Berlin

‘Capitalism is armed robbery,’ reads the graffiti on the subway wall, but here in Berlin, German capitalists are doing what capitalism does best — creating new jobs and new industries. Berlin used to be regarded as ‘poor but sexy’(as Berlin’s former mayor Klaus Wowereit put it), but last year the German capital boasted the highest growth in the country — 2.7 per cent, 0.7 per cent above the national average. A city of squats and bombsites has become a city of high-tech start-ups, and now tech giants such as Google and Microsoft are moving in. Cheap rents and a lively nightlife attract smart millennials from across the globe. Unemployment is at its lowest since the Wall came down.

Berlin’s Wirtschaftswunder is a microcosm of the booming German economy, and the main reason why — barring a catastrophic mishap — Angela Merkel will be returned as chancellor in two weeks’ time. National unemployment is also at its lowest since reunification, and growth is running at 0.6 per cent per quarter — double the rate in the UK. For the third year running, the German government has posted a budget surplus (last year’s was €24 billion, the largest since reunification). No wonder Merkel’s conservative Christian Democratic Union is nudging 40 per cent in the polls, while Martin Schulz’s Social Democrats languish at around 25 per cent.

So how did Merkel transform an election that only last year she looked bound to lose, turning a dead loss into a dead rubber? It’s the economy, dummkopf. It’s also a testament to her talent for sitting tight and saying nothing (if Merkel had a mantra, it would be ‘don’t do something — just stand there’). Following her calamitous decision to let a million migrants into Germany two years ago — one of the few times she’s done something decisive, with disastrous consequences — even some of her closest supporters urged her to step down. Yet Merkel is adept at lying low and waiting for bad news to blow over (her fondness for procrastination has even spawned a new German verb, merkeln).

In last Sunday’s TV debate with Schulz, her matter-of-fact performance was more than a match for his impassioned rhetoric. ‘Germany is a prosperous country, but not every German is prosperous,’ said Schulz. Merkel merely reminded him that unemployment had halved since she became Chancellor. The long-term effect of her immigration policy — or lack of it — will be profound, but for now it has slipped off the front pages. Her million migrants may be a ticking time bomb, but for voters, the economic boom she has overseen is here and now.

For Schulz and his beleaguered SPD, this is the bitterest of ironies, for it was the last SPD chancellor, Gerhard Schröder, who paved the way for the country’s economic turnaround. Schröder’s labour reforms revived the German economy, cutting benefits and making it easier for companies to hire and fire. These reforms were a godsend for Germany, but they were a disaster for its centre-left. SPD chairman Oskar Lafontaine quit to form a new party, Die Linke (The Left), composed of former communists and hard-left refuseniks from the SPD. This exodus split the left-wing vote, and in the 2005 election Schröder lost to Merkel. Schröder’s reforms worked a treat, and Merkel’s CDU has been the main beneficiary ever since.

If the German elections were conducted on a first-past-the-post basis, the SPD might have been able to develop a new identity in opposition, but the Bundesrepublik’s system of proportional representation (devised by the victorious Allies after the second world war to prevent one party gaining overwhelming power) has shackled them to the CDU in a series of so-called grand coalitions. As Nick Clegg can confirm, such alliances rarely turn out well for the smaller party. Like the Lib Dems under Cameron, the SPD has shouldered the blame for the coalition’s failures, while Merkel’s CDU has taken the credit for its successes.

The SPD enjoyed a brief surge when Schulz became its leader in March, but that looks like a dead-cat bounce. Schulz is a strong campaigner who enjoys the common touch, while Merkel is notoriously wooden. Yet 12 years since he lost to Merkel, Schröder’s labour reforms remain a lead weight around his party’s neck. Schulz can hardly denounce a programme that his own party initiated, yet the shock that it delivered to the SPD’s working-class base continues to divide the party, and boost support for Die Linke.

For Blairites and Corbynistas contemplating an acrimonious divorce, the evolution of Die Linke is a salutary lesson in what happens when a centre-left party splits. Despite becoming Germany’s third biggest party, Die Linke is still a long way away from power, yet its relative success continues to divide the left-wing vote, and keep the conservative CDU in office.

For German leftists, an alliance between Die Linke and the SPD would be the obvious solution, and might even give them enough votes to oust Merkel. They’ve already tried this at a local level. Berlin is currently governed by the SPD, in coalition with Die Linke and the Greens, but in western Germany, where former communists are regarded more unsympathetically, this idea has proved toxic. In local elections in North Rhine-Westphalia (the SPD’s industrial heartland) earlier this year, the prospect of an SPD alliance with Die Linke repelled soft-left voters, handing the CDU an unlikely triumph.

Under the British electoral system, the result of the coming election would be a CDU landslide, but under the PR system we gave them, it’s virtually inevitable that Merkel will have to govern in some sort of coalition. With her CDU almost sure to win, and the SPD almost sure to come a distant second, the issue that’s preoccupying German pundits is the battle for third place. Under the German system, this is no consolation prize. Whoever comes third will shape German policy for the next four years (that’s the trouble with PR — it’s the kingmakers rather than the winners who often wield the most power).

There are four parties vying for third place, all hovering around 10 per cent: the Greens, the Free Democrats, Die Linke and Germany’s new anti-immigration party, Alternative für Deutschland (AfD). The Free Democrats, a classical liberal party led by charismatic thirtysomething Christian Lindner, would be Merkel’s favourite coalition partner. She’d also be quite happy to do a deal with the Greens. Naturally, she’ll have nothing to do with Die Linke or AfD, however many seats they win, but if either of these parties comes third, it will be a major headache for Merkel and her CDU.

No other party will work with AfD (for now), on account of its anti-immigrant rhetoric, but in a few weeks, for the first time, it will be in the Bundestag (a party needs to win 5 per cent of the national vote to win seats in Germany’s national parliament, and AfD seems certain to get at least that). A presence in the Bundestag will give AfD authority and status. If it is the third biggest party, that mandate will be impossible to ignore. Merkel will never work with it, but she’ll be under huge pressure to reshape her party’s policies on immigration and integration.

AfD politicians have ruffled feathers on the left and right: last week, AfD deputy leader Alexander Gauland sparked outrage when he suggested Aydan Özoguz, minister for integration in Merkel’s government, should be ‘disposed of’ in Turkey (Ozoguz is a German of Turkish descent). Yet unlike these foot-in-mouth gaffes, which have put AfD on the defensive, the party’s poster campaign has been hugely impressive. Even here in lefty Berlin, its posters dominate the streets, and make the other parties look tame and old-fashioned.

German political posters are usually absurdly formal: cheesy mugshots of earnest candidates promising a brighter future for Germany, or some such guff. Beside these quaint adverts, AfD’s provocative posters stand out a mile. In stark contrast to Nigel Farage’s notorious ‘breaking point’ poster, AfD has opted to accentuate the positive, presenting its party as laid-back, fun-loving libertarians, and focusing on what Germans (allegedly) stand to lose. The most arresting image is of two (white) women in skimpy swimsuits. ‘Burkas?’ reads the slogan; ‘Wir steh’n auf Bikinis’ (‘Burkas? We stand by bikinis’). Another poster depicts a happy pregnant (white) woman lying in a meadow. The slogan reads ‘Neue Deutsche? Machen wir selber’ (‘New Germans? We’ll make our own’). Whether you find these advertisements commendable or despicable, you can’t help but admire their ingenuity. Rather than generating doom and gloom (a tricky sell in prosperous times), AfD has come up with a sexy, feel-good anti–immigration campaign.

Will this campaign propel AfD to third place? I wouldn’t bet against it. Only a year ago, AfD was polling more than 20 per cent in local elections, and though its vote has halved since then, those voters and their concerns haven’t gone away. With all the other parties (and the mainstream media) united against them, it isn’t respectable to admit supporting AfD in polite society. There may be a lot of shy AfD voters out there.

Amid the avalanche of polls showing a 15 per cent lead (or thereabouts) for Merkel’s CDU, one significant statistic has been more or less forgotten. Last week the Frankfurter Allgemeine Zeitung, Germany’s newspaper of record, with an almost neurotic reputation for accuracy, reported that, at this late stage, almost half of German voters are still undecided. Never mind AfD: if the SPD and Die Linke can find another 10 per cent between them, a Red-Red alliance might prove irresistible to both parties — a prospect that should give any Briton to the right of Corbyn sleepless nights.

Improbable? Of course. Impossible? No. Angela Merkel may be within touching distance of a record-breaking fourth term as Chancellor, but as Theresa May, Hillary Clinton and David Cameron can tell her, electorates have become rather unpredictable of late.