A new Germany?

“Scholz is the new Merkel,” opined Michael Hanfeld, an online columnist for the conservative German daily FAZ after the first of the televised ‘Triells’ between himself as social democrat Kanzlerkandidat and Armin Laschet for the Christian Democrats and Annalena Baerbock for the Greens on August 29. It’s a common view among the German commentariat.

Something remarkable is happening in Germany, the European Union’s biggest and, arguably, most important member state: after12 years playing second fiddle in three grand coalitions to Angela Merkel during her 16 years as Chancellor and suffering the consequences – slumping in the polls below even 10% like their Dutch and French counterparts – the social democrats (SPD) may be on course to emerge as the winners on September 26.

Olaf Scholz, outgoing finance minister and former mayor of Hamburg like his political mentor and model Helmut Schmidt, is by far the preferred choice of Germans to succeed Merkel and, in recent days/weeks, he has dragged the SPD into (perhaps temporary) pole position in the Bundestagswahl.

In one recent poll the party was given 24% support, ahead of the CDU/CSU (Christian Democrats/Christian Social Union) on just 21%, an all-time low, with the long-time favourites, the Greens, trailing in third place on 17%. Laschet has been a disastrous candidate so far thanks to a series of gaffes while Baerbock has never got over accusations of plagiarism. (See here and here).

New German paradox

Scholz, a politician with no great charisma but solid credibility like Merkel, represents the continuity candidate in many respects yet his arrival in the Kanzleramt could signal a huge shake-up in Germany’s government/political system. German commentators think it more than likely that he could head a coalition government known as the traffic light coalition (Ampelkoalition): red (SPD), yellow (the liberal Free Democrats/FDP) and Greens. A handful of (wishful thinking) columnists would see Die Linke (elements of the old East German Communist Party SED plus leftist social democrats like ex-finance minister Oskar Lafontaine) replacing the FDP in this constellation of political forces.

In that sense, Scholz, like the Bundesbank, stands for stability in the tradition of Konrad Adenauer, the first post-war Chancellor, whose mantra was: “Keine Experimente!” The finance minister has delivered a steady-as-you-go fiscal policy, with the country’s budget deficit in the first half of this year €81bn or 4.7% of GDP (compared with some 8% in the UK and a nominal 22.4% in Scotland). Growth, which fell 4.9% in 2020, is likely to be 3% while unemployment is 5.6%.

Voters like this and, what’s more, are clearly eager for change after 16 years of CDU stewardship but, as the polling figures underline, are confused about how best to do this without undoing the gains of the past 70-odd years. The right-wing extremist Alternative für Deutschland (AfD), now polling at around 11%, no longer represents an option (if it ever did). But the outcome of what may well be several months of post-election coalition negotiations is highly uncertain.

If voters want change, it’s likely to be modest. The SPD (whose joint chairs are a lot further to the left than Scholz) is standing on a platform of a wealth tax, increases in the statutory minimum wage and a big erxpansion in state investment, not least in infrastructure – hardly radical but enough to put off the libertarian, pro-tax cuts FDP.

Scholz has, what’s more, made plain he does not favour changing Germany’s ultra-orthodox fiscal stance nor continuing the current relaxation of the EU’s stability & growth pact (on deficit and debt levels) indefinitely. He is likely to hold back Brussels-led moves to make EU borrowing on the financial markets (“mutual debt”) under the Recovery Plan more widespread.

Germans are essentially conservative. The big policy changes in recent years – labour market shake-up (carried out by the SPD), limited deployment of the Bundeswehr “out of area”, Merkel’s abrupt abandonment of nuclear energy or her very liberal immigration stance – are notably few and far between. Scholz as Chancellor would be very unlikely to break the mould.

So, a leftist coalition of SPD/Greens/Linke is unlikely, not least because Scholz has said he won’t govern with a party like the Linke opposed to NATO membership. (He has not explicitly ruled out working with that party, a stance that Laschet is trying to exploit but without success so far.) And the “traffic light” coalition masy not come to pass or be stable either, leaving…??? This is unchartered territory.

Impact on UK – and Scotland

Britain has burned its boats with Germany by pursuing a hard Brexit and has exhausted what was once a deep reservoir of goodwill on the part of Berlin. Relations between a Johnson-led administration with a government headed by Scholz would be cool, if not hostile. Ironically, given that he is a constant target of the right-wing media in the UK, a re-elected President Macron might prove a warmer ally in 2022 given his stance on defence and security…

After its love affair with Barack Obama and cold douche with Donald Trump, Germany hoped to revive the Atlantic Alliance, bedrock of its foreign and security policy, with Joe Biden but Afghanistan has put paid to that. Berlin, nevertheless, remains wary of Macron’s “strategic autonomy” with its emphasis on greater European self-reliance militarily and in terms of procurement/deployment. Even so, it has signed up to the French drive for a more pro-active European industrial policy as part of the Green New Deal. A wiser UK government might seize the opportunity fissures in the Franco-German tandem offer to cement stronger alliances with both…

The Scottish Government’s Berlin hub will, like the rest of us, be watching for the contours of the post-Merkel era to become clearer. Obviously, Green participation in any government in Berlin might be beneficial for Holyrood’s new SNP-Scottish Greens tandem but expectations should be kept low. What’s more, under Scholz (or indeed Laschet) Berlin will not amend its strictly legalistic stance towards Scottish independence or related applicatjon to (re)join the EU.

Featued image of Olaf Scholz by  Olaf Kosinsky under the free licence CC BY-SA 3.0-de

See also: Jon Worth Euroblog of 23 April (needs updating), Coalition options for Germany; Guy Chazan, Scholz seeks to topple…, FT (30 August)