New Chancellor, old ways

If Germany is to remain competitive and to create new jobs, it needs... Thatcherism with a human face

"THIS IS a historic moment" a stalwart German Christian Democrat whispered to me as Helmut Kohl mounted the stage at the party headquarters in Bonn. As if it needed saying! Given the Christian Democrats' bad defeat, we all guessed that, after 16 years in power - 16 years that changed the world - the giant of Oggersheim, the Chancellor of German unity and European unification, would be stepping down. When the cries of "Helmut! Helmut!" had finally abated, he gave a dignified short speech saying he would cease to be party leader as well as Chancellor.

For Germany's conservatives, this was like Mrs Thatcher's departure and last year's electoral disaster rolled into one. Like the British Conservatives, many Christian Democrats had felt the defeat coming. But the scale of it was still a shock - especially since the opinion polls had shown them catching up. As in Britain, people simply felt those in power had been there too long. They got bored with the same old faces. Boredom is an underrated factor in politics.

Kohl is the last great European statesman of the 20th century. As I watched him take his leave, I thought of a memorable conversation we had a few years ago. At one point he took my breath away. "Do you realise," he said, "that you are sitting opposite the direct successor to Adolf Hitler?" The point of this startling, even shocking, remark was that he - the first Chancellor of a united Germany since Hitler - was going to do everything quite differently. Whereas Hitler had tried to put a German roof over Europe, he was determined to put a European roof over Germany. This amazing sally encapsulated several ingredients of Kohl's greatness: his acute instinct for power, his historical vision and the bold simplicity of his strategic thinking. To that we must add tactical adroitness, party-political cunning and, not least, vast physical stamina.

Sunday's election was not only the end of this gargantuan phenomenon. It was also the end of the Bonn republic. Next year the government will move to Berlin. As Isherwood didn't write: "Goodbye to Bonn". Walking up the modest dual carriageway which is the spine of the dank Rhineland city, with cheerful crowds thronging the pavements, their attention soon turning back from the election to a rock band, beer, and the Formula One Championships just up the road, I felt a pang of regret. For the Bonn republic has been a good Germany, perhaps the best Germany we have ever had. And in this election it proved the maturity of its quiet, civil democracy. Not only did the German voters once again reject the extremes of left and right, despite 4 million unemployed. For the first time in the history of the Federal Republic, they also changed the government as the direct result of a general election. According to the winner, the Social Democrat Gerhard Schroder, this, rather than Kohl's departure, is the reason it may deserve the title "historic".

As I write, the triumphant Social Democrats and the environmentalist Greens announce that they will open the coalition talks that precede the formation of any German government. Assuming these are successful, the two parties together will have a comfortable majority. Let me make three guesses about this "Red-Green" coalition which, under Chancellor Schroder, and soon in magnificent new Berlin offices, would take Germany into the next century.

My first guess is an optimistic one. It has to do with so called "foreigners" living in Germany. The only disturbing element in this election campaign was the popular hostility to these "foreigners" that it revealed, especially in east Germany. To be sure of tumultuous applause, a politician had only to say something about foreigners "not abusing our hospitality" or "respecting our laws and ways". On the streets of Berlin the posters of a far-right nationalist party proclaim simply "Criminal Foreigners Out!"

This is a problem that Germany has made for itself. Whereas Britain has a very restrictive immigration policy but then is quite liberal in granting British citizenship, Germany has been extremely liberal in taking people in but very restrictive in granting them German citizenship. The result is that a staggering 7 million people live as "foreigners" in Germany.

Now the Greens are admirable on this. They say: if a Turkish worker has lived here for years carrying out all the duties of a citizen, then he should have all the rights of a citizen as well. So my hope is that Germany may finally get a more normal, liberal citizenship law, as in Britain and America, with the main criteria being place of birth or long-term residence, rather than ethnicity. And high time too.

My second guess is more pessimistic - for Germany, though perhaps not for its competitors. Helmut Kohl probably did larger things for his country than Margaret Thatcher did for hers. (To be fair, larger things needed doing. The United Kingdom did not need to be reunited; rather the reverse.) But Kohl failed to do precisely those big things that Thatcher did: reducing the power of the unions, privatisation, deregulation, lowering direct taxation, cutting public spending and so forth. Now Gerhard Schroder fought a campaign of Blair-like discipline and razzmatazz. But to be a Blair in office, you need first to have had your Thatcher.

If Germany is to remain competitive and to create new jobs, it needs some of that medicine: Thatcherism with a human face, so to speak. I think Schroder himself understands this. But in his own party the old left is much stronger than it is in New Labour. Not he but Oskar Lafontaine is party leader, which is rather as though Blair were Prime Minister but John Prescott were Labour leader. Schroder won older voters from the Christian Democrats by promising to restore their pensions. He also says that he will defend the welfare state and deliver "social justice". Meanwhile, the Greens have an agenda very far removed from neo-liberal economics. They want punitive taxes on petrol, for example. This does not add up to the political basis for reforms that German business leaders think are essential.

Finally, a guess about Europe and the implications for Britain. At the moment, it seems likely that Joschka Fischer, one of the most effective self-styled "realists" among the Greens, will become Germany's new foreign minister. This may be bad for concerted military action under Nato auspices in places such as Kosovo, since the Greens still have an influential pacifist wing. But it is unlikely to change the main lines of German policy in Europe.

Here, victory for the "German Blair" will give the British Government new hopes of building a Franco-German-British triangle instead of the exclusive Franco-German axis. Schroder himself has made a nod in this direction. I think there is some basis for these hopes, less because all three governments are now of the left, than because the successor generation in German politics is simply cooler and more hard-nosed about Europe than were post-war Euro-enthusiasts such as Helmut Kohl.

Schroder himself was initially sceptical about European monetary union. Like so much else about him, it is hard to know whether this was a matter of personal conviction or simply trimming to public opinion. Now, of course, he'll go through with EMU and try to make it work - as should we. And his inaugural speech may still contain the usual visionary Euro-rhetoric. But unlike Kohl, he won't in fact be pursuing a personal vision of ever closer political union. This, together with the themes of flexibility, subsidiarity and eastward enlargement of the EU, makes common ground for a Blairite Britain.

Yet Blair will have to work at it. There remains the hard fact that Germany and France are inside the inner core of monetary union, and we are not. There is a great battle ahead about Germany's outsize contribution to the EU budget. And as I write these lines, German television reports that Schroder will definitely make one foreign trip even before becoming Chancellor. It is - you guessed? - to Paris. Like a chip off the old block, a leaf off the old Kohl.