The Price Of Power

Angela Merkel will be the first woman to lead Germany since Empress Theophanu in A.D. 991. Yet what's greeted her unwieldy coalition of Christian Democrats and Social Democrats, to be painstakingly hammered out over the coming weeks? Nothing but skepticism. QUEEN WITHOUT POWER trumpeted a typical headline last week in Stern. "Chancellor walled in by a dungeon," wrote Wirtschaftswoche, a leading business weekly. Its editor, Stefan Baron, dubs Merkel a likely Fruhstuckskanzler --a "breakfast chancellor" who shows up to host morning meetings but has little real say.

Such, pundits say, is the price of power. Those warnings go far beyond the compromises Merkel must make in negotiations with the SPD. Indeed, the new chancellor's real problem may be less her socialist rivals than more shadowy enemies within--CDU heavyweights whose full backing she has yet to win.

First for the formal opposition. It's easy to see how Merkel might seem hemmed in. The SPD, barely outnumbered in Parliament at 222 seats to the CDU's 226, agreed to join a coalition only if it shared power as equals. That cost became apparent last week: Merkel now oversees a cabinet in which SPD ministers outnumber her own, eight to six. More, she's had to give away the most powerful posts--including the Foreign Ministry, Finance, Labor and Health. Controlling the key social-welfare bureaucracies, the socialists will dictate the pace of economic reforms. "This is a Social Democratic government under a Chancellor Merkel," sneered Wolfgang Gerhard, leader of the opposition Free Democrats.

Details of the emerging coalition's platform similarly bear the stamp of the SPD. Merkel has promised not to touch the rights of unions to set wages, nor to meddle with lavish tax breaks for blue-collar shift workers. The Labor Ministry, which runs Germany's disastrously ineffective unemployment administration and spends half the federal budget, will be given to SPD chairman Franz Muntefering, a firebrand campaigner famous for his attacks on "locust" capitalists. If there's good news, says German Economics Institute chief Michael Huther, it's what Merkel's concessions did not include: hiring rules, budget cuts and tax reform.

The challenge to Merkel's leadership posed by her own allies is in some ways just as large. Of her six ministerial spots, she's had to relinquish two to the CDU's Bavarian sister party, the Christian Social Union--every bit as wedded to the idea of a highly regulated "social" economy as the SPD. During the campaign, the party fought hard to water down Merkel's reform plans; it's inclined to bail out critical companies and defend farming subsidies. Other CDU leaders, such as Hesse governor Roland Koch and finance expert Friedrich Merz, might be more market-friendly. But they're bitter personal rivals, all too ready to take Merkel down should her coalition begin to wobble. Ultimately, says one top CDU official on background, Merkel's real fear seems to be who's lurking behind her back. Senior men who've spent their lives climbing the party ladder--only to be outmaneuvered by Merkel--make little secret of their disdain and would jump at the chance to replace her. "If for some reason talks fail, she'll be out in a day," another insider warns.

Striving to be upbeat, Merkel calls her nascent government a "coalition of new possibilities." And indeed, business leaders and economists have taken heart in the SPD's nominations--mostly proven, middle-of-the-road pragmatists. They especially welcomed Peer Steinbruck, 58, as the new Finance minister--a former governor and state Finance minister who comes with deficit-cutting credentials. With the CDU's Koch, he coauthored a bipartisan plan to cut subsidies and reduce tax breaks to help balance Germany's budget--an encouraging inkling of what's possible when Germany's parties agree.

The new chancellor herself may be the best guarantee against gridlock. A grand coalition is by nature a complex power game, and Merkel is an East German woman who rose to the top of the country's mostly western male hierarchy by working the country's always fractious party system to her advantage. Merkel may campaign poorly and lack public charisma. But in the back rooms of the Reichstag, people who know her say, the coolly calculating Merkel is very much in her element. "Whoever underestimates this woman has already lost," says Horst Seehofer, who found himself out of a job after challenging Merkel last year. The chancellor may seem walled-in now, but that's never kept her from getting her way.