Goodbye Helmut, Hello Wolfgang

Article excerpt

Chancellor Kohl is in trouble and may not last the year. If he goes, so will an early start for the single currency.

Speaking to the ranks of a Frankfurt banking congress at the end of last year, Chancellor Helmut Kohl spelled out an unshakeable fact of late 1990s Europe: his political destiny is inextricably linked to that of European Monetary Union. The force that binds the two is becoming ever stronger, though not in the way Kohl hoped. Germany's problems have dramatically increased the likelihood that the single currency will be postponed beyond 1999 and Kohl will step down this year after 14 years as chancellor.

Although hidden from view by European politicians' constant declarations of political support for the project, doubts about EMU continue to intensify. Germany's economic weakness, a Franco-German rift over the design of the planned European Central Bank, the German electorate's long-standing scepticism about the project and a sudden decline in Kohl's authority within his Christian Democrat party have propelled these worries to the top of Europe's political agenda.

And so it is that a chancellor who was mostly underestimated during the first seven years of his chancellorship (up to the fall of the Berlin Wall in 1989) and grossly overestimated thereafter, finds himself beset by difficulties: Germany's own probable failure to meet the Maastricht criteria for monetary union, the Bonn government's mishandling of tax and pensions reform, and the complexities of German politics during the run-up to the October 1998 general elections.

In weighing up Kohl's position, it is also important to note that the chancellor has a ready-made successor in the shape of Wolfgang Schauble, his second-in-command in the Christian Democratic Union. Although publicly as steadfast about the single currency as his boss, Schauble has voiced more pragmatic thoughts in private and he just might welcome some respite from the constraints of the Maastricht fiscal criteria to allow Germany and its neighbours more leeway in focusing on Europe's main economic problem - low growth and even lower job creation. Although postponing EMU would risk disruption on the financial markets, this could be contained if the Bundesbank accompanied (some might say, celebrated) a modification of the EMU timetable with a cut in German interest rates, so stimulating the growth that is needed to erode Germany's record level of unemployment.

If there is a vacancy, Schauble is certainly the man for the job. With considerable reserves of intelligence, persistence and courage, he sits in a wheelchair after nearly being killed by a deranged gunman in 1990. He possesses an intellectual and emotional intensity lacking in Kohl, whose rambling mind seems incapable of grasping the problems that have descended on Germany since unification. Unlike Kohl, however, Schauble has no firm party base, and a switch in leadership would require careful management; it could even be the first move towards a Grand Coalition between the Christian Democrats and the Social Democrats, possibly involving early new elections.

Some doubt whether Schauble would cope with the sheer physical demands of the chancellorship, but provided he took on the job with Kohl's blessing, and so received wide party support, the transition could be relatively smooth. At home he would be a persuasive advocate of change and in a world that still fears the exercise of German might, Schauble would be a more ready symbol of his country's commitment to the politics of peace and co-operation than Kohl.

Two years ago Schauble told me that if EMU were delayed beyond 1999, Germany might turn to Britain for help in securing an alternative path to European integration. He drew a parallel with Britain's support for membership of Nato after the French parliament rejected the European Defence Community in 1954.

This does not, of course, tell us how likely it is that EMU will be postponed, though there is no doubt that pressure is mounting. …