christian charisius / reuters tough crowd Workers at a shipyard in Wismar, eastern Germany, listen to a Schröder stump speech

	GERMANY DECIDES 2005

Posted Sunday, September 11, 2005; 11.34BST
Indeed, German politics could be in the midst of a generational shift, with Merkel and her colleagues representing a new kind of German politician. The Greens and the spd still speak for those who led the liberalization of German society that began 40 years ago. "Whether in opposition or in government, we've achieved massive reform," says Renate Künast, the Green Minister for Agriculture and Consumer Protection. "We've opened up society in terms of the relationship between men and women and the equality of homosexual and lesbian couples." But Merkel's team is now the younger one. "This is a new, straightforward generation that doesn't try to paint a rosy picture but tries to solve problems," Wulff says. "We have to convince people that they will benefit more from economic growth if we introduce more personal freedom into our social market economy." John Kornblum, the former U.S. ambassador to Germany and now head of investment bank Lazard & Co. in Berlin, says the new cdu élite "are less sentimental, less emotional and less ideological ... not conservative in the American sense, but pragmatic."

A bitterly divided Germany is not preordained. Indeed, one of the oddest aspects of the campaign has been the anger that voters seem to feel at Schröder's economic reforms — given that Merkel vows to implement the same changes, but more so. "Everyone agrees on what the country needs; the only question is how to get it done," says Günter Verheugen, a former spd government official and now European Commissioner for Enterprise and Industry. Policies now being mooted by Merkel are not substantially different from those Schröder has tried. But Merkel will be more aggressive in her pursuit of some labor-market reforms, intensely opposed by trade unions and the spd, and potentially radical tax programs (see Looking for Germany's Mr. Fix-It). A grand coalition of cdu and spd, however, would make even marginal reforms hard to push through. Last week, Paul Kirchhof, Merkel's shadow finance minister, said he saw no point in joining a government with the spd because the party would make changes in the tax code nearly impossible.

But the next Chancellor might also get some running room. Germany is not an economic basket case. High-tech industries in east Berlin and Dresden are performing relatively well, and the eastern manufacturing sector registered 9.6% growth last year, compared with a national average of 5.1%. Blue-chip companies such as Deutsche Post World Net, BMW and SAP are recording strong earnings in the face of tough international competition. "The economy is not in bad shape," says Kornblum. "What's in bad shape is the society from which the economy springs." Germans, argues Kornblum, are still recovering from the shock of reunification and the end of communism. "They are befuddled and don't know where they are. The world has changed since 1989, and Germany has yet to find its place."

Merkel would argue that her party — which is led by a close-knit group of young, conservative professionals who share a pro-business worldview — are precisely the sort of people who recognize the need for change. But the economic reforms that Germany needs can only be implemented in conditions of a broad national consensus. Sixteen years ago this fall, Germany was witness to blissful scenes of unity between young and old, East and West, as the Wall came down. That mood, perhaps, cannot be captured again. The outpouring of emotion then was too specific to time and place. But whoever wins the election will pray that something at least passingly similar to the spirit of 1989 descends on Germany soon, lest the divisions still haunting the nation fester and corrupt. Germany is too big a place for that.

With reporting by William Boston/Berlin, Ursula Sautter/Saarbrücken and Regine Wosnitza/Templin

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