Merkel Promises Growth in Germany

By Richard Bernstein

Chancellor Angela Merkel vowed Wednesday to revive her country’s economy and make sure that Germany was still “one of the top three” in Europe in 10 years.

In her first major policy speech as chancellor, she also signaled that her government would not submit to what she called “blackmail” in the crisis caused by the kidnapping this week of a German archaeologist in Iraq. Merkel’s speech in Parliament, mainly a broad outline of the program she will follow as Germany’s first female chancellor, seemed clearly aimed at establishing a position of firmness in dealing with the kidnapping of the archaeologist, Susanne Osthoff, and her Iraqi driver. “One thing is clear: this government, this Parliament, will not let themselves be blackmailed,” Merkel said before giving an almost philosophical explanation of why, as she put it, terrorism is one of the world’s greatest challenges.

“It is directed at everything that is important to us, at the core of our civilization,” she said. “It is directed against our entire system of values, against freedom, tolerance and the respect of human dignity, democracy and the rule of law.” In a message delivered to a German television station Tuesday, the apparent kidnappers warned that Osthoff would be killed if Germany did not end its cooperation with the Iraqi government.

Merkel’s speech seemed more aimed at setting a tone and direction for her week-old government a coalition with the rival Social Democrats than elaborating a set of policies. The chancellor, speaking conversationally and with a minimum of rhetorical flourishes, summarized the main lines of the program that the coalition has agreed to. But she also added a few rare personal notes and gave something of a pep talk to a country that, by all accounts, has been in a gloomy mood over its problems. These include most conspicuously an intractable 11 percent unemployment rate, high budget deficits, and near-zero growth.

“The biggest surprise of my life was freedom,” she said, alluding to her background in East Germany, where she worked as a physicist in the Academy of Sciences. “I expected The Wall,” she said, meaning the Berlin Wall, which was torn down in 1989. “I did not expect freedom. And once you’ve had such a wonderful surprise in your life, then you think anything is possible.”"Let us dare to have more freedom,” she said, alluding to her intention of relaxing restrictions on hiring and layoffs and, more generally, striving to give more scope for initiative.

“Our growth hasn’t picked up in years,” she said. “Our debt has risen to alarming levels.”

“The new states stopped catching up years ago,” she said, referring to the states of the former East Germany, from which many people, facing poor prospects, have emigrated to the Western parts of the country.

But, aiming apparently at calming fears that she is hostile to Germany’s elaborate welfare system and would dismantle it, she also spoke about society’s responsibilities to take care of what she called “the weak,” even as she warned against people who cheat on the system. “We have to have a heart for achievement,” she said. “We can only give to the weak if we have the strong who can help them.”"We want to get the labor market in shape; we want to make our schools and universities world-class; we want to bring the deficit under control and repair our health, pension and nursing systems,” she said. But aside from elaborating on a few programs more affordable child care to make it easier for women to pursue careers was one; raising the retirement age from 65 to 67 was another she offered few new ideas on how to achieve those objectives.

After her speech, members of the opposition criticized the coalition plan as getting off on the wrong foot by raising sales taxes and some income taxes.

At the center of the coalition government’s program is a 3 percent rise in the value added tax, which some businesspeople think will discourage consumer spending, and a 3 percent tax surcharge on the very wealthy. Merkel’s conservatives apparently agreed to the surcharge in order to win agreement from the Social Democrats for other parts of the program.