Taking stock of Germany

14th December 2005, Comments 0 comments

The start of the new year is a good time to take stock of where Germany is going and what challenges face the new government. David Gordon Smith asks if Germany is really in such a mess as the media might suggest, and if it's still a good place to live.

Germany is a world leader in environmental protection

Neither expats already living in Germany nor those someone thinking of moving here can have escaped the media reports of doom and gloom which have been plaguing the country for most of 2005.

The charge sheet in the case against Germany is a long one. Record unemployment of the order not seen since the 1930s. Stifling bureaucracy. The urgent need for reform, but no political will to carry it out. A stagnated economy. A huge budget deficit.

With such pessimism abounding, expats could be excused for reconsidering their decision to live in Germany. But perhaps things are not as bleak as they seem, and there are still many reasons why Germany is a good place to live. In this overview of the state of the nation, I'll be looking at where Germany is, where it's heading, and why it's still a great place to live.

Political stalemate

The world's attention was focussed on Germany in September 2005 for the near-fiasco which was the German national election. Called after Gerhard Schroeder's SPD party was defeated in a key state election, it was widely expected to be a clear victory for the CDU/CSU candidate, Angela Merkel. Instead, it turned out to be a very close result, with only three seats separating the two main parties and no clear victor.

*quote1*German entered a period of political stalemate. Various coalition options were discussed and rejected as the minority Greens and FDP parties refused to join with anyone apart from their usual coalition partners.

Eventually Schroeder gave up his insistence on being chancellor, clearing the way for a 'grand coalition' of the CDU/CSU and the SPD under Angela Merkel, who made history by being elected Germany's first female leader on 22 November 2005.

Tough challenges

At the time of writing it is not clear if the grand coalition will be able to form a stable government in the long term, or what sort of chancellor Merkel will turn out to be. But one thing is certain: the new government will have some pretty tough challenges as far as the economy is concerned.

The Holocaust memorial in Berlin is finally open after 17 years of controversy

Germany has a huge budget deficit, consumer demand is low, and economic growth for 2006 is forecast to be only 1.5 percent. Unemployment at the time of writing is an unenviable 4.5 million (almost 11 percent of the population), only slightly down from its record high of 5 million earlier in 2005 - the highest rate since the early 1930s.

But expats worried about their employment prospects should bear in mind that, although Germany does indeed have some pretty nasty unemployment blackspots (notably in the former east), they are unlikely to be the places that expats will be planning to live. Similarly, the industry sectors that the average expat is likely to work in are not those worse affected.

Not all gloom

And there are still some grounds for optimism. Germany has recently become the world's biggest exporter. Surveys show business confidence is beginning to improve. And unemployment is starting to come down as labour market reforms introduced by outgoing Chancellor Gerhard Schroeder begin to take effect.

Finally, the 2006 football World Cup, which is to be held in Germany, couldn't come at a better time. Despite a media focus on predicted problems with prostitution and hooliganism, the World Cup is almost certain to give a much-needed boost to the country's economy.

Glad to be green

*quote2*While Germany's recent economic record is nothing to write home about, it does have some things of which it can justifiably be proud. One of these is environmental protection, of which Germany is undoubtedly a world leader, partly as a result of the Greens' seven-year stint in government.

It Germany is committed to phasing out nuclear power by 2020 (although whether this target will remain the same with the CDU in power remains to be seen) and renewable sources of energy currently provide around ten percent of Germany's electricity. Its solar power companies are performing well on the stock market, and it is beginning to export wind power technology to places such as China.

No more shame

Perhaps Schroeder's most important legacy will be a resurgence in German national pride. For the first time since the Second World War, Germany under Schroeder was run by a generation of politicians too young to remember the war. Germans began to feel they no longer needed to be ashamed of their nationality - although this upsurge in national confidence has not been without its critics.

Germany has also shown itself to be more self-assured on the international stage. One of Schroeder's main foreign policy initiatives was to lobby for a permanent seat for Germany on the UN Security Council. German troops have played significant roles in operations in both Kosovo and Afghanistan, even if Germany famously opposed the 2003 Iraq war, causing a split with the US.

Always there

However the legacy of Germany's horrific Nazi past continues to haunt its cultural life and politics, cropping up in issues such as reparations for Nazi slave labourers or compensation for Jewish property seized during the Nazi era.

The sun hasn't set on Germany quite yet

For obvious reasons, Germany makes great efforts to be seen to be remembering its inglorious past. Large-scale celebrations in summer 2005 marked the 60th anniversary of Germany's surrender on 8 May 1945, and a series of ceremonies commemorated the liberation of the Nazi death and concentration camps. Similarly, the Holocaust Memorial in Berlin has finally been unveiled after 17 years of debate and controversy.

Friends in the east

The war also continues to colour Germany's relationship with its eastern neighbours such as Poland and the Czech Republic, with issues such as a planned museum dedicated to those Germans expelled from eastern Europe after 1945 causing strife.

But despite the occasional spat, Germany on the whole seems to be getting on well with the new EU members, who joined the union in May 2004. Popular fears of a wave of illegal immigration and criminality from the east seem to have been unfounded, and there are signs that German attitudes to their eastern neighbours may be improving as cross-border contacts increase.

Clamping down

Islamist terrorism has been a big issue in Germany since the 11 September 2001 attacks, especially as it was revealed that the 9-11 bombers had studied in Hamburg, and there has been a notable tightening of domestic security. Radical Muslim clerics such as Metin Kaplan, the self-styled 'Caliph of Cologne' have been deported, and a series of high profile trials of Islamist terrorists has fuelled an ongoing debate about immigration and tolerance.

These developments are unlikely to help improve the lot of Germany's Turkish community, who make up a sizeable portion of Germany's seven-million-plus population of 'foreigners' (one quarter of whom were born in Germany) and who suffer disproportionately from unemployment and other social problems. Improving the situation of Germany's immigrant population will be a major task for the new government.

Still one of the best

But despite the prevailing mood of pessimism, Germany is by no means the basket case that it is sometimes presented as being. Many countries, its eastern neighbours in particular, would love to have Germany's problems. It is still a safe, prosperous country with a highly-educated population, good infrastructure, rock-solid democratic institutions, low levels of corruption, and a rich cultural life - all things which make living here enjoyable but make poor newspaper headlines.

So as an expat you are unlikely to regret choosing to live in Germany. It may get a bad press, but it's still one of the best countries in the world to live in.

A version of this article appears in the new edition of Expatica's Expat Survival Guide (in press).

15 December 2005

Copyright Expatica 2005

Subject: German economy, German politics, living in Germany, expats in Germany

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