Election in Germany lacks ‘big issue’

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There are serious doubts about the long-term health of the German economy. German Chancellor Angela Merkel's Greek fix-it plan is about to cost taxpayers another fortune. Soaring energy costs are hurting job creation. Germany's stance on Syria is, to all intents and purposes, no stance at all.

It would be logical to imagine that Ms. Merkel, who is fighting her third national campaign, would face a barrage of questions, and criticism, from voters and the opposition parties on these issues and others. But she's not. The hot election topics ahead of the Sept. 22 vote have been road tolls and vegetarian lunches.

Ms. Merkel's Bavarian political ally, Horst Seehofer, head of the Christian Social Union (CSU) Party, triggered a media frenzy when he vowed to reject a coalition with Ms. Merkel's Christian Democratic Union (CDU) unless she agreed to hit foreign drivers with road tolls (she did not take the demand, which would be illegal under European Union law, seriously).

Things heated up again when the Green party, which is polling in third spot, proposed a one-vegetarian-meal-a-week policy in workplace canteens across the country. The ruling centre-right coalition parties used the anti-sausage idea to highlight the ideological differences between them and the left. The veggie proposal amounted to "paternalism," said agriculture minister Ilse Aigner. The youth wing of the Free Democrats, the junior party in the CDU/CSU-led coalition, responded by holding an impromptu barbecue in front of Green party headquarters.

As far as political tension and razzle-dazzle goes, that was pretty much it. The German election has been an eye-glazer compared with the thrillers in Italy, whose fragile coalition government could be felled any day by the doubly convicted Silvio Berlusconi, and in Norway, where the conservatives, under "Iron Erna" Solberg, have just sent the Labour party packing.

"There is really no big issue in this election," said Georg Thilenius, the owner of Stuttgart investment firm Dr. Thilenius Management.

But with just over a week to go before the ballots are cast, there is a sense that Ms. Merkel's ultra-careful, stay-the-course campaign could backfire even though the German economy, which is growing again and creating jobs, is working in her favour. While there is little doubt that she will remain chancellor, her lead is narrowing and her FDP partners are sinking in the polls and face obliteration.

The upshot? She may be forced into a "grand coalition" not to her liking. Such a political concoction could upset her carefully crafted conservative agenda, one that she argues is restoring Germany's economic health and its role as Europe's industrial juggernaut.

"In this sense, it's a totally open race," said Siegmar Mosdorf, a partner at CNC Communications of Berlin and former senior politician in the Social Democratic Party (SPD), the main opposition party.

If the SPD and its candidate for chancellor, Peer Steinbrueck, continue to gain popularity, the most likely grand coalition would see it join Ms. Merkel's centre-right coalition.

The scenario has a precedent. From 2005 to 2009, the years that marked Ms. Merkel's first term, the government was formed by a coalition of precisely that make-up, with Mr. Steinbrueck taking the key finance minister's position. Ms. Merkel's second victory thrust the SPD into the political wilderness, already occupied by the Greens and the Left party, who are the remnants of East Germany's old communist party.

While Ms. Merkel's conservatives and the Mr. Steinbruck's SDP both preach the virtues of fiscal discipline, they differ on how such discipline should be achieved. Ms. Merkel is campaigning against tax increases and the launch of a wealth tax. To her, austerity for all is the key – that is, not living beyond your means. This discipline should apply to Germans and the euro zone's bailed out countries. "It's better that we're strict with each other and I think we're making progress," she said the other day on ARD TV.

The SPD thinks the best way to ensure fiscal sustainability is through tax increases, including the launch of a wealth tax. It also wants a financial transactions tax and is open to the idea of pooling euro zone sovereign debt. Ms. Merkel is horrified by the idea of a "debt union" because, she argues, it would remove fiscal discipline from the very countries that need it most while exposing Germany taxpayers to debts that feckless foreigners (read: the euro zone's Mediterranean frontier) could not pay off themselves.

In an pre-election analysis, CNC Communications said a coalition that combines Ms. Merkel's conservatives with the left-leaning SPD could be fractious, noting that "taxation would be an area of conflict since the ideas of the CDU and SPD differ greatly" and that the austerity programs so beloved by Ms. Merkel "would no longer be at the top of the agenda."

While the polls are changing by the hours, the general trend is down for Ms. Merkel, though not by a lot, and up for the SPD. A recent poll done for the Bild am Sonntag newspaper showed that 50 per cent of the people surveyed want Ms. Merkel as chancellor compared to 35 per cent who favour the Mr. Steinbruck, a dip for Ms. Merkel since a television debate against the SPD candidate earlier this month.

So far, the election has avoided the tough issues like who is going to pay what in the next instalment of the Greek bailout, Germany's role on the global political and security stage and whether a country with a declining population and investment rate can maintain its competitive edge. If any surprise comes, it will come on election day itself, when Ms. Merkel could find herself negotiating to bring her opponent into her government.