Lockdown breakdown; all hail the sandal

This newsletter is a 5-minute read

Dear Reader,

Today we are picking over the lockdown extension while proudly wearing cork-soled footwear.

Regards,
Jörg & Axel


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5 Things

  • The check-in area at Berlin’s new airport is so cold that it’s been closed down until the weather improves. The cause is reportedly cold winds blowing in through the underground S-Bahn station. Just the latest design failure in a project that went spectacularly wrong thanks to the vanity of its designers

  • Three brothers have been arrested on suspicion of planning an Islamist terror attack. Equipment that could be used to build a bomb was found in their apartments in Hesse and Saxony-Anhalt; all three were already on the police’s radar.

  • A man has died in Berlin after swimming in a frozen lake. The 43 year old disappeared under the ice and it took divers hours to find him. He died later in hospital with hypothermia.

  • Around 15,000 people in Jena had to go without heating in mid-week after the district’s central heating pipe broke (don’t ask us what this is - presumably some relic of the DDR.) That was by night-time temperatures of -15 degrees.

  • The federal government has agreed upon a draft law that establishes the parameters for self-driving vehicles. The bill will enable automatic buses and trucks to operate within certain zones, but at first a human operator will have to be on board for emergencies.


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Lockdown extended until March 7th

Angela Merkel met the 16 state leaders on Wednesday for more crisis talks. The long and short of it: nothing much is going to change until at least March 7th.

The build up…

The virus has been on the retreat since before Christmas; intensive care occupancy peaked in early January. The improving situation has led to a drop in the public appetite for the ‘hard’ lockdown; just half of Germans support the current measures. The government warns though, that new virus strains could overwhelm the health system in a third wave.

  • At the weekend three states - Thuringia, Schleswig-Holstein and Lower Saxony - published plans for a step-by-step exit. Thuringia’s plan argued that opening schools, hairdressers and small businesses should be attached not just to positive tests, but also intensive care capacity and local dynamics.

  • Several states announced before the meeting that they’d go their own way on schools. Berlin said it’d open up schools on February 22nd, while Saxony (CDU) pledged to open its kindergarten and primary schools next Monday. 

  • The Chancellor has been pushing for a tough line since October - and she’s not letting up now. As is her custom, her office leaked a draft resolution on Tuesday with the obvious aim of backing the states into a corner. The leak made clear she was against any relaxation of the measures until well into March.

Match report

  • The states won a major victory. Merkel conceded that each state could decide when to bring its schools out of lockdown (as is their constitutional right).

  • But the Chancellor claimed a small victory on the bizarrely central issue of hairdressers. While the states wanted these to open in February, she insisted on March 1st and got her way. Who would’ve thought that hairstyle isn’t a top Merkel priority? Still, there is light at the end of the tunnel for both Axel and Klaus Kleber.

  • The key decision though is one that will please Merkel. All further easing of restrictions will only be contemplated below active cases of 35 per 100,000 - in other words the target of 50 Merkel insisted was necessary to keep the epidemic under control is now even lower. Faint hopes of good news for shops, hotels, restaurants, museums and concert halls were dashed.

Post-match analysis

  • Merkel seemed satisfied with the result, calling it "suitable, necessary and proportionate" in a speech to the Bundestag on Thursday. Her central argument: the “more dangerous and more infectious” new strains necessitate caution. "I don't think a back and forth, open once, close once, is going to bring more predictability for people than waiting a few extra days and getting a proper overview," she said.

  • During the Bundestag debate, the liberal Free Democrats (FDP) voiced disappointment, with leader Christian Lindner quipping “many people expected more than just a fresh haircut.” No one was surprised to hear that from the anti-lockdown FDP. More intriguing was the criticism from the Left party, who accused Merkel of “mentally walling herself into the lockdown". The Linke have been muted in their criticism thus far, so a change in the general mood on the left could be afoot.

  • The decision on school openings has split opinion. It was greeted with relief by state education ministers, who’ve been pushing for re-openings. Teachers unions, which have rejected sending their members back into the classroom, complained that Merkel had “capitulated.”

  • The National Retail Association released a furious press statement accusing the government of “broken promises”, adding that 50,000 small businesses could now go under. 

Our two pennies…

Remember the reformed disease control law that passed through the Bundestag in November? The government promised it would make the executive more accountable by tying restrictions to the current infection rate. Well, pardon my French, but that is a load of Pferdemist. Here’s why:

  • The unexpected decision to drop the target incidence from 50 down to 35 seems to be a glaring violation of the new law.

  • The law states that an incidence of 35/100,000 justifies “broad-based protective measures” on a regional level. Only when a nationwide threshold of more than 50 infections per 100,000 is exceeded are “nationally coordinated comprehensive protective measures” to be brought in. So you would think that cases falling below 50 would force a move back to regional lockdowns. But you’d be wrong.

  • Read the law more carefully and the gaping loophole is revealed. The nationwide measures kick in when the infection rate exceeds 50/100,000 but when it drops back down below that threshold the lockdown “may be maintained to the same extent and for as long as necessary to prevent the spread of disease.”

  • In other words, you can checked out, but you can never leave: the government can keep the lockdown in place even when there are no infections being detected at all (the list of justifications could include case rates abroad, mutant strains abroad, general vigilance while vaccinations goes on). No wonder legal experts warned in November that the law is little more than a rubber stamp for unaccountable executive rule.

J.L.


Unfashionably fashionable Birkenstock is worth €4B

You could spot them from a mile away. The German tourists with their quintessential socks-and-sandals look. Ugly yes, but very praktisch and bequem... When enough war-guilt had worn off for German tourists to start traveling the world in the 1970s they took their Birkenstocks with them and the cliché of the utterly unfashionable, dull German was born. 

Comfortable sandals have a long tradition in Germany. Johann Adam Birkenstock started making them back when Fredrick the Great was at large, and the American William Scholl, who created the Dr. Scholl company in 1904, had obviously inherited his passion for comfortable footwear from his German parents. 

The rise of Birkenstock, from a small-scale footwear producer employing 400 people in the nineties, to a global fashion brand over which the crème de la crème of global private equity is battling it out - sending the company’s valuation to well over €4 billion - is a symbol of Germany’s rise from boring to cool if ever there is one.

In 2019 the company employed some 3,800 people and made a profit of €129 million on annual revenues of €721.5 million. Propelled by work-from-home, sales are said to be growing by 15 percent on an annual basis. Private equity giants Permira, L Catterton and CVC are supposedly all interested in acquiring the footwear manufacturer, whose shoes are produced in Görlitz, right by the Polish border.

The sale will be a big success for CEO Oliver Reichert. The bearded man, who not only has a preference for sensible shoes (he owns 500 pairs…) but also for denim shirts, is the first CEO from outside the family in 250 years.

Writing these lines wearing a pair of cobalt blue Birkenstock Arizona’s (with socks obviously) I can’t help feeling a small sense of personal vindication. Since I first slipped my feet into the cool cork-reinforced leather bed of a pair of Birkenstocks in the mid-nineties I have had to endure much ridicule. Back then they drew as much skepticism and laughter as speaking German did. But as hipsters from LA to Beijing are sporting the socks-and-sandals look, and American private equity capital is desperately trying to get a piece of the brand, who’s laughing now?

A.B.B.


Who we are:

Jörg Luyken: Journalist based in Berlin since 2014. His work has been published by German and English outlets including der Spiegel, die Welt, the Daily Telegraph. Formerly in the Middle East. Classicist; Masters in International Politics & Arabic from St Andrews.

Axel Bard Bringéus: Started his career as a journalist for the leading Swedish daily Svenska Dagbladet and has spent the last decade in senior roles at Spotify and as a venture capital investor. In Berlin since 2011