Merkel Is Sworn In, Must Address Economic Troubles

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

BERLIN – Angela Merkel was elected Germany’s first female chancellor yesterday, taking the reins of the uneasy alliance that must reinvigorate Europe’s largest economy. Chancellor Merkel, 51, also the nation’s youngest leader and the first from the former communist East, took office after the Bundestag voted 397 to 202 to elect her.


The first to congratulate her was her predecessor, Gerhard Schroeder, whom she defeated in elections two months ago. At that time he taunted her that she would never be chancellor but has since apologized. Yesterday he handed her the keys to the cuboid Chancellery in Berlin, and led her up to the seventh-floor office she will hope to occupy for at least four years.


He was given a military send-off over the weekend at which the band played, at his request, “I Did it My Way.”


The election of Mrs. Merkel, a former physicist, was overshadowed by doomsayers who predicted that her unwieldy grand coalition could not stay its four-year course.


The decision by 51 members of the Social Democrats not to support her yesterday was an indication of the difficulties she faces in holding together her coalition. Most Bundestag members wore black. It was meant as a mark of respect for a member of parliament who had died but its effect was to add to the sense that these are somber times for Germany.


The pastor’s daughter tried to laugh off the number of parliamentarians who voted against her in the secret ballot after the president of the Bundestag, Norbert Lammert, joked about how long they would be able to conceal their identities.


Mrs. Merkel slapped her hands on the table repeatedly and roared with laughter as if releasing some of the tension built up by weeks of protracted coalition talks.


Watched from the public gallery by her husband, Joachim Sauer, 56, a leading quantum chemist, and her parents, Mrs. Merkel appeared shy and embarrassed as Mr. Lammert declared her “Germany’s first female chancellor” and asked if she was ready to take up the office. She replied: “Mr. President, I accept the decision,” before being showered with bouquets from colleagues.


She was forced into a coalition, allying her conservative Christian Democratic Union, and its Bavarian sister party, the Christian Social Union, with the Social Democrats, after failing to secure an outright majority in September’s vote. But the alliance, which has a commanding 448 seats in the Bundestag, is described by some of its members as a “loveless marriage”.


The result has been that while Mrs. Merkel had promised ruthless reform – by German standards – the reality is that she has been forced to dilute many of her policies. Absent from the coalition deal are her plans to reduce prohibitively expensive non-wage labor costs and relax the job market’s hire-and-fire rules.


Her most radical policy to be accepted by the coalition is the 3% rise in VAT, which will largely go towards plugging a L24 billion deficit.


More than half her cabinet are Social Democrats, and the party has secured key ministries such as foreign affairs, finance, justice and health.


Mrs. Merkel, a pragmatic thinker but a weak orator, has inherited a country that has the highest unemployment rate and largest state deficit since World War II, and the lowest growth rate in Europe for a decade. Many of its institutions, the welfare system, health, and education, are in need of overhauls.


Yet Germans seem too fearful of change to embrace the necessary challenges.


Addressing the cabinet, the German president, Horst Kohler, told Mrs. Merkel’s government to “tap into” the spirit that helped Germany to emerge from war.


Mrs. Merkel, who has a portrait of Catherine the Great on her desk, shies away from comparisons with Margaret Thatcher. But she is said to be fond of quoting a line from Senator Clinton’s autobiography: “Women are like tea bags. You never know how strong they are until they are in hot water.”


It is a sentence on which she might be forced to dwell often during the coming months.


The Chancellor’s Plan


* Increase VAT from 16 to 19% from January 2007. Mrs. Merkel hopes for spending boom before then. Revenue required to plug about $43 billion budget deficit to bring it within E.U. borrowing limits.


* Investment program worth about $29 billion, financed partly from gold reserves.


* Increase pension age to 67 from 65.


* Increase tax from 42% to 45% for those earning more than $290,000.


* Scrap housebuilder subsidies and replace with tax breaks; end coal subsidies; more tax write-offs for smaller companies; individuals to get tax breaks for child care and home improvements.


* Extend probation period for employees to 24 months from six, making it easier for employers to hire and fire.


* Move foreign policy closer to America, away from close relationship with Russia’s president, Vladimir Putin.


* Reinforce traditional relationship with France. Mrs. Merkel’s first foreign visit will be to Paris today. Tomorrow she will visit Prime Minister Blair in London.


The New York Sun

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