Can Europe Make It?

A new German government: but what about that new German politics for Europe?

After months of campaigning, leading to an election, followed by weeks of negotiation, the German Social Democrats and Merkel's CDU/CSU have finally agreed to form a grand coalition. But can this coalition hold? And how will it affect Europe?

Ulrike Guerot Victoria Kupsch
28 November 2013
Demotix/Gonçalo Silva. All rights reserved.

Demotix/Gonçalo Silva. All rights reserved.

By the time you read this article, Germany will be different. The lid on the coalition agreement between the Union (CDU/CSU) and the Social Democrats (SPD) will be lifted. What is a common first step in setting up a government after elections in Germany, has on this occasion become a political catch 22.

On the evening of the September 22 election, in which Angela Merkel won 41.5 per cent of the vote, she and her party, the CDU, were cheerful. A clear victory and an extraordinary result - even more so considering that the Social Democrats had regained only 2.7 of the 11 percent of votes they lost in the 2009 elections, only adding up to 25.7 percent in total.[1]

However, with the CDU’s former coalition partner, the liberal Free Democrats, voted out of parliament and a missed absolute majority, the CDU needed a new coalition partner. The fact that the other two remaining parties in parliament were The Left (8.6 per cent) and the Greens (a disappointing 8.4 per cent) left little wiggle room. Soon, it was clear that Merkel’s options were limited, her victory tarnished and that compromises needed to be made.

While the Union and SPD have a common experience in forming a grand coalition [2], many thought a coalition with the Greens might be the solution this time [3]. But the Greens, given their electoral setback, soon declared themselves in a state of “deep inner trauma”, devoting their attention to a recovery period of self-reflection outside government. After brief exploratory talks, the Greens and Union jointly declared their mutual respect as well as their agreement that “working together was a future option”. A future farther away than 2014. 

The Social Democrats agreed to negotiate. Since then, political life in Berlin and in many other capitals around Europe has given the appearance of being on hold - the current EU crisis and Germany’s position within it underlines the importance of the coalition talks, both for Germany and the EU. And so European policy makers have been waiting for Germany - again. This European attentisme, which was already observable during Merkel’s overly cautious decision-making throughout the past three years, continued during the German election campaign, and finally culminated in the coalition talks.

But the wait is not yet over: European patience is expected to reach its apex with the ballot vote of all 470,000 SPD party members. Only with a majority there can the grand coalition be set up. And what the SPD leadership initially expected to be a disciplined, reconciliatory process is becoming increasingly out of control: many party members having expressed concern that they will “lose credibility to the CDU” are determined to never work with the Union again, and thus to vote against the treaty. Several policies have here been invoked as touchstones: at the top of the SPD’s agenda are, for example, the right to keep two nationalities for people born in Germany (rather than decide on one by the age of 23), the legal equivalence of same-sex marriages for adoption purposes, the abolition of the retention of data (Vorratsdatenspeicherung), the introduction of a wealth tax, education reforms, and a minimum hourly wage of at least 8.50€.

On Wednesday, November 27 at 6 am, the top 15 CDU/CSU and SPD negotiators finally finished their work on the treaty. The SPD got through their demands on the minimum wage, an increase of the education budget, the double-nationality; the CDU/CSU with a mother’s pension and vague formulas regarding a foreigner toll for highways as well as the status of same-sex parents towards adoptions. Upon leaving the scene, tired-looking SPD officials stated that until their party memberss' decision, no personalities or cabinet structure would be discussed, adding that the internal plebiscite will be held by December 14. Should the SPD members vote “yes”, the new government will be formed before Christmas.

In a worst case scenario, where SPD members reject the Union-SPD coalition treaty, two alternatives exist: a Union-Greens coalition with the Greens taking up coalition talks again; or re-elections. A theoretical third option of a three-party government of SPD-Greens-The Left has been ruled out from the word go. And Angela Merkel is short of seats to govern alone, if one prices in the some 30 or so “rebel MPs” in her own camp, (e.g. those who voted against Merkel's European policy in recent months). Nobody wants new elections; but even if the grand coalition is in place by December, it will be a fragile government in many respects and some predict it may not last a full term.

The wider implications of Germany’s inner struggles are visible on the European level: both parties have long been working on a joint understanding of what it is that they have so delicately headlined “Germany’s political responsibility for Europe”. Paragraphs have been written and many pages filled: misunderstandings, differences, and banalities were discovered en route - but with no trace of any innovative, progressive understanding of Europe’s future and the role of its biggest member country. But of course Germany is not the only country finding itself hesitant in the face of European politics when it comes to doing what is needed.

With a stable Union-SPD majority and a consequently rather weak group of Euro-sceptics, many expected that Germany's European policies would be newly emboldened. While Germany’s partners hoped the wait would be worthwhile and Berlin would finally change up a gear towards a more highly motivated course of action, a first draft presented on 22 November proved disappointingly superficial, amounting to a simple continuation of recent years. How can Germany be a driving force in Europe when it still favours national interests and party politics over progress on the EU-level? In addition, the CSU’s Schulden- (guilt and debt) oriented rhetoric will certainly not help to make Germany a reliable cooperation partner for other EU members, notably the southern states...

If one agrees that the current crisis is a symptom of institutional shortcomings, how can solutions still focus on continuing with what has brought us to where we are? Problem-solving is not about lip-service, but about concrete measures and actions. The disconnect between economic and political integration is clear: While the economic union and single currency are in place, the political mechanisms to manage them are not. This crisis has exemplified that a stable single currency must be accompanied by joint finance policies and stronger European coordination of national budgets as well as growth policies.

The final paper offered by the current coalition proved better than the first draft, but is still incomplete. It is worth noting that the “Community method” is said to be placed again at the centre of European integration policy. And some forward looking, concrete proposals, can, indeed, be found, i.e. a single voting scheme for the EP in all EU member states. Yet, the ten pages on Europe remain vague, pick up the usual rhetoric about subsidiarity and use the same language as in the past years of crisis management, which is the usual commitment to promote growth, competitiveness and innovation, strive for sound public finances and fight against youth unemployment.

Hence, with respect to common instruments, there is still a looming lack of precision: none of the former projects - advocated for, more or less openly - by the SPD, i.e. to create an EU finance ministry, a debt repayment fund or a full banking union are mentioned in really clear and convincing wording. Quite the opposite actually: common liability is excluded, and the Single Resolution Mechanism (SRM) is not even mentioned. Other pressing issues such as what position Germany anticipates taking on how ailing banks can be stabilised through the ESM [4], whether and how to implement the financial transaction tax, or how youth unemployment in the EU can be decreased, are addressed in an equally vague manner. Additionally, it seems that the current draft entirely disregards the EU’s 2020 growth strategy and the Commission’s advice. 

The wording and semantics are again much more about the self-responsibility of each member states for its reform agenda, than about joint instruments, joint actions and appropriate European tools. Regarding shock absorption, Europe is heading at best for individual raincoats rather than for a strong and common umbrella. Transnational fiscal solidarity is far away, and mechanisms to even the equally disturbing inner-European trade imbalances didn’t find their way into the coalition agreement.

Germany cannot afford a continuation of the past four years' policies - while hesitation may have felt safe at first, it is by now clear that it was too often short-sighted and hence damaging to long-term prospects. In the current state of the European Union, where markets are poorly managed because of political under-integration, Germany has to take responsibility. Policies must be drafted for and from a European level, and the re-nationalisation of competencies, which could only lead to political deadlock while markets continue to spiral out of control, must be avoided. 

The upcoming weeks will challenge the reluctant hegemon in two ways. First, Germany will have to overcome its inner struggle and form a viable government. Second, Germany not only has to find its place within Europe, but must also take an active role in re-designing it. In short: Germany has to understand its responsibilities as the biggest and the economically strongest member state of the European Union. Yet, for the time being, we can't do anything but await the outcome of the SPD internal vote.

[1]  The SPD in 2009 (23 percent) lost more than 11% of its voters as compared to 2005 (34.2 percent) – a fact often associated with the increase of non-voters in worker’s households after the Agenda 2010 reforms.

[2] The name relates to the common understanding that the SPD and the Union are the two big parties (Volksparteien) in German politics, representing a sizeable part of the German electorate.

[3] Germany has so far never been governed by a Union-Greens coalition, despite the fact that even leading politicians of both parties see large overlaps, both in their respective clientele and interests. 

[4] The deployment of ESM money being conditioned by a vote of the Bundestag.

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