07 September 2017

LSE: Germany’s election: Behind consensus politics lie conflicting ideas of Europe

There is a clash between two different visions of Europe in the German elections debate: further integration by strengthening European institutions, and gradual integration by making the Union even more inter-governmental, with a de-politicised Commission and a transformed ESM.

Four possible options

Recent opinion polls suggest a 13-17 percentage point lead for Merkel (37-39% for Merkel’s CDU/CSU vs 23-24% for the Social Democrats). The FDP is at about 8-9% (they failed to reach the 5% threshold in 2013, and they are currently not in Parliament). The Greens are at about 7-8% and the far-left Die Linke is around 9-10%. Most probably, the far-right AfD will pass the “five percent hurdle” and enter Parliament, but they would be out of any alliance. Six parties are likely to gain access to Parliament as opposed to just four currently.

Considering that some smaller parties are not going to be represented and their votes are to be redistributed, about 48% of the votes may be sufficient to get an outright majority of seats in Parliament, giving four possible options depending on where the decimal points fall and on Merkel’s decision.

A re-run of the Grand Coalition between the CDU/CSU and the SPD

A Grand Coalition might well be Merkel’s preferred result, not to become hostage to both the CSU and the FDP in European affairs (but also on migration, energy and climate policies). However, if the CDU/CSU manages to have a majority with the FDP it will be very difficult not to dump the SPD, as it would be difficult to convince both the CSU and part of her own party.

If the CDU/CSU becomes dependent on the SPD to form a governing coalition (that is, it does not reach the numbers to form a coalition with the FDP and/or with the Greens), the SPD may ask for the Ministry of Finance instead of the Foreign Ministry (which they got last time). Martin Schulz, the former president of the European Parliament and current leader of the party, or Sigmar Gabriel, the current Vice Chancellor and Minister for Economic Affairs and Energy and former leader of the party, could become Finance Minister (some people also say that Olaf Scholz, the mayor of Hamburg, could be in the game). It would represent an important shift in policy towards faster and deeper European integration versus the current approach designed by Wolfgang Schäuble. Still, Angela Merkel might resist those demands and convince the SPD to remain with the current portfolios.

Martin Schulz, who is very close to Jean-Claude Juncker, the President of the European Commission, is considered a passionate EU supporter. He would also work very well with Angela Merkel. More importantly, Schulz is committed to strengthening Europe and European institutions. In 2016, he proposed a ten-point plan for reforming the EU. The plan calls for a streamlining of European institutions and the formation of a strong European government, which would be more tightly controlled by the European Parliament. It would be a significant departure from the policies followed so far by Wolfgang Schäuble, who enjoyed lots of independence even from Angela Merkel and his party. Even without the finance ministry, Schulz would have a strong impact in rebalancing the government towards a more integrationist/federalist stance, especially so with Macron in France.

The so-called Jamaica coalition (CDU/CSU, FDP, and the Greens)

This would be a novelty for Germany. These three parties (actually four, as the CDU and CSU are two different parties) have never been in power together at the national level. They seem sufficiently close, however, regarding policies. Probably the most tricky bit would be combining the somewhat Eurosceptic views of the FDP with the strongly pro-European stance of the Greens. On many other issues (namely on migration, energy and climate policies), the FDP would tend to team up with the CSU and part of the CDU against Merkel and the Greens. This coalition would have a sufficiently vast majority in the Bundestag, although in the Bundesrat, the chamber formed by representatives from the Länder, there may still be some problems.

At the local level, there are grand coalitions and if the SPD does not agree with policies at the national level, the representative of the State would have to abstain in the Bundesrat. The German legislative process often requires the agreement of the Bundesrat on several matters, including those related to Europe. In fact, federal legislation frequently has to be executed by state or local agencies. Parties are used to forming a conciliatory committee to find a compromise when there is disagreement between the Bundestag and the Bundesrat.

No matter how it goes, the consensus way of conducting policies is unlikely to change much in Germany, and this includes policies toward Europe. Still, in many policy areas, there may indeed be change. If tradition holds, which seems likely, as there is always the alternative option of a grand coalition with the SPD – the FDP would stay with the Economics and/or Foreign Affairs ministries. Thus, Wolfgang Schäuble would remain finance minister. The FDP’s leader, Christian Lindner (38), would normally opt for the Foreign Ministry (as Guido Westerwelle did in the 2009-2013 political term) or the Economics Ministry.

The Greens are more inclined to ask for ministries that deal with energy, the environment, and family matters. However, if they were to be in government with the CDU/CSU and the FDP, it would be unlikely that the FDP would get both the Economics and Foreign Affairs ministries as the Greens would ask to have Foreign Affairs (like Joschka Fischer in the SPD-Green coalition). In the case of a Jamaica coalition, there would still be a significant chance that Wolfgang Schäuble gets the job again and thus informs policies towards Europe.

CDU/CSU and the FDP (black/yellow)

If the SPD does not perform sufficiently well on 24 September to impede the CDU/CSU and FDP from getting a majority in Parliament, this would lead to a traditional Black-Yellow alliance. On paper, this seems the most cohesive coalition, but many in the CDU/CSU, especially Angela Merkel, would not like to be so dependent on a small party like the FDP, with which it had important frictions in 2009-2013 and whose stance on Europe, migration and energy/climate issues diverges from the current government and also from Merkel and at least part of the CDU’s stance.

In such a scenario, most probably Wolfgang Schäuble would remain finance minister. If a Black-Yellow coalition were technically feasible, it would be difficult for the two parties not to go for that, given the long tradition and the relatively close political positions between these two political forces. Still, today’s FDP is not the same as Genscher’s or Lambsdorff’s and its positions on Europe, migration, the automobile industry or energy and climate change have headed towards a less open and liberal and a more protectionist and Eurosceptic stance. It is also much less programmatic (principle-based) and it has run the campaign to re-enter Parliament as a one-man show, which makes it less predictable.

A black/green coalition?

This seems not a very likely scenario, although still a possible one if the Greens enjoy a better result than the FDP. The FDP and not the Greens are by tradition the first choice of the CDU/CSU and possibly the CSU would object to the Greens as the only coalition partner (they are much closer to Merkel’s choices and ambitions for her most likely last mandate). Therefore, a Jamaica coalition seems more likely than this option. [...]

Would the new German government re-launch the European project?

There are high expectations of a new drive towards European integration in the aftermath of the German elections, and EU governance is probably the area where the SPD, especially an SPD led by Schulz, would tilt the balance in favour of further European integration. President Macron in France is proposing a fresh new season for the European project. However, the roadmap presented by the Four and then the Five Presidents has been met with a lukewarm reception, if not outright opposition, in Germany.

Germany has opposed any mutualisation of fiscal policies or fiscal transfers, let alone any Eurobonds or mutualisation of government liabilities and any step towards completing the banking union with a European deposit insurance. There has been strong opposition towards any European unemployment insurance as well. Finally, there has been increasing criticism of European institutions. Is all this going to change?

Recently, Angela Merkel and Wolfgang Schäuble indicated cautious support for Macron’s ideas and made some substantial overtures for an expanded role of the European Stability Mechanism (ESM). The ESM would effectively become a sort of European Monetary Fund (EMF), allowing countries to call on the fund for countercyclical investment and the costs of natural disasters, and with some capacity to issue debt. In the traditional annual meeting with the press, Schäuble announced a proposal that will be unveiled after the elections.

The FDP is not keen to speed up integration either. The current FDP leader, Christian Lindner, resigned from the position of secretary general of the party in December 2011. A group of Eurosceptic FDP parliamentarians forced his resignation on the future course of the ESM. Therefore, any plan to go towards a strengthening of the ESM and its transformation into an EMF may find some opposition in the FDP and probably in part of the CDU/CSU as well. In the past, Germany was in favour of a semi-automatic mechanism for sovereign debt restructuring in the Eurozone, designed to prevent any form of risk sharing among its countries, as well as tools to reduce risk, and it is unclear whether this would be part of the ticket that makes the proposal more palatable for some sceptic voices. [...]

For Europe, there is much more than meets the eye in German elections. It will determine the course of European integration, with a clash between two different visions: further integration by strengthening European institutions (Schulz) and gradual integration by making the Union even more inter-governmental, with a de-politicised Commission and a transformation of the ESM (Merkel-Schäuble) with more responsibility on fiscal surveillance. However, Merkel/Schäuble have made some openings toward a possible Eurozone Finance Minister and some fiscal capacity. [...]

Full article on LSE blog EUROPP

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