The German Government: Gridlock or Gamechanger?

IIEA16th March 20185min
There are high hopes for the next German government to provide impetus and leadership for European reform.

On 14 March 2018, the 19th German Bundestag elected Angela Merkel to a fourth term as Federal Chancellor. Dr Merkel and her cabinet were sworn in by the President of the Bundestag, Wolfgang Schäuble.

The relief among policymakers in Europe at the formation of a German government following months of negotiations and setbacks after the Federal Elections on 24 September 2017 was palpable. There are high hopes for this government to provide impetus and leadership for European reform. This is particularly so with regard to the ambitious proposals for Eurozone reform set out by Commission President Jean-Claude Juncker and French President Emmanuel Macron.

A new dynamic between both partners of the third Merkel-led Grand Coalition of CDU/CSU and the SPD is also crucial for domestic politics and the longer term Future of Europe. The far-right populist Alternative für Deutschland (AfD) is now the largest opposition party in the Bundestag and in recent polls, it exceeds its 12.6 percent result in the Federal Elections by 1-2 percent. Leading the opposition is an advantageous position for any populist party and any sign of a continuation of the status quo gridlock in the government, the popular perception of which fuelled anti-establishment sentiments during the election, will provide further ammunition to the AfD.

While it is too early to tell whether this government will be one of renewal or repetition, this blog posts highlights three crucial key dynamics within the governing parties that will be important in determining the outlook of the government in the short and longer term.

  1. Angela Merkel and Olaf Scholz

The relationship between Angela Merkel and her new Vice Chancellor and Finance Minister Olaf Scholz will be important in order to determine how far Germany is willing to go in engaging with Eurozone reform proposals as well as in ambitious investment programmes domestically and in Europe. Despite his party’s somewhat more liberal stance on fiscal policy, it is unclear exactly to what extent Mr Scholz will continue his predecessor’s emphasis on fiscal discipline and thus to what extent he will clash with the Federal Chancellery, now headed by Dr Helge Braun, who previously served as the Chancellor’s Minister of State for Bureaucracy Reduction and State-Federal Coordination.

To some extent, this dynamic is predetermined by the parties’ coalition agreement. It enshrines the conservative and highly popular “schwarze Null” policy, which prescribes a balanced budget. The coalition agreement retains the intention of both parties to transform the European Stability Mechanism (ESM) into a European Monetary Fund. However, in contrast to the blueprint published in January 2018, the final coalition agreement adds the condition that such a transformation should be conducted “without prejudice to the rights of national parliaments”, retaining a strong role for Member States in deciding how funds are allocated. There could be some room for divergence, however, when it comes to proposal such as a Eurozone Finance Minister or a Eurozone investment budget.

  1. Horst Seehofer and Katarina Barley

With his appointment to the Federal level as head of the newly created “superministry” for the Interior, Homeland and Building, Horst Seehofer has resigned as Minister President of Bavaria. On 16 March 2018, the Bavarian State Parliament elected Markus Söder to that office.

In his new position, Mr Seehofer will seek to consolidate his legacy, which has suffered somewhat as his party, the CSU, lost many votes to the AfD in the Federal Elections. It is therefore expected that he will take a strong law-and-order stance, which will emphasise more effective surveillance and limiting migration numbers. This might lead to clashes with the newly appointed Minister of Justice, Katarina Barley. Her party, the SPD, was vehemently opposed to a binding cap on migration, which was proposed by the CSU. The final coalition agreement contains a softer version, stating that parties do not expect migration numbers to exceed 220,000 annually and that additional measures would be enacted to guarantee this. As migration was still an important topic during the election, a good working relationship between both ministries will be crucial for the new government’s ability to offer a credible solution to popular concerns.

  1. Jens Spahn and Annegret Kramp-Karrenbauer

Chancellor Merkel appointed one of her most prominent critics within the CDU and a contender to succeed her, Jens Spahn, to the post of Minister for Health. This gives Mr Spahn, who tends to hold more conservative views than the Chancellor, a prominent platform as Member of the Cabinet. It will, however, be difficult for Mr Spahn to distinguish himself as head of the Ministry for Health, a challenging portfolio as the widening gap in quality of service between those publicly and privately insured is a particular source of popular discontent.

An important relationship to watch is that between Mr Spahn and Annegret Kramp-Karrenbauer, who was recently elected to the post of General Secretary of the CDU. Ms Kramp-Karrenbauer is seen as the Chancellor’s preferred option for her successor as she shares the Chancellor’s centrist views.

Mr Spahn and Ms Kramp-Karrenbauer have already clashed over a remark by Mr Spahn on 10 March 2018, where he said that social welfare recipients should not be considered poor as welfare payments covered basic necessities.  The remarks sparked outrage from the Greens, the left wing Die Linke party and some in the SPD, and even Ms Kramp-Karrenbauer indicated that Spahn was not best placed to comment on such matters.

The question of Chancellor Merkel’s succession will, of course, be crucial – not just for domestic politics but also for the future of Europe as a whole.

Conclusion

The three key dynamics mentioned above are only a few of the many factors that will determine the outlook of the German government. However, keeping these crucial relationships in mind can be helpful in keeping a finger on the pulse of the German government as it finds its feet and defines its positions on Europe.

 

Authored by Max Muenchmeyer, Researcher (Germany), IIEA