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Germany
Germany's Unemployment Rate Reaches 12%
Germany's
recession continued in 2003: for the previous three
years, Europe's biggest economy had the lowest growth
rate among EU countries. In Aug. 2003, Schröder unfurled
an ambitious fiscal-reform package and called his
proposal “the most significant set of structural reforms
in the social history of Germany.” Schröder's reforms,
however, did little to rejuvenate the economy and
angered many Germans, accustomed to their country's
generous social welfare programs. His reforms reduced
national health insurance and cut unemployment benefits
at a time when unemployment had reached an alarming 12%.
National
elections in Sept. 2005 ended in a deadlock: the
conservative CDU/CSU and its leader, Angela Merkel,
received 35.2% and Gerhard Schröder's SPD garnered
34.3%. After weeks of wrangling to form a governing
coalition, the first left-right “grand coalition” in
Germany in 36 years was cobbled together, and on Nov.
22, Merkel became Germany's first female chancellor.
During her first year, Merkel showed strong leadership
in international relations, but her domestic economic
reform agenda has stalled. Her first major initiative,
reforming the health care system, was widely viewed as
ineffectual.
Germany
was hit hard by the global financial crisis in late 2008
and 2009. In October 2008, the government financed a $68
billion bailout of one of the country's largest banks,
Hypo Real Estate, to prevent it from collapse. That was
followed in February 2009 with a $63 billion stimulus
package to help lift the battered economy out of
recession.
Merkel
earned another four-year term as chancellor in September
2009 elections. Her party, the Christian Democrats,
formed a governing coalition with the pro-business Free
Democrats. She faced criticism in early 2010 for her
delay in seeking parliamentary approval of a bailout
package for Greece, which was teetering on the brink of
financial collapse. International observers remarked
that she should have acted sooner; she was criticized by
voters for coming to the rescue of another country.
President
Kohler was reelected in 2009. He resigned in May 2010
after his statement that a country of Germany's size
sometimes must justify troop deployment abroad to
protect its economic interests sparked controversy and
outrage. He was replaced by Christian Wulff.
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