'Following a Risk-Avoidance Strategy'

When Angela Merkel was elected federal chancellor in the German Bundestag two years ago, the sigh of relief throughout Washington—especially in the Bush administration—was audible in Berlin. She seemed far more pro-American than her predecessor, Gerhard Schröder, and had spent the last decade helping transform her party, the Christian Democrats (CDU), into an Anglo-Saxon-style conservative party. She ran her election campaign on a free-market economic program, arguing for tax cuts and deregulation. But voters were less impressed, forcing Merkel to form a Grand Coalition with the center-left Social Democrats.

Now, after two years in power, what does the balance sheet show? Is she the reformer she claimed to be—or has she been stymied by this unwieldy right-left coalition? In fact, the case is neither. Rather than taking the bold steps she once promised, she has demonstrated that she is a risk-averse politician, driven by popular sentiment.

Domestically, the reforms put in place by the Schröder government put the economy on track, but Merkel's achievements are few: the government increased the value-added tax from 16 to 19 percent, raised the retirement age from 65 to 67 (a prudent step) and implemented a health-care reform that is incapable of fixing the challenge the system faces with an aging population and ever-fewer premium payers. But there are no further labor-market reforms in the pipeline. Why not? Merkel has finally come to understand the voters' verdict: forget radical economic reform.

In foreign policy, one of her finest achievements was the Brussels agreement on the EU reform treaty, which revived the constitutional process. Yet she faltered elsewhere. Though more outspoken about human-rights issues in Moscow and Beijing than her predecessor, she has simply adopted his popular position on Iraq. And while the CDU have warmed German-U.S. relations, the few real changes in German foreign policy run counter to U.S. policy. Germany is no longer supportive of Turkey's accession to the European Union, and has weakened its commitment in Afghanistan by not sending troops into the south. Indeed it is obvious that here, too, Merkel is following a risk-avoidance strategy that is popular but has strengthened the country's isolationist mood.

Merkel has been active on one front: the environment. She is pushing for a post-Kyoto international agreement, and her government promotes energy efficiency. For this, she deserves full support. Yet here, too, Merkel is following the previous government's policies. Conservatives seem to have forgotten they were dead-set against green politics during their seven years in the opposition. Now they have adopted the environment agenda of the previous SPD-Green coalition. And for a chancellor now intent on making her name on staunch support of environmentalism, her record raises tough questions. Among them: why is Germany the only European nation with no speed limit? The answer: it would force Merkel to risk going up against a powerful German auto industry.

Merkel's risk-averse strategy has prompted cynics to claim that after two years of her chancellorship, Germany is still governed by the old Red-Green coalition. Yet Merkel has made one decision: she wants to be re-elected. A legitimate goal, to be sure, but risk avoidance is not enough for the country. And in the end, it might not be enough to get re-elected.

Fischer was German foreign minister from 1998 to 2005. His memoir, “The Red-Green Years,” was published in October.

© 2007