Over the Iraqi Occupation and Helmut Schmidt in Die Zeit

Today we’re back to the €S bread-and-butter – interesting articles in the European press on political subjects – and in fact we resort to a long-time favorite source, Die Zeit. That newspaper’s latest assessment on the situation in Iraq is in an article entitled A Victory Without a Victor, and sub-titled “If America fails in Iraq, Europe loses as well,” by Matthias Naß.

(By the way, give a half-second of pity in passing here for Herr Naß who, because of a recent spelling reform in Germany, is really supposed to have changed the spelling of his name to “Nass.” But this here is EuroSavant sovereign territory, and the authorities in charge of this chunk of cyber-space intend to respect the family name Naß was born under, even though it also means “wet, damp” in German.)

By this point, “if America fails, Europe fails” is not a very original conclusion, which is not to say it’s incorrect but rather more like conventional wisdom, at least among American commentators. So it’s probably a healthy sign to see it brought forth within the high-quality press of one of those countries whose financial contribution to aid Iraq offered at the Madrid conference of two weeks ago was negligible, which didn’t want the War in Iraq and in its wake offers a textbook demonstration of one of its most famous exported intellectual terms, Schadenfreude.

What did Germany want instead, then? As long as we’re returning to €S convention, let’s go all the way and make reference to Thomas Friedman’s most recent NYT column. “Pretending to ease the suffering of the Iraqi people – by calling for the removal of sanctions but keeping Saddam in power so he can buy lots of stuff from Germany and France – is priceless to them. [To Germany and France, naturally.] But easing the suffering of the Iraqi people by removing Saddam’s whole sick regime is worthless to them.”

But back to Herr Naß’ article. He puts his Credo right in his second paragraph: You can snort and say “That’s Bush’s war,” but that won’t cut it. Yes, the war was undertaken under false pretenses, and it was never sanctioned by the international community through the United Nations. Still, if America gives up in Iraq then everything gets even worse. Iraq sinks into anarchy and breaks apart.

Still, things are obviously not going well. Naß structures his analysis around three objectives Deputy US Defense Secretary Paul Wolfowitz formulated for the invasion in Iraq, in connection with the “War on Terrorism.” (Wolfowitz is of course most appropriate for him to cite, not only because he was the leading conservative ideologue who pushed for Saddam’s downfall, but also because he was actually present in Baghdad’s Rashid Hotel not long ago when insurgents succeeded in firing a number of lethal rockets at that heavily-guarded American command post. Naß describes his appearance before the press just after this incident, with “naked horror” written on his face (yes, he did write “das nackte Entsetzen“) and a breaking voice.) Those Wolfowitz objectives are:

1) To kill or capture as many terrorists as possible, and cut them off from their sources of state funding. But Naß points out that, although the defeat of Afghanistan did contribute considerably to these goals, Osama bin-Laden himself is still free. What is more, while the rest of the world apparently looks the other way, the terrorist-friendly Taliban are gradually reimposing their authority on many of that country’s border provinces.

2) Simply to make terrorism unattractive, in the face of America’s military superiority and the pain it is able and willing to dish out to terrorists. But events in Iraq have shown that this is plainly not happening. On the contrary, there “the war against terrorism has led to an offensive of terrorism without precedent,” as foreign fighters seeking jihad flock into the country.

3) To build a shining example of prosperity and democracy for the rest of the Islamic world. But things are likewise far from that stage in Iraq, as the handover of true sovereignty to Iraqi authorities keeps getting shoved further and further into the future. Here Naß quotes former US Secretary of State Madeleine Albright: “It’s going to be difficult for US soldiers to democratize Iraq as long as they are forced to hold out behind walls and armored vehicles.”

He then updates his readers with by now well-known symptoms of the Iraqi morass: Donald Rumsfeld’s recently-leaked memo expressing doubts whether the US is really making any progress; that controversial “Mission Accomplished” banner that was hanging on the control tower of the USS Abraham Lincoln as a backdrop for President Bush’s victory speech back on May 1 (110 is Die Zeit’s count of American military deaths in Iraq since); and the growing restlessness both in Congress and among the American public, with Bush’s approval sinking in the polls and even street demonstrations occurring to demand “Bring our boys home!”

And meanwhile, Bush also lacks foreign allies, whom the Madrid Conference showed to be rather reluctant to contribute much money to the cause of rebuilding Iraq. “Many Europeans were right to warn about this war, whose justification did not convince them, and in whose objective they did not believe. But now is not the moment to be right, but rather to do the right thing,” Naß declares. Remember: this is not money for war, but money for rebuilding. Beyond a general forgiving of Iraq’s foreign debt (which Naß indicates the German government is planning secretly to do, even though its present attitude is to allegedly know nothing about it), much more humanitarian assistance should be forthcoming. “Help, not gloating” is what is necessary; America must not fail in Iraq, because even though it might have been “Bush’s war,” both Americans and Europeans can still lose there.

Now, for something a little more on the esoteric side, also from Die Zeit, which I personally found a bit more entertaining and informative. It’s actually an interview, and should be of note to anyone who is interested in Germany and who recognizes the name “Helmut Schmidt,” because that’s the interview’s subject.

Just as a reminder, Schmidt was German Bundeskanzler (from the Social Democratic Party, which is also the party of the current Chancellor, Gerhard Schröder) from 1974 until 1982. That was a pretty turbulent eight years, and among the things Schmidt was known for during that time was Germany’s unique approach to the oil crisis of the early 1970s (namely accepting recession instead of inflation, in opposition to most other countries’ reaction, including that of the US – although these latter more often than not wound up having to accept both); the construction (with then French president Valéry Giscard d’Estaing) of the European Monetary System (EMS), forerunner to the euro; and putting his political future on the line by accepting the deployment in Germany of American intermediate-range Pershing missiles in the early 1980s. Ever since he was removed from the Chancellorship in 1982 by a parliamentary vote of no confidence, Schmidt has in fact been closely associated with Die Zeit, and remains a well-respect éminence grise both in Germany and throughout the world. Given his reputation for economics in particular, forged at the very top of the German government during those tough times in the 1970s (and he was Finance Minister in the cabinet under Willy Brandt that preceded his own), you would think that he would have valuable insights on Germany’s current economic troubles and the efforts of the governing SPD-Green coalition to address them.

And he does. But at the interview’s very beginning there is some skirmishing to get out of the way, apparently so that the interviewers (Die Zeit’s twin editors-in-chief, Dr. Josef Joffe and Dr. Michael Naumann) can let Schmidt know that they don’t intend to be intimidated by either his intellect or his famously gruff manner. They note that he has recently been on a lecture-tour in the United States, and ask him if he dared to smoke there. “I smoke everywhere,” Schmidt replies. “Here in the Thalia Theater [in Hamburg, where the interview took place] I even have special permission from the fire authorities.” So they ask him about the stark black-and-white messages legally mandated to be on every pack of cigarettes that he smokes, to the effect that “Smoking can kill.” Schmidt answers by noting that he has smoked for roughly sixty years now, and he is still alive. He doesn’t mind being warned about cigarettes that way per se, but he would only rather have it done by someone “from my own government” and not by Brussels “Eurocrats” whom he doesn’t even know.

So much for the preliminaries. After some philosophical musings and comments about old friends, the interview quickly gets down to its real business, and the first focus is the economic situation in Germany in general and in Eastern Germany, the former DDR, in particular. Schmidt, it seems, has recently caused something of an uproar with alleged comments that all the whining by the Eastern Germans over their economy made him want to throw up (“zum Kotzen“). Naturally, that was not wholly accurate, and Schmidt takes the opportunity to correct the record. East German pensions (for those who still have them) actually amount to a bit more for women there than West German women receive, as a result of the policy of the defunct DDR (pensions for East and West German men are roughly the same). In view of this, if East Germans still wanted to complain, as he stated in a previous interview, well then that sort of thing truly made him want to throw up.

But it’s his larger point that is more interesting: Namely that the recovery-process for the economy in the former DDR came grinding to a halt somewhere around 1996, and it hasn’t gotten underway again since. This despite massive, massive government fund transfers to the East via the federal government budget ever since reunification. Indeed, for a number of years West Germans were even paying a special “solidarity tax,” to be spent on rebuilding Eastern Germany. But the problem lies rather in mistakes that were made at the time of unification, mainly the exchange of old Ostmarks for West German DMarks at too low a rate (1-to-1 in most cases). That also meant East German wages being translated into West German/pan-German wages at 1-to-1, while East German productivity was way under productivity in West Germany and has remained so. (It’s still only 70% of Western productivity, Schmidt claims.) Naturally as a result there were massive job losses, massive income losses, and the region has had to struggle with that ever since while continuing to lose enterprising East German souls who are willing to simply move West to find jobs paying higher wages they can justify with their productivity there.

It’s too late to do anything about that original mistake, especially considering the DMark itself no longer exists. Schmidt instead has a couple of radical suggestions for addressing the particular economic stagnation in Eastern Germany. (Sure, there’s also plenty of stagnation in the West German economy these days; we’ll get to that shortly.) Number 1: Halve the value-added-tax rate for goods and services produced/provided in the former East Germany (into which Schmidt also includes Berlin; note that the standard German VAT rate currently stands at 16%). Number 2: Empower the local Bundesland legislatures in the 6 Eastern federal states (to include Berlin) to cancel outright or modify any federally-passed laws having to do with the economy. For Schmidt shares the opinion that one of Germany’s main economic problems is the sheer sea of red-tape and regulations that inhibit economic activity and hiring. So empower each of the new Bundesländer to get rid of those (federal) laws and regulations that are holding them back – not forever, but for a period of fifteen or twenty years. (It seems that Manfred Stolpe, the cabinet minister in Gerhard Schröders current cabinet responsible for East German development, has estimated that it could take until 2019 for that region to catch up economically with the rest of Germany; Schmidt is not sure that it can even make it by then, even with the adoption of his proposals.)

As for the current raft of new legislation pushed through the Bundestag by Schröder’s government (at great risk to the Bundeskanzler; he has had to basically say “Pass this, or I resign”) to try to reanimate the German economy as a whole, Schmidt is certainly in favor of it. But where Schröder’s government collectively calls these measures “Agenda 2010,” Schmidt prefers to call them “Agenda 1993,” that is, they should have been passed long ago, and by themselves they certainly do not go far enough. Unfortunately, most of them are not yet law, as they have to go on to be passed by the German upper house, or Bundesrat, where Schröder’s coalition of SPD and Greens does not have a majority. As necessary as they may be, then, passage is not a certainty, since the opposition may decide to obstruct the government for political reasons. Schmidt himself regrets the increasing percentage of laws that have to go on to review and passage in the Bundesrat. He estimates that 70% of legislation passed has to undergo this now, whereas that figure was more like 30% back when he was in government.

Elsewhere in the interview, Schmidt turns out to be no fan of the euro’s Growth and Stability Pact, that agreement by European states participating in the euro that they will keep their government budget deficits below 3% of GDP (which both Germany and France are currently violating). While this may sound surprising, coming from a politician famous for his past tight-fisted economic policies, Schmidt has a good reason to disparage the Stability Pact: it doesn’t take national saving into account. He points out that government deficits are most easily sustained in countries whose inhabitants have high savings rates, since there is then a ready supply of funds available for the government to borrow while keeping its claims on capital needed by business to a minimum. So Schmidt is not worried by Germany’s current 4% budget deficit – he says it’s necessary in recessionary times, as long as structural causes holding back the German economy are also addressed – and he doesn’t feel that Germany’s fellow EU member-states should be worrying about it, either.

But wait: Schmidt has a reputation for “tight-fisted economic policies,” yet he belongs to Germany’s socialist party? How can that be? Schmidt and his interrogators address that question at the interview’s end, where they ask him if in fact he still considers himself to be a social democrat, and what that concept means to him. He acknowledges that, in the past, many have considered him to be a member of the wrong political party, but that they themselves were wrong about that. He has been a social democrat since his captivity in a British prisoner-of-war camp at the end of World War II, and will always remain so. After all, he confirmed this attitude shortly before in the interview with a brief analysis of what he calls the American preoccupation with business success and the accumulation of personal wealth, a preoccupation that he sees as increasingly taken as a pattern within German (and European) business circles. But while those parts of society may be adopting those values, the European body politic is not. In contrast to America, where the average citizen is inclined to accept the accumulation of riches by others because he truly thinks that that reflects that other person’s abilities and superiority, in Europe there is much more sentiment for social justice and equality. Schmidt is hinting here that, sooner or later, this difference in values – between America and Europe, but also between European high-flyers and the populace at large – will become painfully apparent, and will bring new political consequences.

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