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. Last Updated: 07/27/2016

Even Germany Tightens Belt For Maastricht

If you want to know why German Chancellor Helmut Kohl reigns unchallenged as Europe's senior statesman, consider the masterful way in which he recently prepared his countrymen for some of the largest cuts ever made to Germany's generous welfare system. Germans had suspected an announcement of austerity measures ever since early January, when the government revealed to widespread amazement that Germany was having difficulty in meeting the low budget deficit criteria for joining a single European currency in 1999.


However, Kohl did not panic. First, he made sure that his government discussed the cuts in advance with employers and labor unions. The unions are unhappy with the proposals -- a savings package of about 50 billion marks ($30 billion), the most drastic since 1933 -- but they cannot complain that Kohl kept them in the dark about his intentions.


The chancellor's officials then planted a few selective leaks about the cuts in the media, ensuring that public opinion was not taken by surprise when the full package was finally announced at the end of April. Kohl must have been delighted with the tone of German newspaper commentaries, many of which acknowledged in a resigned sort of way that the cuts were an unfortunate but necessary sacrifice.


Lastly, Kohl took care not to unveil the cuts until after elections last March in three of Germany's 16 L?nder, or states. This eliminated the danger that the opposition Social Democrats and Greens could exploit heightened public interest in politics during an election period to whip up an angry and enduring resistance to the impending austerity plan.


How much more intelligently Kohl handled the whole matter in comparison with his friends in Paris, President Jacques Chirac and Prime Minister Alain Jupp?. When the French government was faced with the need late last year to introduce austerity measures and welfare reforms as a way of preparing France for European monetary union, there was practically no prior consultation with the relevant public organizations or society at large.


Within days the whole of Paris was paralyzed by a transport strike that broadened into France's worst social unrest since 1968. Jupp? later humbly admitted that the government had erred in not engaging in a dialogue with society over the proposed cuts. The French public perceived the government as high-handed and indifferent to social opinion in a way that could still negatively influence popular views on the merits of the single European currency. In Germany, on the other hand, Kohl is successfully leading from the front in easing public concern over giving up the Deutschmark for the Euro.


Of course, the road ahead for Kohl is not free of pitfalls. Germany's six leading economic institutes are predicting economic growth this year of a mere .75 percent, and the government's own senior economists -- the so-called "Five Wise Men" -- are forecasting only 0.5 percent.


Normally, such sickly levels of growth would result in a pump-priming government budget to boost jobs and consumption. But Kohl is heading in the opposite direction, cutting spending in order to meet the strict Maastricht Treaty criteria on budget deficits. Clearly, there is a risk that this will exacerbate rather than cure the problem of sluggish growth. But Kohl is confident he judged matter correctly. Looking at his performance as chancellor over almost 14 years, who is to say he is wrong?