How Merkel’s Win May Hide Rising Discontent

Exclusive: With German Chancellor Merkel expected to win reelection on Sunday, the European elites may celebrate having turned back a populist surge, but their neo-liberal policies continue to fuel discontent, says Andrew Spannaus.

By Andrew Spannaus

The citizens of Germany will head to the polls this Sunday, in the last of a series of elections in major European countries this year. Before the voting began, there were fears that populist, anti-system parties could actually win in some cases, in the wake of the victory of last year’s Brexit vote and the election of Donald Trump as President of the United States. That hasn’t happened, as Marine Le Pen of the National Front was defeated in a run-off in France, and Geert Wilders’ Freedom Party failed to break through in Holland.

President Donald J. Trump and Chancellor Angela Merkel on July 7, 2017 (Official White House Photo by Shealah Craighead)

Germany is also expected to weather the populist storm, with Chancellor Angela Merkel set to be re-elected. Her Christian Democratic Party (CDU/CSU) now holds a comfortable lead over its main competitor, the Social Democrats (SPD), with the other opposition parties far behind. That will give Merkel, a reserved but effective politician who grew up in Communist East Germany, the chance to approach Helmut Kohl’s record as the country’s longest serving leader.

Due to the parliamentary system, which allows numerous smaller parties to send representatives to Berlin, neither of the large parties can win outright, which means that Merkel will need to form a coalition. Her preference would be to take on her party’s historical ally, the Free Democrats, but it is possible she will be forced to continue with a “grand coalition” agreement between the CDU and SPD to share power in the name of stability, while keeping out the parties seen as more extreme.

The most feared of the smaller groupings is the Alternative for Germany (AfD), a “populist” party that has grown rapidly in recent years, drawing on economic and social discontent in the mold of other anti-system parties around Europe. The AfD is expected to draw slightly more than 10 percent of the vote, well below the totals for Marine Le Pen in France (21 percent in the first round) or the Five-Star Movement in Italy (25 percent in 2013), and closer to the level of Geert Wilders’ Freedom Party in Holland (13 percent in the March elections).

Nevertheless, the AfD’s growth has caused consternation around Europe, as the governing elites struggle to explain why even in the country with the continent’s strongest economy, where unemployment is low, and productivity and budget surpluses are high, there has been a rapid increase in populist fervor.

The standard explanation, of course, is xenophobia and racism. Indeed the AfD plays to nationalist and anti-immigrant sentiment, and has increasingly identified itself with right-wing issues. As immigration from the Middle East and Africa has soared in recent years, European countries have struggled with accepting and integrating the new arrivals, causing considerable social tensions.

Germany was at the center of this crisis in 2015, when Merkel went against the grain of public opinion and announced that her country would accept hundreds of thousands of asylum-seekers in order to do its part for those less fortunate, in particular refugees from the war in Syria.

It didn’t take long for that policy to change though, as less than a year later Germany was decisive in reaching a deal with President Erdogan of Turkey that ended up limiting immigration by closing the land route towards Europe through the Balkans. The result has been a shift of migrant flows to the sea routes from Northern Africa primarily to Italy and Greece, accompanied by a notable change in attitudes among the respective populations.

Economic Inequality

As with most populist movements throughout the Western world, the issues of immigration and race tell only a part of the story. The Brexit vote was fueled by a reaction against neo-liberal economic policies, effectively summed up by the headline of an article in the English newspaper The Guardian shortly after the referendum in June 2016: “If you’ve got money, you vote in… if you haven’t got money, you vote out.” Decades of economic decline had produced the desire to stick it to the governing elites, and the Brexit vote provided an excellent opportunity to do so.

Syrian women and children refugees at Budapest railway station. (Photo from Wikipedia)

In addition, there has even been academic research demonstrating the obvious, that racial attitudes are influenced by economic hardship, which provides fertile ground for the growth of extremist parties.

The same can be said for the United States, of course, as Donald Trump’s victory was based in large part on his appeal to voters who feel left behind by globalization, and left out by a political system that has favored those at the top. Racist and anti-immigrant sentiment is clearly present, but Trump’s decisive margin came from sectors of the population such as union workers in the Rust Belt, not pro-Confederates in the South.

As for Germany, the question is where the impetus comes for the rise of anti-system political forces, beyond the standard explanation involving immigration and right-wing social issues. With the country considered to be doing so well economically, the narrative doesn’t seem to fit as well.

A clear-eyed analysis, however, makes it clear that the conditions for a revolt of the voters based on economic hardship are present there as well. First there is the eastern part of the country, the former “German Democratic Republic” which belonged to the Communist bloc dominated by the Soviet Union. Despite the claims of great success in the years following German reunification, the reality is that much of the industry in the East was cannibalized by western companies, and a large segment of the population lives on welfare.

The economy of the former Communist country was obviously inefficient and required modernization, but the approach taken by the West was to shut down and sell off whatever was available, leaving the East in a perpetual state of inferiority.

Annual reports published by the German government show that significant disparities persist between the two areas of the country, with higher unemployment, lower wages and less investment in the East. The ownership and control of Germany’s considerable industrial capacity also remains principally in the West.

Exploiting the Unemployed

A second major factor is the system of labor market and welfare reforms introduced in Germany in the 2000s. The most famous is the “Hartz IV” law, which provides unemployment subsidies of just 280 euros ($330) a month, and forces people to accept whatever jobs they are offered, even at only 1-2 euros an hour.

German companies have done very well with this system, that allows them to exploit extremely cheap and flexible labor. Critics points to this as one – although certainly not the only – factor contributing to the great success of German industry in Europe.

For the six million citizens trapped in the system though, things aren’t so great. There are entire areas called “Hartz IV neighborhoods,” indicating widespread socio-economic difficulties among the local population. If we add the high level of “working poor,” a category that has reached 9 percent of the population in Germany, it becomes clear where the populist movements can look for votes on economic issues.

What scares the elites in Europe is that political parties that criticize European Union economic policies will eventually break through, thanks to support among these segments of the population. The E.U. is in fact rightly associated with the monetarist and neo-liberal policies that have contributed to producing greater inequality and thus causing hardship for many across Europe.

In the end, Holland, France and Germany will succeed in keeping the populist parties out of government this year. (Italy will vote in 2018, and the 5-Star Movement is still challenging for the top spot.) The risk is that the European elites may take this as an opportunity to continue with their neo-liberal policies of recent years, which will ultimately only make the situation worse.

Andrew Spannaus is a journalist and strategic analyst based in Milan, Italy. He is the founder of Transatlantico.info, that provides news and analysis to Italian institutions and businesses. He has published the books “Perché vince Trump” (Why Trump is Winning – June 2016) and “La rivolta degli elettori” (The Revolt of the Voters – July 2017).

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29 comments for “How Merkel’s Win May Hide Rising Discontent

  1. mike k
    September 21, 2017 at 5:10 pm

    The real problems of a world headed towards human extinction have little to do with the endless games of left and right. Out of control industrial pollution, exploding populations, oligarchic greed, ignorance, delusion, technowar, and moral decline will finish us off. Who “wins” the left/right scuffles is irrelevant – there are no solutions there.

    • SteveK9
      September 22, 2017 at 9:14 am

      Human extinction? We very well could end civilization with nuclear weapons. But, none of the reasons you list are going to cause human extinction: Industrial pollution is getting better not worse (and if we would simply turn to nuclear power, we could remove a large portion of it, due to coal burning), population growth rates are falling rapidly (this is intimately linked to industrial development) … the other issues are certainly depressing, but hardly a reason to expect ‘extinction’.

    • R Davis
      September 24, 2017 at 1:35 am

      What exploding populations are you talking about ?
      Below replacement fertility is present in every nation & region of the world.
      Are we scheduled to get a shipment of refugees from outer space ?
      Toys R Us is bankrupt – how is this possible – every day less & less baby’s are born & we are expecting a population explosion ?

      • DemirS
        September 25, 2017 at 8:17 am

        Careful please: Exploiting not Exploding … :-) thanks.

  2. David Smith
    September 21, 2017 at 5:33 pm

    The EU supporting European Propertied Class still have plenty of cards to play. If it gets really bad they can play the “Syriza Card” and we all know how that turned out.

  3. September 21, 2017 at 6:42 pm

    …a welcome change of subject(we were re-hashing a lot of left-overs). I thought the Hartz IV law factor was particularly interesting.

  4. MaDarby
    September 21, 2017 at 7:04 pm

    This story is neglected everywhere, some journalist or historian should put all this together.

    The German takeover of the EU through its early economic maneuvering to implement a beggar thy neighbor economic policy undercutting the rest of Europe and creating a huge trade surplus for Germany which it used as a hammer over the entire continent. Provision in the Lisbon were passed and gave advantage to Germany through regulations on the ECB and other issues. but most of all was the Growth and Stability Act which gave Germany Imperial power over the European economy. Witness what Merkel and Schnobel did to Greece. Additionally, look at the legion of German sycophants at the EU, Junker (hand picked) Tusk (another hand pick) and Jeroen Dijsselbloem every key position controlled by Germany and Mario Draghi as her best pal.

    Germany has done what it could not do with two wars – it has a European empire which it runs for the benefit of the dynastic families of the German oligarchy.

    • September 21, 2017 at 10:14 pm

      MaDarby,..Although I agree Germany has prospered relative to the rest of the EU it has been largely because of the dominant banking interests that are the primary beneficiaries of the adoption of the euro by other EU members. German industry(and workers) haven’t really shared in this prosperity due to losing Southern European markets that are still languishing. In my estimation the choke hold of the troika on countries on the southern tier of Europe(and Ireland) has been unconscionable, particularly when one considers the migrant crisis. Merkel is a prisoner of the policies of the CDU which largely represents German banking interests that along with the other banks of No. Europe made bad loans to corrupt governments and, in the case of Greece, tried to collect from reformers. If you or I made such bad loans we would have to eat them. Little has changed since I posted this in 2015 during the Greek crisis.
      https://crivellistreetchronicle.blogspot.com/2015/05/beyond-greece-payback-time.html

      • SteveK9
        September 22, 2017 at 9:19 am

        So much has been written about this. You are right about German workers. Germany is the most efficient industrial country in the EU, but instead of its workers reaping the benefits, the ‘Hartz Reforms’ suppressed their wages to allow for a large trade surplus. You can’t have a huge trade imbalance in a currency union without a mess ensuing. The German banks recycled the excess money by loaning it to Greece, etc. as you note.

  5. Zachary Smith
    September 21, 2017 at 8:52 pm

    German companies have done very well with this system, that allows them to exploit extremely cheap and flexible labor. Critics points to this as one – although certainly not the only – factor contributing to the great success of German industry in Europe.

    Another benefit of that “extremely cheap and flexible labor” is to put pressure on the regular German work force.

    Hardly any wonder that the opposition grows more “extreme”.

  6. Markus
    September 22, 2017 at 3:48 am

    I don’t know where you got your figures from concerning Hartz 4. I’m from Germany and I get 409 € each month H4 + money for habitation. It’s true that there are jobs for 1 €/hour, but as far as I know, there are more volunteers than jobs available. That is because you get the money in ADDITION to H4.

    Let’s assume you work 160 hours a month for 1 €. Then you end up with 409 € + 120 € = 529 €. That’s a lot more than having 409 € while staying at home all the time (you will have to give 40 € from the 160 € to the so called Jobcenter). So it’s not that bad, at least in some cases. Given the obscene money which bankers make even after crashing it’s disgusting anyway. But the governement in Germany is totally corrupted.

    I would be interested what financial help workless people in other countries (partticularly EU) get?

    • Seamus Padraig
      September 22, 2017 at 10:31 am

      Still, it’s a effectively a taxpayer subsidy to German business. Rather than forcing the businesses to pay a decent minimum wage, they force the taxpayer to supplement the H4 recipient’s income.

  7. Mark Thomason
    September 22, 2017 at 7:19 am

    Merkel can only put off the inevitable. The excesses of capitalism run rampant are catching up to the sold-out political leaders of all Western countries.

  8. Michael Kenny
    September 22, 2017 at 11:36 am

    The monetarist and neo-liberal policies Mr Spannaus refers to were largely imposed on an unwilling EU by US bullying and the use of Britain as an American trojan horse within the Union. (I speak from first-hand experience; I’m old enough to have actually lived through all of this!) As originally conceived, what we now call the EU was intended to be a large single market protected by a high tariff wall with considerable equalisation of regional inequalities through investment. A lot of that was abandoned just to keep the British on board. With the US superpower in terminal decline and Britain (perhaps) leaving the EU and, whether it does or doesn’t leave, is likely to lose Scotland and Northern Ireland fairly soon, EU leaders will be able to return to source and abandon the monetarist and neo-liberal policies referred to. The push of the far right, which has now probably passed the high-water mark but will most likely be followed by a push of the far left, will provide the political justification for that.

    • Brad Owen
      September 22, 2017 at 4:13 pm

      Monetarist and (neo)liberal policies are hoary old European inventions (inherited from those Masters of Venice) to enable Oligarchs to rule societies, instead of having People’s Republics. By the late 17th century the European republican philosophers (a great many of them French) thought it a hopeless cause to re-establish republicanism in the Mother Countries, so they focused upon the distant English colonies in North America (after the Seven Years War eliminated France from North America) to establish republicanism there, to re-import it to the Mother Countries at a later time (the Puritans were onboard with this, as they despised Crowns and Popeism, the Cavalier South, not so much). Monetarism was foisted on US (for at least the 3rd time, if not more) after Nixon ruined FDR’s Bretton Woods arrangements, and Reagan welcomed Mr. Monetarist, “Free to Choose (oligarchy)”, the Economic Royalist (as FDR would say) Milton Friedman with open arms. How old is the Bank of England? 1690s I believe (established by Venetian immigrants who were called “The New Venetians” in the 18th century. We were finally saddled with OUR private Central Bank in 1913, thanks to Anglophile Prez. Wilson (effing Tory). For a history of the “American System of Political Economy”, go to EIR search box and type it in. Also type in “Synarchy against America”, for those who care to know the truth…and “Inter-Alpha Group”, and “Permindex”, and “Return of the Monarchs” for good measure. Might try “The New Venetians” too.

      • September 22, 2017 at 4:45 pm

        Aye Brad,…our president is no more than an American doge, readily disposable if he identifies too closely with popular interests.

    • Seamus Padraig
      September 23, 2017 at 5:22 am

      So Brexit should allow the EU to go back to being what it was meant to be?

  9. Vera Gottlieb
    September 22, 2017 at 12:09 pm

    Is populism turning into the antidote to globalization???

    • September 22, 2017 at 4:07 pm

      Populism is a political philosophy supporting the rights and power of the people in their struggle against the privileged elite. A populist listens to what the constituents want, and then works to achieve that. It is a good thing, nothing negative about that. Since globalization benefits the elite, and does nothing for the people, Populism is most definitely what is driving the resistance.

  10. Ian
    September 22, 2017 at 7:55 pm

    The cause of the unrest is very simple and clearly documented in many few books (e.g. ‘Beyond Banksters’ by Joyce Netson and ‘Secrets of the Federal Reserve’ by Eustace Mullins (http://whale.to/b/mullins5.html) ). Our elite – Rothschild and company – are economic predators that blatantly abuse their power and cheat countries out of trillions of dollars. They are behind most, if not all, wars and strife. The entire worlds population suffers the wars, strife and hardship that Rothschild and company have been imposing on us for at least a century. What makes all of their criminal activity so unforgivable and heinous is that they prey on all citizens who expect their governments to protect them and yet find their governments have become corrupted by these criminals. The US today is a perfect example.

    There is a commonality between the Bolshevik revolution, WWII and the US government today and this is readily exposed by simply scratching at the surface.

    My opinion is the only solution is the equivalent of a world wide French revolution to purge us of these parasites and criminals. They are a virulent cancer in our society and their only contribution is one of continuing hardship and crimes against humanity.

  11. R Davis
    September 24, 2017 at 1:46 am

    Mad Old Mutti Merkel needs to win this election – by hook or by crook – & personally I hope she wins – this game being played on the EU by the banking & other vested interest groups – is a desperate attempt to survive – the banks are broke & so is everyone else =The Filthy Rich & Nobel of the EU – mainstream media has lost market share – who wants to go back to reading the papers & depending on the Idiot Box & Radio for news – not since we have multiply avenues of news to choose from.
    Alas it is End Time – out with yesterday & in with tomorrow.
    Merkel need to see this losing battle through so that it has her name on it – eternally.

    • September 24, 2017 at 2:21 pm

      R Davis
      Your first line made me vomit, but you redeem yourself in the end … sort of.

    • R Davis
      September 25, 2017 at 12:23 am

      hooray !
      Hooray !
      Good Old Mutti Merkel has won
      Again.
      He victory speech went something like this – “Bla, bla, bal bla, bla, – bla, bla, bla, …….. no government can be created without us.”
      It was a forgone conclusion that the old bag would win again – the system is set up accordingly.
      And that’s OK ………………………… & then they act surprised
      Go figure why they are surprised ?

  12. Herman
    September 24, 2017 at 9:20 am

    What is most troublesome about Merkel is her lock step support of our policies regarding Russia and the Middle East despite the negative impact on her country particularly regarding immigration and trade. The evidence of the extent of her obedience is the failure to point the finger at our policies and actions which created the flow of immigrants from the Middle East. That she was willing to take the lead in taking in immigrants and be silent as to why there are coming demonstrates just how obedient she is. Similarly, her policies, at least publicly pointing Russia as the aggressor in Ukraine is further evidence, despite what would appear to be a position not in the interests of the German people. It is puzzling but we must assume that the benefits to her and possibly Germany are greater than can be perceived from afar.

    • Poor sod
      September 26, 2017 at 3:02 am

      The US have nuclear weapons stationed in Germany and the biggest US airbase in Europe. There is pretty little Merkel can do against express US interests. We are part of the Empire, and so, we are doomed to go on with brainless Russia bashing until the end (nuclear destruction of Germany as part of a NATO – Russian nuclear exchange, or collapse of the US Empire due to inner conflicts).

  13. Vera Gottlieb
    September 26, 2017 at 11:45 am

    Now that the SPD, the FDP and the AfD, plus two other parties, will be in the Bundestag – things should turn very interesting. Now there is a real opposition.

  14. Kelli
    September 27, 2017 at 9:18 am

    And as suffering continues to rise under NEOliberal policies, just as in the US, the elites will end the population uprising and introduce WAR instead.

  15. September 29, 2017 at 3:45 am

    Interesting news, thx!

Comments are closed.