HAMBURG: What has happened to Germany? It is only a few years ago that Mikhail Gorbachev convinced himself and his Kremlin colleagues that they had to accommodate Bonn over unification because Germany would be the main actor on the continental European scene. More recently, a hard-nosed French former central banker, Michel Aubert, published a book in praise of "Rhineland Capitalism", elevating Germany to a model society combining economic dynamism and social justice. Now that model is deflated, and Europe's supposed leading power is in the doldrums.

One reason for this is merely a temporary political deadlock. Chancellor Kohl's slender majority in parliament is insufficient to push through serious reform of the country's Byzantine tax system against the Social-Democratic opposition's majority in the Council of States, the second parliamentary chamber where Germany's regions participate in federal legislation. The country's highly developed federal structure, together with a lack of political leadership, is seen by many as the main culprit for the stalemate.

Yet political structures and inclinations are blocking change precisely because voters have been unwilling to grant either government or opposition a clear mandate. If only politicians were to blame, the solution would be easy: throw them out at the next election. The real source of Germany's malaise lies deeper: citizens and society are undecided. And while, of course, politicians should lead opinion, they also have to follow it to win votes.

Voters in their various ways have realized, longer probably than many a politician, that the "German model" with its short working hours, long holidays, secure and substantial pensions, social security and comprehensive health insurance for all could not last forever. People are prepared in principle to accept the sacrifices needed to streamline and modernize the present system -- provided these sacrifices are distributed fairly.

The trouble is that modernizing the welfare society demands sacrifices which are essentially unfair. They have to be made not by the better-off but by the poorer parts of society, those whose material well-being would be impaired directly by cuts in the public support system. Reforms which distribute burdens equally between all sectors of society are, therefore, not possible.

Equality and social justice, long the cornerstones of Germany's social cohesion, now are major barriers to change. While people recognize the need for change in the abstract, they balk when it is translated into concrete terms, holding more firmly to what they have even if that means foregoing the opportunities of the future. To maintain jobs in smokestack industries with the help of government subsidies seems preferable to the creation of new jobs through subsidizing more promising ventures. Since there is no guarantee that reforms will provide a more equitable future, unequal sacrifices now are resisted.

Holding on to what one has rather than invest in an uncertain future is a familiar feature in most democracies. In Germany it is reinforced by collective memories of war and disaster. The "economic miracle" of the 1950's in the then West Germany derived its dynamics not least from the urge to own and hold on to something of one’s own. In 1990, with unification, the irrepressible desire of East Germans to be incorporated into the Federal republic stemmed from their determination to obtain what their relatives in the West had acquired long before -- not just democracy but material well-being as well.

Thus the trauma of German history combines with the almost natural human aversion to change In retrospect, unification could have provided the unique opportunity not just to remove the bankrupt structures of the communist East but also to overhaul the creaking system of the West. Instead, Western structures were uncritically extended Eastward and thus reinforced.

A mixed blessing of not doing then what needs to be done now has been to expose the failings of Germany’s welfare state even more starkly. The one thousand billion Deutschmarks shifted East since unification might otherwise have been spent propping up the sagging German welfare state, delaying the moment of truth even longer.

While exposure of the system’s failings increases public unease it has not yet led to massive impatience for action. When German voters elect a new federal parliament in September next year, they are unlikely to give a clear signal for change. Whichever party combination comes out on top -- and Helmut Kohl's coalition must still be regarded as the narrow favorite -- it will enjoy a meager majority, depending for any major initiative on the unlikely support of its political adversaries. Thus Germany seems destined to be stuck in the doldrums for some time.

The price for inaction is considerable. While exports are booming, unemployment remains stubbornly high. Disillusionment with politics is increasing and may even bring forth right-wing populists whom democratic Germany has so far been spared. Domestic gridlock will sap Germany's international influence at a time when Europe's global responsibilities are increasing. If Germany should become the sick man of Europe, the Continent too, will fall ill.

In the end, reforms of social welfare will be imposed, if not by political leaders then by international competition and interdependence. By then, the social cohesion and consensus characteristic of democratic Germany for five decades will be severely strained. Perhaps this disturbing prospect can propel society into mobilizing its politicians.

Another agent for change waits in the wings: European Monetary Union. When it enters into force in 1999 its immediate effect will be to stimulate competition for markets and reform within the Union. It would not be the first time that European integration has helped Germany get out of blind alleys. And the common European currency, in contrast to practically all other major reform initiatives, still enjoys a massive majority in both chambers of the Bundestag, however unpopular it may be among the voters.