[Marxism] Corporate Germany sanguine about election outcome

Marv Gandall marvgand2 at gmail.com
Sat Sep 21 06:52:31 MDT 2013

The German corporate sector would rather see Angela Merkel's CDU govern independently of the social democratic SPD following tomorrow's election, but German capitalists aren't unduly perturbed by the prospect of a grand coalition of the two parties, any more than American, British, and French business leaders respectively fear the Democrats, Labour, or the Socialists in government. However, because these left-centre parties are still to some degree based on the unions and allied organizations, they're perceived as more susceptible to pressure to hew to their electoral promises. Conservative parties like the CDU are largely insulated from such pressure, which is why they're typically regarded as more reliable by business. 

Despite the virtually indistinguishable records of CDU and SPD governments, then, German capitalists consider the presence of the social democrats as junior partner in a Merkel government may complicate the expected retreat from the electoral promises of both parties to impose a modest tax on financial transactions, to cap rent increases, and to focus on alternative energy sources. Also, despite widespread hopes outside Germany that a re-elected Merkel government will be free to pursue more accommodative policies to resolve the eurozone crisis, here too German corporate heads are confident it will be business as usual.

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German business seeks Angela Merkel’s return in election
By Alice Ross and Chris Bryant in Frankfurt
Financial Times
September 20 2013

Angela Merkel is the preferred candidate of German executives ahead of national elections on Sunday, but some think a grand coalition threatens to harm certain core business interests.

Recent polls suggest neither of Germany’s two main parties – the Christian Democratic Union and the Social Democratic party – will secure enough votes with their traditional coalition partners to cross the 46 per cent hurdle needed to form a government, making a grand coalition between the two the most likely outcome.

Many German executives believe Ms Merkel – whom they view as the most pro-business political candidate – is merely paying lip service to more leftwing concerns that have become key election battlegrounds. These include greater regulation for the financial sector and controlling rising prices for Germany’s army of renters, both issues on which the chancellor has adopted a tough stance, at times even borrowing ideas from the SDP.

But German executives fear that a grand coalition could see the chancellor forced to adhere more strictly to the letter of her election promises than they believe she otherwise would.

In particular, the current German government has been a public supporter of the European Commission’s controversial plans to introduce afinancial transaction tax, which has been widely criticised by banks and financial institutions, both in Germany and in wider Europe.

Yet privately, many bankers believe Ms Merkel’s support for such a tax will wane after the general election if the current coalition continues. If a grand coalition is formed, the opposite could be true.

“They have a completely different view of how markets should function,” says a board member of one of Germany’s banks, referring to Ms Merkel’s potential coalition partners on the left.

“The SPD is stronger on regulation and will pursue the FTT issue more. [I believe] the FTT has been pursued very lukewarmly by the current government.”

The chancellor also surprised the nation’s property investors when she announced in the summer that her party would also support further caps on rising rents – a cause of concern in a country where renting rather than buying a property is still the norm. The trend has created opportunities for institutional investors in recent years and could see the creation of Germany’s second largest property company this autumn, with Deutsche Wohnen and GSW Immobilien currently in talks to merge.

Yet Ms Merkel’s move was seen by property investors as largely a political attempt to commandeer another of the SPD’s core election issues. Property investors say they are planning to discuss with the new government what steps will be taken on rent controls in the coming weeks, with a grand coalition seen as more likely to take a firmer stance on stemming rent rises.

Others are concerned about Germany’s costly transition from nuclear and fossil fuels to renewable energy and the risk that subsidies further raise energy costs and thereby impair Germany’s competitiveness.

“We have invested a lot in recent years to reduce our energy requirements . . . [But] at the same time electricity costs have disproportionately increased and that is set to continue,” said Axel Heitmann, chief executive of Lanxess, the German speciality chemicals company. He added that for Germany to become competitive on energy costs, the government should overhaul its strict laws on alternative energy generation under its renewable energy act.

Ms Merkel’s popularity is not in question among both the general electorate and business leaders, some of whom have been happy to air their political views in recent days.

Asked by the Frankfurter Allgemeine Sonntagszeitung who he plans to vote for, Martin Winterkorn, chief executive of Volkswagen, said: “Secrecy of the ballot also applies to the head of VW. But I think it is well known that I have worked together well with the chancellor.”

The chancellor can also count on the support of Nicola Leibinger-Kammüller, chief executive of Trumpf, arguably Germany’s best known female corporate leader, who has criticised the SPD and the Greens for proposing a wealth tax, which she said would be “disastrous” for family-owned companies.

Finally, there is a feeling among some German business executives that many of the key election issues that will decide which party takes power on Sunday have a domestic focus.

As the chief executive of one Dax-listed company says: “The result of the election is quite important for Germany, but not for the rest of the world.”

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