being emasculated in his first month in office (fairly or not), unable to stop a very public spat between a current and former lover, one of whom happens to have been his party’s 2007 presidential candidate and a leading political figure in her own right.  Strauss-Kahn would have come to the French presidency after a career in the public eye, unlike Hollande, who had chiefly served a behind-the-scenes role — when he was half of France’s power couple, it was Royal, not Hollande, who was the public star.  Hollande, from 1997 to 2008, was the first secretary of the Socialist Party and, unlike Strauss-Kahn, he was never a minister in the Jospin government and he was certainly not among the presidential contenders in 2007.

Four years are a long time in politics, French or otherwise, and Hollande can at least point to a military intervention earlier this year in Mali that went relatively smoothly by accomplishing a narrowly defined goal, and the Mali operation represents the Hollande administration at its best.  Hollande could engineer his own comeback, especially if the economy improves this year or next — it’s hard to believe he can sink much lower in public opinion.  For now, Strauss-Kahn will still have some ways to go until he, if ever, reaches political redemption in France.  But he’s a formidable economic and political talent, and comebacks aren’t altogether unheard of in France.  Just look at the return of former prime minister Alain Juppé as foreign minister in the final 15 months of the Sarkozy administration, despite his 2004 conviction for mishandling public funds.

With such an uninspiring administration, Hollande could well turn to a cabinet shakeup in the future to replace Ayrault or other top minister, including finance minister Pierre Moscovici — and he might do well to bring Strauss-Kahn or Royal, whose political talents remain unutilized, back into the top tier of government.

Bulgaria, Cyprus, European Union, France, Germany, Greece, Italy, Spain, United Kingdom

What Iceland’s election tells us about post-crisis European politics

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Iceland was supposed to be different.Iceland Flag IconEuropean_Union

In allowing its banks to fail, neo-Keynesian economists have argued, Iceland avoided the fate of Ireland, which nationalized its banks and now faces a future with a very large public debt.  By devaluing its currency, the krónur, Iceland avoided the fate of countries like Estonia and others in southern Europe trapped in the eurozone and a one-size-fits all monetary policy, allowing for a rapid return to economic growth and rapidly falling unemployment.  Neoclassical economists counter that Iceland’s currency controls mean that it’s still essentially shut out from foreign investment, and the accompanying inflation has eroded many of the gains of Iceland’s return to GDP growth and, besides, Iceland’s households are still struggling under mortgage and other debt instruments that are linked to inflation or denominated in foreign currencies.

But Iceland’s weekend parliamentary election shows that both schools of economic thought are right.

Elections are rarely won on the slogan, ‘it could have been worse.’ Just ask U.S. president Barack Obama, whose efforts to implement $800 billion in stimulus programs in his first term in office went barely mentioned in his 2012 reelection campaign.

Iceland, as it turns out, is hardly so different at all — and it’s now virtually a case study in an electoral pattern that’s become increasingly pronounced in Europe that began when the 2008 global financial crisis took hold, through the 2010 sovereign debt crisis in the eurozone and through the current European-wide recession that’s seen unemployment rise to the sharpest levels in decades.

Call it the European three-step.

In the first step, a center-right government, like the one led by Sjálfstæðisflokkurinn (Independence Party) in Iceland in 2008, took the blame for the initial crisis.

In the second step, a center-left government, like the one led by Jóhanna Sigurðardóttir and the Samfylkingin (Social Democratic Alliance) in Iceland, replaced it, only to find that it would be forced to implement harsh austerity measures, including budget cuts, tax increases and, in Iceland’s case, even more extreme measures, such as currency controls and inflation-inducing devaluations.  That leads to further voter disenchantment, now with the center-left.

The third step is the return of the initial center-right party (or parties) to power, as the Independence Party and their traditional allies, the Framsóknarflokkurinn (Progressive Party) will do following Iceland’s latest election, at the expense of the more newly discredited center-left.  In addition, with both the mainstream center-left and center-right now associated with economic pain, there’s increasing support for new parties, some of them merely protest vehicles and others sometimes more radical, on both the left and the right.  In Iceland, that means that two new parties, Björt framtíð (Bright Future) and the Píratar (Pirate Party of Iceland) will now hold one-seventh of the seats in Iceland’s Alþingi.

This is essentially what happened last year in Greece, too.  Greece Flag IconIn the first step, Kostas Karamanlis and the center-right New Democracy (Νέα Δημοκρατία) initially took the blame for the initial financial crisis.  In the second step, George Papandreou and the center-left PASOK (Panhellenic Socialist Movement – Πανελλήνιο Σοσιαλιστικό Κίνημα) overwhelming won the October 2009 elections, only to find itself forced to accept a bailout deal with the European Commission, the European Central Bank and the International Monetary Fund.  In the third step, after two grueling rounds of election, Antonis Samaras and New Democracy returned to power in June 2012.

By that time, however, PASOK was so compromised that it was essentially forced into a minor subsidiary role supporting Samaras’s center-right, pro-bailout government.  A more radical leftist force, SYRIZA (the Coalition of the Radical Left — Συνασπισμός Ριζοσπαστικής Αριστεράς), led by the young, charismatic Alexis Tsipras, now vies for the lead routinely in polls, and on the far right, the noxious neo-nazi Golden Dawn (Χρυσή Αυγή) now attracts a small, but significant enough portion of the Greek electorate to put it in third place.

The process seems well under way in other countries, too.  In France, for examFrance Flag Iconple, center-right president Nicolas Sarkozy lost reelection in May 2012 amid great hopes for the incoming Parti socialiste (PS, Socialist Party) administration of François Hollande, but his popularity is sinking to ever lower levels as France trudges through its own austerity, and polls show Sarkozy would now lead Hollande if another presidential election were held today.

It’s not just right-left-right, though. The European three-step comes in a different flavor, too: left-right-left, and you can spot the trend in country after country across Europe — richer and poorer, western and eastern, northern and southern. Continue reading What Iceland’s election tells us about post-crisis European politics →

European Union

Regling denies north-south European divide, claims EFSM a ‘lot of solidarity’

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If you were at Brookings Thursday afternoon, you could have taken away the following points:European_Union

  • Olli Rehn (pictured above), European commissioner for economic and monetary affairs and vice president of the European Commission, thinks the eurozone will return to growth by the end of 2013.
  • Klaus Regling, chief executive officer of the European Financial Stability Facility thinks there is no north-south divide in the eurozone.
  • The three-step plan presented by Jeroen Dijsselbloem, president of the Eurogroup of eurozone finance ministers, for future growth comes down to: balanced budgets, banking union and structural reform.  And, by the way, he thinks the main political problem in the eurozone is that European Union leaders have been so busy (for the past four years) dealing with the crisis that they haven’t had time to explain adequately their plans to the public.

jeroen

Consider this quote from Dijsselbloem (pictured above), whereby he says he and his colleagues have been so busy that they haven’t done a job of explaining themselves to the public:

‘[We’ve been so busy] solving the problems and dealing with the crisis, that we’ve not really involved a lot of people, the public, at large, as to what we’re doing, why we’re doing this, why it’s so crucial to work together along the lines of the strategy, why it’s so crucial to push forward structural reforms,” Dijsselbloem said.  ‘People are just experiencing the structural reforms in terms of, ‘I’m losing social rights,’ but we have to explain to them in order for young people to be able to participate also in labor markets, we have to rebalance maybe some countries’ securities and flexibilities in order to create new jobs.’

That’s a fairly audacious understatement of the democratic deficit problem in the European Union these days, and especially among the eurozone member states, who have had treaty upon treaty, condition upon condition dictated to them by Brussels and Berlin.

It also took two questions from the audience about deposit insurance for Dijsselbloem to confirm that their intention is for banking union reform to incorporate a eurozone-wide deposit insurance — in the fullness of time, of course.

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Regling (pictured above), one of five northern Europeans sitting on the panel today, went so far as to rebuke Jean Pisani-Ferry, a French economist and director of Bruegel, a Brussels-based think tank, for suggesting that the political risks in the European Union are rising.

The director general of [the European commissioner of economic and monetary affairs] is Italian, I have two deputies, one is French and one is Spanish, so in the end we’re all good Europeans,’ Regling said, after calling Pisani-Ferry’s question cheap.  ‘We are also not saying that Southern Europe has no problems — you implied that, I think that’s just wrong. We are fully aware there’s a lot of solidarity coming from European partners to these countries.  My institutions alone have dispersed in two years alone €185 billion, in two years alone… That’s a lot of solidarity.  These countries go through very painful adjustments, nobody here is denying that, although we’re all northern Europeans.  But I don’t like this north-south [dichotomy].  I’ve said this before, Latvia was the first country to take [tough structural adjustments] and that’s pretty northern European, so I think we should all be a bit more rational here.’

Reasonable economists can disagree about the policy mechanisms available to Greece or Italy or Portugal or Spain or Cyprus to pull their economies out of depression and how to repair the eurozone’s growing pains.  I’m not going to argue that Italy is in no more dire need of labor market reform than, say Sweden or The Netherlands — of course, Italy needs to modernize its economy if it wants to goose its long-term GDP growth potential.  Greeks have had to learn that income tax isn’t an optional exercise.  And Germany needs to figure out a viable trade model where the eurozone doesn’t exist, as it seemed in its first decade, as a means of enabling the European periphery to buy all of Germany’s exports.

But to refuse to see that there’s a north-south divide in Europe, that Mediterranean Europe is not at the center of today’s eurozone crisis, is abjectly short-sighted.  Regling has to realize that even the north-south divide in Germany is stronger than the east-west divide, despite the separation of west from east for nearly three decades!

It’s Italy that’s currently undergoing a crisis of government today, not France.  It’s Golden Dawn in Greece winning their highest percentage of votes in the history of post-dictatorship Greece, it’s not a neo-Nazi resurgence in Germany.  It’s Cypriot depositors who spent a week wondering if their five-figure savings would be taxed by 6.75%, not the Irish or the Latvians.  That’s not to deny that Latvia and Estonia and Ireland have made incredibly tough decisions in the past four years, but none of those economies are even as big as Greece, let alone Spain or Italy.

If eurocrats like Regling have such a hard time at Brookings, who are largely sympathetic to the goal of (if not always the precise strategies for) saving the eurozone, good luck dealing with Alexis Tsipras’s radical left Greek government or the next Silvio Berlusconi government in Italy or Artur Mas’s declaration of Catalan independence — all of which could happen by the end of 2014.

Photo credit to Kevin Lees — Brookings Institution, Washington DC, April 2013. 

European Union

‘La bataille des chiffres’: EU leaders agree new budget deal

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Guest post by Michael J. Geary

European Union leaders reached agreement Friday on the EU budget (the multi-annual financial framework or ‘MFF’) for the period from 2014 to 2020.European_Union  After months of bickering, the 27 member states signed off on a deal totaling €908.4 billion, and the European Parliament will vote on the budget in March.

The budget is geared towards two — some would say conflicting — goals and political constituencies.

On the one hand, politicians argued that spending should be mobilised to support growth, employment, competitiveness and convergence, in line with the Europe 2020 Strategy. At the same time, some EU leaders in the United Kingdom, Germany and in the Netherlands, made clear that ‘as fiscal discipline is reinforced in Europe, it is essential that the future MFF reflects the consolidation efforts being made by Member States to bring deficit and debt onto a more sustainable path.’  The result is a smaller budget than was agreed for the previous budgetary period (2007 to 2013), yet one that is expected to achieve greater results to help pull the EU out of its economic malaise. A ‘spend less, achieve more policy’ strategy in an era when one in four Spaniards are unemployed seems doomed to fail.

The result, however, is not wholly surprising. Over the last four years, austerity and cuts in public spending have become commonplace throughout the EU, so it should come as no shock that the EU institutions should also tighten their belts.

Speaking after the negotiations concluded, German chancellor Angela Merkel said, ‘The agreement is a good agreement as it gives predictability for investors to create growth and jobs.’  José Manuel Barroso, the European Commission president, no doubt privately disappointed with the outcome, publicly voiced support for the deal saying the budget was ‘an important catalyst for growth and jobs.’

UK prime minister David Cameron can also be very pleased with the result, given that the agreement marks the first time in the history of the EU that its budget has been scaled back.  Cameron had gone to Brussels threatening to use the veto if leaders failed to make savings in real terms. He singled out the exorbitant salaries paid to some of the EU’s top officials, some of whom earn close to €15,000 per month and are taxed at just 8%. During the last five years, national-level tax increases have been imposed in addition to freezes on public and private sector pay, while officials working in the EU institutions have escaped austerity.  Cameron was determined, during the talks on the budget, to cut administrative costs despite opposition from French and Polish leaders who feared any cuts to the EU budget would affect generous subsidies to farmers and structural and cohesion funds.

Cameron was clearly relieved that his call for budgetary reductions met with friendly ears at least among some EU colleagues.  Over the past twelve months, he had been busy building a coalition among the Dutch, German and Scandinavian member states (the EU’s main paymasters) to reduce the budget in real terms.

Although Cameron and Merkel may well find themselves at odds over the UK’s role in the EU over the next five years, with Cameron determined to ‘renegotiate’ its role and Merkel equally determined to forge ever closer fiscal and political union, budget politics may have been a useful vector to find common ground.  Indeed, Merkel and Dutch prime minister Mark Rutte ultimately became strong supporters of London’s push to force austerity on the EU itself.  The unlikely emergence of the Anglo-German alliance was perhaps the most intriguing element of the negotiations. Continue reading ‘La bataille des chiffres’: EU leaders agree new budget deal →

Greece

Tsipras predicts Greek debt haircut after German elections

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The great thing about Washington, D.C. is the flow of visitors we see from throughout the world and the relative access to top officials through top-notch organizations such as the Brookings Institution, which hosted Greek opposition leader Alexis Tsipras for a 90-minute session Tuesday.Greece Flag Icon

The beleaguered Greek economy has receded from headlines somewhat since the razor-close election in June 2012 (itself a rerun of an earlier inconclusive vote in May 2012) and since the conclusion of the latest agreement, reached in October 2012, between Greece’s government and the ‘troika’ of the International Monetary Fund, the European Commission and the European Central Bank for the disbursement of cash to the nearly bankrupt Greek government in exchange for €13.5 billion in budget cuts.

Tsipras leads SYRIZA (the Coalition of the Radical Left — Συνασπισμός Ριζοσπαστικής Αριστεράς), which finished a very narrow second place to the center-right New Democracy (Νέα Δημοκρατία), whose leader Antonis Samaras, now prime minister, leads a broad pro-bailout coalition.  Although SYRIZA lost the election, it’s the largest anti-austerity force in Greece, and it either leads or ties New Democracy in most polls.

Given that Greece’s unemployment rate keeps increasing (it’s currently around 27%) and it’s entering its sixth consecutive year of economic contraction, even as the government’s been forced into adopting increasingly harsh austerity measures, it’s hard not to see Tsipras as a future prime minister.

Tsipras, who’s made several international trips since last June, has been on somewhat of a campaign to convince the world that he’s not a crazy socialist to be feared, but rather well-placed within the Keynesian macroeconomic tradition of the social democratic left, whose European leaders believe that austerity alone cannot deliver the kind of boost to the economy that will result in greater GDP growth and more employment.   Continue reading Tsipras predicts Greek debt haircut after German elections →

Germany, Lower Saxony

Merkel shouldn’t despair over center-right’s Lower Saxony loss

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Voters in Germany’s fourth-most populous state, Niedersachsen (Lower Saxony), have elected popular Hannover mayor Stephan Weil (pictured above) its new minister-president after an incredibly narrow victory for the center-left coalition, according to official provisional results.
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The predicted victory would mean that the center-right coalition headed by minister-president David McAllister, a high-profile (and half-Scottish!) politician within the ruling Christlich Demokratische Union (Christian Democratic Union) of German chancellor Angela Merkel would lose power for the first time in a decade.

As such, the German media is already reporting that the election is a setback for Merkel in advance of expected federal elections later in September or October 2013.  While the election is somewhat of a barometer for federal politics, generally (it’s where former chancellor Gerhard Schröder got his political start — he served as the state’s minister-president from 1990 to 1998), there’s actually a lot of positive news for Merkel in the Lower Saxony result.

Provisional results give the center-right CDU around 36.0% of the vote, a small lead over the center-left Sozialdemokratische Partei Deutschlands (SPD, the Social Democratic Party), with just 32.9%.  Unfortunately, however, that represents around a 6.5% drop in support from the previous regional elections in 2008:

Niedersachsen

Although the CDU’s traditional coalition partner, the Freie Demokratische Partei (FDP, Free Democrats), will have increased their share of the vote to around 9.9% (despite polls showing the FDP with support running at around 5%), the SPD’s traditional coalition partner, Die Grünen (the Green Party), has won around 13.5%.

According to projections, that means the CDU will hold 54 seats in the Landtag, Lower Saxony’s regional unicameral parliament (a 14-seat drop from the current representation) and the FDP will gain a seat for a total of 14.

The SPD will gain just one seat to hold 49, while the Greens have gained eight seats to hold 20.

Together, therefore, the center-left is likely to hold 69 seats to just 68 seats for the center-right, giving Weil the narrowest of margins in the Landtag. 

The key factor is the loss of all 11 seats currently held by the more radical Die Linke (The Left Party), which is projected to have won just 3.1% of the vote, lower than the 5% required to win seats under Lower Saxony’s electoral system.  That means that all of the center-left seats won in Sunday’s election will have gone to the SPD-Green coalition, rather than split with the Left Party, which has historically rejected the possibility of joining a coalition with the SPD.

The Piratenpartei Deutschland (Pirate Party) also fell far below the 5% threshold.

So the result is quite a setback for McAllister, who was contesting his first election as minister-president, and has been mentioned as a potential successor to Merkel as a federal chancellor.  There’s a fair chance that Merkel could bring McAllister into her federal government as a top aide and minister (she once attempted to appoint him as the head of the CDU federally).

Although McAllister isn’t incredibly unpopular in Lower Saxony, he became minister-president in 2010 after Christian Wulff, premier since 2003, resigned to assume Germany’s largely ceremonial presidency — Wulff resigned in February 2012, however, amid allegations that he concealed a private loan from a wealthy friend with business interests in Lower Saxony.

Given the scandal around Wulff, the fact that the CDU has held power for a decade and was seeking its third consecutive mandate for forming a government, and the fact that Germany is slipping into recession, McAllister was always going to have a tougher run in this year’s elections than Wulff had in 2008.

But, as I noted above, there’s a lot of good news for Merkel in advance of this autumn’s elections: Continue reading Merkel shouldn’t despair over center-right’s Lower Saxony loss →

European Union, The Netherlands

Who is Jeroen Dijsselbloem?

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Most indications are that the next Euro Group head will be a relative newcomer to the group of eurozone finance ministers — Dutch minister Jeroen Dijsselbloem, who declared his formal candidacy for the job today.European_UnionNetherlands Flag Icon

As I noted at the beginning of the year in my piece on 13 up-and-coming politicians to watch in 2013, the current head of the Euro Group since 2005, Jean-Claude Juncker, also prime minister of tiny Luxembourg since 1995 and the Luxembourgian finance minister from 1989 to 2009, is stepping down from the role.

Dijsselbloem belongs to the anti-austerity social democratic Partij van de Arbeid (PvdA, Labour Party) — that has joined a coalition that’s headed by the decidedly more budget-obsessed Volkspartij voor Vrijheid en Democratie (VVD, the People’s Party for Freedom and Democracy) and prime minister Mark Rutte.

The second Rutte cabinet took office as a ‘purple’ Lib-Lab coalition in November 2012 after a closely fought election in September 2012, during which Labour leader Diederik Samsom fought for a more gradual process of budget cuts to bring the Dutch budget within 3% of GDP.

The Euro Group came into being in the late 1990s in advance of the introduction of the single currency as an informal group.  In 2005, Juncker became the group’s first president amid a push to formalize the group’s role in 2009 though a protocol to the Treaty of Lisbon:

The Ministers of the Member States whose currency is the euro shall meet informally. Such meetings shall take place, when necessary, to discuss questions related to the specific responsibilities they share with regard to the single currency. The Commission shall take part in the meetings. The European Central Bank shall be invited to take part in such meetings, which shall be prepared by the representatives of the Ministers with responsibility for finance of the Member States whose currency is the euro and of the Commission.

The Euro Group typically meets a day before the Economic and Financial Affairs Council of the Council (Ecofin) of the European Union — Ecofin is comprised of the wider group of all 26 EU member state finance/economics ministers.  Accordingly, the Euro Group typically dominates economic policymaking at the Council level.  At the Council, policies related to fiscal matters must be adopted unanimously, though other policies can be adopted by the EU’s qualified majority voting mechanism (i.e., essentially a supermajority formula that requires both a majority of the 27 member states and a majority of the EU population).

The Euro Group president is appointed for a term of 2.5 years, by majority vote of the Euro Group, and the next president could be appointed as early as Monday, though French finance minister Pierre Moscovici has called for a more formal and transparent process of selecting the next president.  Moscovici has also called on Dijsselbloem to outline his views on the future direction of the Euro Group, and Dijsselbloem is set to discuss goals at Monday’s meeting, though Juncker has been dropping all sorts of hints that Dijsselbloem’s selection is all but assured.

Dijsselbloem has been a member of the Tweede Kamer (the lower house of the Dutch parliament) since 2000, after spending four years as an assistant at the ministry of agriculture, nature management and fisheries.

In parliament, Dijsselbloem has been a moderating voice on highly charged issues like the role of Muslims in Dutch society.  In 2007, he spearheaded a commission on educational reform.  Earlier in 2012, when former Amsterdam mayor Job Cohen resigned as Labour leader, Dijsselbloem was chosen to serve as the party’s interim leader until Samsom was elected as the permanent Labour leader, and he was the fifth candidate on Labour’s list in the 2012 elections.

As early as the 2003 election, Dijsselbloem was seen as a Samsom confidante — they campaigned together in that year as the ‘rode ingenieurs‘ — the ‘Red Engineers’ — due to their red overalls and scientific backgrounds, Samsom in nuclear energy and Dijsselbloem in agricultural economics.

Despite just two months on the job as a pro-growth minister in a government that will seek to reduce the Dutch budget to within 3% of GDP in 2013, Dijsselbloem literally personifies the current fiscal debate in Europe.  It helps that the Netherlands was one of the original six countries that formed the predecessor to the European Union and that it retains one of Europe’s last remaining ‘AAA’ credit ratings.

On one side, as personified by Moscovici and French president François Hollande of the center-left Parti socialiste, only aggressive government policies to boost aggregate demand can reduce unemployment and jumpstart Europe’s economic engine.  Although even Hollande admits the need to bring France’s budget in line with the European Union standard, generally, of within 3% of GDP, Hollande’s government has preferred to implement tax increases rather than cut spending too deeply.

On the other side, as personified by German finance minister Wolfgang Schäuble and German chancellor Angela Merkel of the center-right Christlich Demokratische Union Deutschlands (CDU, Christian Democratic Union), the key to prosperity — even in the face of recession — is to cut spending and narrow the budget deficit, thereby bringing more investment and business confidence by shoring up public finances. Continue reading Who is Jeroen Dijsselbloem? →

Germany, Lower Saxony

Lower Saxony state elections also a mild barometer for Merkel’s federal CDU

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State elections in Lower Saxony later this month are to Germany’s center-right what elections last year in North-Rhine Westphalia were to Germany’s center-left. Germany Flag Iconlower_saxony

Last year, state elections in North-Rhine Westphalia were somewhat of a barometer of German federal politics, and the incumbent minister-president Hannelore Kraft’s win in May 2012, extending the strength of her Sozialdemokratische Partei Deutschlands (SPD, the Social Democratic Party) as well as of her coalition partner, Die Grünen (the Green Party).  Her commanding position as a pro-growth, pro-Keynesian premier in Germany’s most populous state instantly made her a possibility for a future jump to federal politics — and until she ruled herself out, a likely more savvy challenger against chancellor Angela Merkel in federal elections expected later this autumn (certainly more charismatic, in any event, than the SPD’s chancellor candidate Peer Steinbrück).

Although Lower Saxony is only just Germany’s fourth-most populous state, it lies just to the north of North-Rhine Westphalia, and like North-Rhine Westphalia, it’s a bit of a political weathervane.  It launched the career of former chancellor SPD Gerhard Schröder, who was minister-president of Lower Saxony from 1990 to 1998 before sweeping to federal power in the 1998 federal elections.  Since 2003, the Christlich Demokratische Union (Christian Democratic Union) has, however, controlled Lower Saxony’s Langtag, its 152-member unicameral state parliament.

And its current minister-president since 2010, David McAllister (pictured above with Merkel), like Kraft, is a rising star who could one day make a leap to federal politics.  Born in West Berlin at the height of the Cold War to a German mother and a Scottish soldier who came to Germany during World War II, at 41, he’s one of the youngest rising CDU leaders, and political observers both within and outside Germany pit him as a credible successor to Merkel as the head of the CDU federally — Merkel even offered him a position as general secretary of the federal party in 2005, though McAllister declined at the time.

There’s some irony that ‘Mac,’ whose English is Scottish-accented due to his half-British roots, found his political base in Hanover, the capital of Lower Saxony, given that the British monarchy traces its 18th century roots to Hanover.  He has retained a British passport and has built ties to UK prime minister David Cameron.  He proposed to his wife at Loch Ness in Scotland, and he married her in 2003 wearing a kilt.  Suffice it to say his elevation in the future as Germany’s chancellor would bring about an interesting chapter in Anglo-German relations, just 68 years after World War II ended.

Nonetheless, a Kraft-McAllister showdown in, say, 2018, isn’t an incredibly unlikely scenario — but first, he’ll have to win the Jan. 20 elections in Lower Saxony.

The CDU currently holds 68 seats and it governs Lower Saxony in alliance with the economically liberal Freie Demokratische Partei (FDP, Free Democrats), who hold 13 seats.  The SPD holds just 48 seats, their traditional allies, the Greens, hold 13 seats, and the more radical Die Linke (The Left Party) hold 11 seats.

The CDU won 42.5% in the prior January 2008 elections to just 30.3% for the SPD and, while polls show the CDU with a steady, but narrower lead, the election results will invariably be seen through the prism of the parties’ respective strengths — given that the CDU is expected to win the election, it will be seen as a troubling sign for Merkel’s federal party if the race is incredibly tight, or if the SPD pull off an upset win.

Polls generally mirror national polls — with the CDU outpolling the SPD, with the Greens polling in the low double-digits, and the FDP, The Left and the new protest party Pirate Party each poll below 5%, the threshold for parties to win seats to the Landtag.  That’s not a small likelihood — in 1998, the FDP won just 4.9% and was consequently shut out completely, and The Left only won their first seats in Lower Saxony’s parliament in 2008.

Despite the CDU’s steady lead, however, the fear for McAllister is that the FDP could lose all of its seats in the Landtag, thereby forcing him to govern with the Greens or the SPD — or worse for the CDU, allow the SPD to form a governing coalition with the Greens.

Stephan Weil, who is leading the SPD in the regional elections, is the popular mayor of Hanover (since 2006) — his wife, Rosemarie Kerkow-Weil, is the president of the University of Hanover.  A vote that results with Weil as minister-president could boost the SPD’s hopes — and spur doubts about Merkel’s CDU — in advance of federal elections this autumn. Continue reading Lower Saxony state elections also a mild barometer for Merkel’s federal CDU →

Germany

Thoughts on what a Steinbrück government would mean for U.S.-German relations

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I’ve written a short piece today for Deutsche Welle looking at how U.S.-German relations might (slightly) vary if Peer Steinbrück, chancellor candidate for the center-left  Sozialdemokratische Partei Deutschlands (SPD, Social Democratic Party), defeats current German chancellor Angela Merkel, of the center-right Christlich Demokratische Union Deutschlands (CDU, Christian Democratic Party) in elections expected to be held in September 2013.

By and large, the main priority for U.S. policymakers, no matter who wins the Nov. 6 presidential election in the United States, will be that Germany keeps the eurozone from spiraling into crisis.

The key point is that U.S. policymakers should expect continuity, mostly, on the German position vis-a-vis the eurozone and on German economic policy:

Steinbrück, who served as Germany’s finance minister under Merkel in the SPD-CDU grand coalition government from 2005 to 2009, would also mark continuity in German economic policy – in contrast to center-left leaders such as former UK prime minister Gordon Brown and current French president Francois Hollande, Steinbrück derided Keynsian economics in 2008 and, alongside Merkel, refused to consider large amounts of stimulus funding in 2008 and 2009.

Nonetheless, on European policy, as well as on the more narrow focus of German economic policy, Steinbrück would not exactly mark a rupture; that will be especially true if the next German election leads to another grand coalition between the CDU and SPD.

Steinbrück emerged as the SPD candidate last month.

Ultimately, I note, the biggest area for potential disagreement is on foreign policy especially in light of the rift over Iraq between then-U.S. president George W. Bush and then-German chancellor Gerhard Schröder a decade ago:

[N]owhere will the US election matter more than in the area of foreign policy – a Romney administration would be much more likely than the Obama administration to consider military action to prevent Iran from achieving nuclear weapon capability.  While Merkel’s government has supported the Obama administration’s approach for increasingly tougher economic sanctions on Iran, it seems unlikely that Germany, especially under a SPD chancellor, would have much appetite for military action in Iran.

Germany

Steinbrück set to challenge Merkel as SPD candidate for chancellor

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In a month when most eyes have been on Germany’s current finance minister, all eyes are now on Germany’s former finance minister, Peer Steinbrück, who is now set to become the main challenger to German chancellor Angela Merkel in federal elections expected later in 2013.

In a bit of a surprise, Steinbrück was named as the candidate of the main opposition party, the center-left Sozialdemokratische Partei Deutschlands (SPD, Social Democratic Party) on Friday after the other main contender, Frank-Walter Steinmeier, indicated that he didn’t want to run.

Among the trio of Steinmeier, Steinbrück and party leader Sigmar Gabriel, Steinbrück has always been the clear favorite.

But perhaps the most jarring element of Friday’s announcement was that SPD party leaders simply announced the news — in Germany, there are no primaries and no leadership contest as such to determine who will be the candidate for chancellor (essentially, think of the German chancellor much like a very strong prime minister rather than a president). Gabriel is highly unpopular among voters and Steinmeier previously led the SPD against Merkel and her governing Christlich Demokratische Union Deutschlands (CDU, Christian Democratic Party) — to disastrous result.

In the previous September 2009 general election, Steinmeier won just 23% for the SDP and lost 76 seats (for a total of just 146).  The party thereupon fell out of the CDU-SDP “grand coalition” that had governed Germany since 2005.  The CDU, which won 34% and 239 seats, was able to form a more rightist coalition with its preferred partner, the Freie Demokratische Partei (FDP, Free Democratic Party), which won 15% and 93 seats. Steinmeier had previously served in the “grand coalition” as foreign minister.

The next federal election in Germany is expected to be held in September or October 2013.

Steinbrück, however, remains a less than ideal candidate — he served as Merkel’s finance minister from 2005 to 2009, so it’s going to be difficult for Steinbrück to draw as clear a contrast on economic policy as might otherwise be the case, even with signs that Germany, the last beacon of economic strength throughout the eurozone, is now also likely headed into recession.  As finance minister, Steinbrück famously (demonstrating his, ahem, willful side) derided Keynesian economics and criticized the stimulative approach of the UK’s government under Labour prime minister Gordon Brown, but he is well regarded, alongside Merkel, for steering Germany reasonably well through the 2008-09 financial panic. (Note: Paul Krugman will be happy).

On Europe, too, the German electorate seems receptive to a populist challenge to Merkel’s performance on European affairs — Germans are incredibly weary of four years of what they see as German bailouts of profligate governments from Portugal to Greece.  Nonetheless, the SPD is actually more pro-Europe than the CDU — and especially more pro-Europe than the CDU’s sister party in Bavaria, the Christlich-Soziale Union (CSU, Christian Social Union).  In Bavaria, the CSU-led government’s finance minister Markus Söder has all but called for Greece to be booted out of the eurozone.

In any event, German voters seem fairly well disposed to giving credit to Merkel for walking a tight line between letting the eurozone crumble, on the one hand, and holding governments in Spain, Ireland, Portugal, Italy and Greece to very tight austerity plans in exchange for European monetary and fiscal support, on the other hand.

The latest polls show the CDU-CSU with a very healthy lead of around 38% to just barely 30% for the SDP — since 2010 and 2011, the gap has only grown wider in favor of the CDU-CSU.  The FDP, however, looks set to collapse, picking up just 4%, though the SDP’s preferred coalition partners, Bündnis 90/Die Grünen (the Greens) poll a very strong 13%.  The newly-formed Piratenpartei Deutschland (Pirate Party) and the more leftist Die Linke (The Left Party) poll 6% each.  Given Steinbrück’s centrist characteristics, I would not be surprised to see the current soft support for the Pirate Party migrate to the Left Party or to the Greens — there will be a lot of room on the left in a Merkel-Steinbrück race to win support, both on Europe and on economic policy, especially if Germany’s economy continues in a downward trajectory.  Given the Left Party’s strong base of support in the former East Germany, there’s a real opportunity for the Left to break out.

The ideal candidate for the SPD may well have been the premier of Germany’s most populous state, North Rhine-Westphalia, Hannelore Kraft, who led the SPD to a huge victory in elections in May of this year.  A premier with charisma, who has championed a more activist state response to boost economic growth, and who could well have been Germany’s second woman as chancellor, Kraft indicated earlier this year that she was not interested in running for chancellor.