Coalition Options

A transcript of the FT’s interview with Guido Westerwelle, chairman of Germany’s Free Democratic party, conducted in Berlin on December 7 by Bertrand Benoit.

Financial Times: What will happen next week when parliament votes on the postal minimum wage?

Guido Westerwelle: The coalition will get a majority. The Greens and the Left Party will adopt it. The FDP will be the only party to reject it.

FT: Yet the CDU MPs who want to oppose the measure are growing louder.

Westerwelle: This is just a fig leave. It is rhetorical courage at best. These people should have fought at the CDU party conference in Hanover (last Monday). But they stayed like rabbits in their holes.

FT: So it won’t come to a split in the CDU on this minimum wage issue?

Westerwelle: We will fight against it, including in the Bundesrat (the upper house of parliament where regional governments are represented), but it will not change the majority. It will go through, and it will expand from one sector to another. It’s just a matter of time. When the innocence is gone it is gone.

We regret that very much because it’s a mistake. Among the mistakes the government has made, this one will have the most serious consequences. From now on, the level of minimum wages will infect every electoral campaign, every political discussion. One economic sector after the other will be dragged into election campaigns. The CDU thought it could keep minimum wages out of next month’s election campaigns. In reality, the SPD is leading it by the nose while the Left Party is leading both Greens and SPD by the nose.

The biggest danger, however, is that this measure will destroy jobs. For the first time in Germany the state is setting wages. Wage-setting by the state – that’s a historical rupture in Germany.”

FT: Many look to the UK as evidence that you can have a minimum wage and low unemployment.

Westerwelle: First you must consider the level of the minimum wage. There is no minimum wage in the entire world that is as high as €9.80. Nowhere. Secondly, those who mention the US and the UK must ask themselves whether they would like to have the British tax system or its labour legislation.

The combination of German welfare state, German benefit levels and German labour law with a minimum wage of €9.80 is poison for the labour market.

FT: Still, many economists recognise that Germany has a consumption problem and stagnating incomes. Isn’t it right to try and increase wages?

Westerwelle: What’s correct is that the recovery is passing the people by. That’s right. But it’s no wonder when taxes and contributions are rising all the time. An average family of four has about €1,600 less in disposable income this year than last. I can think of a lot of things the government is doing right, in the foreign policy field for instance, but if we are talking about core issue of economic policy, then I’m pitiless because they’re doing it wrong.

Don’t you find it fascinating that the entire community of economists should now live in the fear of what the government will do next? The best they can hope for is two years of immobility.

FT: But can you really reject minimum wages when there is such overwhelming popular support for them?

Westerwelle: Now this is a curious understanding of politics. In politics, the first question should always be: ‘is this good or bad for Germany?’ Then you should ask yourself: ‘how do I muster the necessary majority for the right decision?’ If you don’t fight for the right thing you shouldn’t be surprised by opinion polls. When everyone, from the chancellor to the SPD, the Left Party and the Greens says how good minimum wages are, then the polls shouldn’t come as a surprise.

This is a question of leadership. If a Social Democratic chancellor (Gerhard Schröder, Angela Merkel’s predecessor, who opposed minimum wages) was able to prevent the introduction of minimum wages in his time, then a Christian Democratic chancellor should have been in a position to do the same. Schröder showed you could say no, even to the trade unions, whose support was far more crucial to the SPD than it is to the CDU. There is no opinion leader left in the CDU, no one, who’s fighting for market-oriented reforms, for equality of chances, against a dominant state in the economy. How can they pretend the people don’t follow them if they don’t fight?

Politicians who surf on the wave of public opinion may have good careers ahead of them, but they’re leading the democratic system to the grave. That what makes the difference between big and small leaders in European history – their capacity to lead.

Konrad Adenauer’s alliance with the west, Willy Brandt’s Ostpolitik, Helmut Kohl’s push for reunification – these were all highly controversial. But they took risks and won the people over. The most important thing in politics is courage and the readiness to lose as long as you’re fighting for the right thing.

I’m quite relaxed saying this because I could have been sitting on the government’s bench if I’d wanted to. I could have said yes to Schröder on election night in 2005. But I knew SPD and Greens would not implement the reforms I thought were necessary.

I’m not naïve or romantic. I know we must all make compromises. But in the end you must be clear about what you’re fighting for. The CDU had a platform once and now it has a different one. Yet the world has not changed. Globalisation is not retreating, Russia and China are not becoming less of a challenge. So which platform is wrong and which is right? Do we need more freedom or more state? You can’t have both. I see only opportunism here.

FT: If political parties can shape public opinion, who bears responsibility for the current leftwards shift in the political Zeitgeist?

Westerwelle: From the day the CDU decided to give up on Agenda 2010 at its 2006 party conference it was clear the SPD would not let the CDU overtake on the left. Anyone with the most rudimentary understanding of politics could have seen this coming. The CDU, and the CDU alone, bears entire responsibility for this disaster.

FT: It seems the CDU draw the conclusion from its poor electoral performance of 2005 that reforms just did not sell.

Westerwelle: Then Ms Merkel is drawing the wrong conclusions. The CDU did not score such a catastrophic result because it stood for a market economy, it failed because it ran such a chaotic campaign and made mistakes.

FT: Has the shift in the CDU’s policy priorities changed your choice of preferred coalition partner?

Westerwelle: It’s always a question of alternatives. The SPD is vacating the centre much faster than the CDU. The SPD and the Greens are heading left and the CDU is walking in their steps. But Ms Merkel’s centre is too left for me and it’s not the centre of Germany.

FT: Is the FDP benefiting from this shift?

Westerwelle: We’re being credited with 9-11 per cent of votes. These are top ratings for us. The supporters of the social market economy, a large segment of whom used to be at the CDU, are increasingly moving to us. We are the only party to have recorded an increase in membership since the beginning of the decade. All other parties, but also churches and trade unions, are losing members.

FT: So do you hope to play the role of refuge for disappointed CDU voters that the Left Party is playing for the SPD?

Westerwelle: That’s what I hope, yes. The party landscape is transforming right now. And it’s changing ever faster. It’s too early to say where this will lead but we see this as an opportunity. When I took over as chairman we had ratings of 5 per cent. If we can maintain our current level of support and build on it, that would be remarkable.