Berlin Cable

Aug 25, 2023

A False Restart

Before the summer break, Chancellor Olaf Scholz’ coalition had pledged to stop squabbling and do a better job at governing. But old habits die hard.

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German Minister for Family Affairs, Senior Citizens, Women and Youth Lisa Paus, along with German Justice Minister Marco Buschmann, gives a press statement on the government's draft law on self-determination in relation to gender registration in Berlin, Germany August 23, 2023.
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The end of summer is a bit like New Year’s Eve, a time for making resolutions and plans for self-improvement. It’s no different for the German government: Chancellor Olaf Scholz’ Social Democrats (SPD) and their two coalition partners—the Greens and the pro-business Free Democrats (FDP)—have been returning from their various holiday destinations vowing that, with the Berlin political machine revving up its engines again, they are going to govern in a better way. New rule number one: no more infighting, at least in plain sight.

Scholz’ government has excellent reasons for their good intentions. Missteps and scandal accompanying Green Vice Chancellor Robert Habeck’s “boiler law,” a piece of legislation trying to force private homeowners in particular to switch their heating away from oil and gas. It immediately created a public outcry and led to the FDP basically sabotaging and watering down the law, making it increasingly difficult to pass it before the summer recess. The saga became a perfect mess when the country’s Constitutional Court stepped in to demand that Germany’s parliamentarians should be given more time to consider its ever-expanding provisions and exemptions. It’s now scheduled to pass the Bundestag in September.

Yet, this was just the loudest and hardest-fought squabble of Germany’s ill-tempered early summer. Overall unimpressive budget planning for the remainder of the government—now in the shadow of the reapplied constitutional “debt brake” which limits new borrowing to 0.35 percent—caused a number of disputes, often between the Greens and the FDP, and often conducted in the German media. In contrast, all the parties seemed to be content with Germany’s decidedly non-increasing regular defense budget, which hovers around €50 billion and would need to jump to around €80 billion once the special fund introduced at the start of Russia’s war against Ukraine worth a nominal €100 billion is spent, to meet NATO’s spending goal of 2 percent of GDP.

While the government was on its summer vacation, Germany’s GDP, meanwhile, continued to flatline. For the second quarter, statistics office Destatis reported zero growth at the end of July, after -0.1 percent in the first quarter and -0.4 percent in the fourth quarter of 2022. In other words: Germany hasn’t managed to leave its recent recession behind it. This has led to anxious headlines over the summer predicting what a deindustrialized wasteland Germany will turn into in no time, with rightwing tabloid BILD accusing Habeck of “leading us back into the stone age.” The Economist (in part inspired, no doubt, by IPQ’s new “Deutschland 2030” series), followed up last week asking on its cover, “Is Germany the sick man of Europe again?

Another story that dominated headlines this summer—one closely intertwined both with the spectacle of a misfiring government and the weakening economic outlook—is the rise, in national polls, of the far-right Alternative fuer Deutschland (AfD), which saw its support swell to around 20 percent in July and August, overtaking the SPD. It has certainly been helped by Germany’s far-left Die Linke party undergoing a bitter split, with the charismatic Sarah Wagenknecht poised to launch her own party. As someone who’s not afraid to play the nationalistic card, what helps the AfD now may hinder her later.

Back to the Sandpit

For Scholz and his government, the way to put a stop to this is clear: by starting to govern in a better way. Alas, just as most of our New Year’s resolutions often remain, at best, works in progress, the Scholz government, during its first cabinet meeting following the summer recess last week, went straight back to the sandpit. Green Families Minister Lisa Paus (pictured) personally blocked legislation, prepared by Finance Minister Christian Lindner (also the FDP leader), which would have given tax relief worth €6.5 billion to German industry. This was little-disguised revenge against Lindner who, before the summer, made things difficult for a Green pet project under Paus’ tutelage, namely to introduce “basic social security for children” (“Kindergrundsicherung”) at the cost of around an extra €5 billion. Lindner questioned the sum, and eventually the whole concept.

The move by Paus, who apparently acted on her own accord, has created consternation all round. Scholz declared himself unamused, using the passive voice of an unnerved referee, “that [things] have been discussed once more so publicly.” Still, the chancellor—presently fighting his own not-so-private battle with his own party and Habeck whether to support German energy-intensive companies by way of subsidizing their electricity— insisted that an agreement was imminent. However, Paus’ stance even provoked public rebuke from leading Greens. Habeck told ZDF television that Paus’ action was “no masterstroke,” adding: “Again and again we’re shooting ourselves in the foot (wir versauen es uns permanent selbst). Of course, that’s no recipe for success.”

Lacking Opposition

Indeed. It all would perhaps not create such a feeling of doom if Germany had an opposition ready to take over the minute the current “traffic light” coalition spins out of control. But it does not. Since former Chancellor Angela Merkel’s Christian Democrats (CDU) were taken over by her erstwhile rival Friedrich Merz, Germany’s center-right has been in constant disarray. And Merz, having finally gotten what he wanted for close to 20 years, seems unsure what to do next. Declaring the Merkel years a disaster and moving the CDU firmly to the right? Or remaining true to the CDU’s origins and keeping it as one of Europe’s last “big tent” people’s party, or Volkspartei? It’s also unclear with which political partners Merz’ CDU would want to return to power. Barring a return to the “grand” coalitions with the SPD, the most realistic option would be a future “black-green” coalition with the Greens. For Merz, though, they are the main enemy.

Add to this Merz’ personal unpopularity and you have an explanation as to why the CDU has stubbornly remained below 30 percent in national polls—even during a period when the government has been in disarray. Instead, the AfD has surged. Merz had once promised to “halve” the support of the far-right party, which won 10.3 percent at the 2021 election. He seems to have done his bit to double it instead.

And in dealing with the AfD, Merz this summer made the huge blunder of suggesting that very limited forms of cooperation with a party now clearly controlled by its neo-Nazi wing might be possible under specific circumstances. This caused an outcry in the CDU and beyond, causing Merz to swiftly back-peddle, insisting that the CDU’s stance of strict “non-cooperation” had not changed. This mistake has opened him up to challenges when it comes to determining who will be the center-right’s “candidate for chancellor” come the 2025 election. Hendrik Wüst, North Rhine-Westphalia’s smart prime minister, governing Germany’s most populous federal state very harmoniously with the Greens, is sure to have his eyes firmly on that particular, chancellery-shaped prize.

German domestic politics, therefore, are moving more deeply into unchartered waters. The Scholz government will try another restart (the English word is being used while there is the perfectly fine Neustart) during its government retreat at Meseberg castle in Brandenburg next week. But success is not guaranteed. Quite a few Green and FDP politicians seem to feel, not quite two years into the government, that their respective worst enemies are sitting across the cabinet table.

For Germany’s foreign policy, that does not bode too well either, as it reinforces a dynamic that seeks to find the lowest common denominator, making big steps and bold strokes unlikely. According to reporting by the Frankfurter Allgemeine newspaper, the coalition is moving further and further away from Scholz’ promise to spend 2 percent of GDP on defense, by trying to use the “special fund” for a lot of ordinary security expenses. The goal will likely be met from 2024 to 2026 or 2027, but once the extra €100 billion is spent, whoever forms the government after the next election will likely have to put a second “special fund” in place for Germany to consistently meet the level of spending promised to its allies.

With all the coalition’s foreign affairs paperwork done (Guidelines for a Feminist Foreign Policy, Germany’s first-ever National Security Strategy, and its China Strategy were all published between February and July this year), one may have expected a government that was firmly focused on putting policies based on these papers into practice. However, given its divided government, the volatile political situation, and the country’s economic downturn, the wrangle about Germany’s future and the role it wants to play in Europe and the world may only have started.

Henning Hoff is Executive Editor of INTERNATIONALE POLITIK QUARTERLY.

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