For years, German fund managers have lobbied passionately for tax breaks to encourage Germans to invest more of their retirement savings into stocks--a move that could pump up to $10 billion into the country's capital markets. But it seemed a lost cause. The supposedly business-friendly Christian Democrats feared such a move would offend cautious retirees. And the labor-oriented Social Democrats looked upon financial markets with suspicion.
Now, surprisingly, the environmentalist Green Party wants to make the fund managers' wish come true. Yes, the Greens still want to dismantle nuclear power plants. But in a bid to win votes from the entrepreneurial Internet generation, the Greens want to invest pension money in stocks, cut the tax burden on business, and dismantle rules that strangle startups. "None of the established parties are as progressive toward equities as the Greens," says Rudiger von Rosen, chairman of the German Share Institute, which promotes stock ownership.
Indeed, the Greens have become one of the most powerful forces for reform in Germany. Much of the credit goes to party leader Joschka Fischer, 51, a former gadfly who has become a pragmatic and respected foreign minister in Gerhard Schroder's coalition government. Fischer has quelled his party's left wing and turned the Greens into an unexpected counterweight to the left wing of Schroder's Social Democrats. These days, the Greens are bolstering Finance Minister Hans Eichel as he pushes through cuts in business and income taxes. "Eichel has often gotten better backing from the Greens than from his own party," marvels PaineWebber Inc. analyst Alison Cottrell.
TAX BREAKS. The Greens' shift to the middle is partly an effort to ensure its long-term survival. The party earned less than 5% of the vote in recent elections in Saxony, shutting itself out of the state parliament. And it has come close to the 5% mark in past national elections. The Green Party could slip into obscurity if it doesn't attract a new generation to replace the aging 1960s radicals who founded it. "We used to concentrate on things like the environment, women, peace," says Christine Scheel, the Green point person on economic policy. "Now economics and taxes are among our central issues."
That change is winning friends in the business community. Among other things, the Greens want to eliminate the punitive levy that prevents German banks and insurance companies from selling their big stakes in German industry--a measure that could bust open the nation's insular business world. They fought a recent proposal to end a tax break for investment funds. They've called for rules to protect small investors and force companies to give out more information. And they want to make life easier for small and midsize companies. By eliminating bureaucracy, the party hopes to encourage start-up businesses and attract young entrepreneurs who find the mainstream parties too stodgy.
The strategy seems to be working. A Feb. 10 poll by the Forsa Institute, a public opinion research firm, puts the Greens's nationwide support at 9%, up from 6.7% in the 1998 elections. "There's a general recognition that the Greens can really work constructively," says Forsa Institute director Manfred Gullner. The Greens are likely to benefit further from voter disgust at the Christian Democrats' campaign- funding scandal, which forced CDU chairman Wolfgang Schauble to resign on Feb. 16. If Green candidates do well in upcoming elections in the states of Schleswig-Holstein and North Rhine-Westphalia, the party could emerge with more clout inside the coalition---and more power to push reform.