In Germany, Crony Capitalism Is Kaput

The political financing scandal rocking Germany is another stage in the country's painful trek to a more modern, open society. The details of the affair are still murky, involving secret party bank accounts in Switzerland, possible payoffs by a major German weapons maker and by France's Elf-Aquitaine when it bought a derelict East German refinery, and a slush fund tended by the patriarch of German unity, Helmut Kohl.

It's no secret what produced such a culture of sleaze. Corruption is inevitable in a bureaucratic welfare state where government exercises much of the economic power. It is also more accepted in a period such as the cold war, when anticommunism, political stability, and the NATO alliance were all considered critical enough to permit, even encourage, whatever it took to make Germany a trusted ally of the U.S. and Western Europe. In the same period, the same dynamics played out in Italy and France.

That era is now ending, and the German welfare state is steadily giving way to a more transparent market democracy. Prosecutors and the press are pursuing the case aggressively, and the public is outraged. The Christian Democrats, who have ruled Germany for most of the postwar era, are fighting for their very survival. Those who would give or take bribes now see vividly that the consequences are severe. In short, crony capitalism no longer pays. The marketplace and society in general are pushing for a more open and accountable political system. Watching all this unfold isn't much fun if you're a German. First Italy, then France, endured similar upheavals for similar reasons. It had to happen for Germany to fully join Europe--and the evolving global economy.

The key for Germans will be to reconcile their traditional yearning for stability with a desire to move toward a more transparent, and perhaps more volatile, system. Germany's remarkable political consistency since the war is generally admirable. But it has sometimes bordered on apathy, fostering mischief. Germans must now confront the flaws in their society. They must channel their outrage into reform.

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