Merkel prepares to negotiate her 'grand coalition'. Demotix/Goncalo Silva. All rights reserved.

On Germany’s sensational election night of September 22, international television viewers were briefly confronted with a surreal image. The electorate’s overwhelming verdict on the chancellorship was clear-cut – Kanzlerin Merkel was to stay in her post. But as the Christian Democrat leader’s bumper victory was being reported live, images were broadcast of opposition social democratic SPD supporters bursting out cheering.

This briefly confused news presenters before they were briefed on what was going on: the SPD was cheering because the pro-business, neoliberal party FDP had been voted out of the Bundestag. But will their cheers prove hollow as Germany's right-wing regroups as an extra-parliamentary force?

Schadenfreude

Merkel had lost her junior coalition partner in September’s election and the Bundestag balance had shifted to the centre. The chancellor’s conservative CDU-CSU party will be isolated in the Bundestag and this is what prompted the spontaneous election-night outburst of Schadenfreude from the Social Democrats, who had themselves been heavily defeated.

FDP’s wipe-out means that the party-political dynamic has been ineluctably heading towards a grand coalition between the Christian democratic CDU-CSU and the Social Democrats of the SPD. Votes cast also dictate that the grand coalition will be led by Angela Merkel, Germany’s new eternal chancellor, who is now one election victory away from equalling the original ewiger Kanzler Helmut Kohl’s sixteen years at the helm.

Grand coalition of hugs and bargains

Formal talks between the SPD and Merkel’s CDU-CSU are well underway and are set to lead to a grand coalition led by Merkel before Christmas. There was spontaneous hugging in Berlin as the 77 members of the two parties greeted each other at the start of negotiations on 23 October. The meeting was so amicable that observers likened it to a family reunion.

The new grand coalition will force the CDU-CSU to make concessions to the smaller SPD in the shape of ministry posts, policy and rhetoric, leaving acres of space on the right. Grand coalitions rule by cautious consensus and tit-for-tat bargains, sparking resentment and voter dissatisfaction.

The current cosiness of the talks and ongoing back-room dealing over ministerial posts is bound to add to anti-establishment feelings. A backlash among a substantial section of disaffected SPD members is already swelling online.

German political history shows what happens on the extreme right-wing fringes during a grand coalition. The first post-war grand coalition, starting in 1966, left the door open for the neo-Nazi National Democratic Party of Germany, NPD, to soar out of nowhere to 4.3% in the subsequent 1969 elections, narrowly missing the 5% needed to enter parliament. The same NPD’s membership swelled by nearly a fifth during the first year of the next grand coalition, led much later by Merkel herself from 2005 to 2009.

During these two grand coalitions, the FDP was in effect an opposition machine anchored in the Bundestag, positioning itself firmly on the right on economic policy and hammering the two governing parties for not doing enough to lower taxes and not cutting welfare spending fast enough. This time, the neoliberal FDP will join other right-wing forces outside the Bundestag. There will be no rightist parliamentarians soaking up and channelling resentment towards the grand coalition. The action will be outside parliament.

Hungry for power and revenge

The FDP is an extra-parliamentary movement for the first time in its history. It joins other forces on the right who can choose whatever line of attack they want, unencumbered by the responsibility of having seats in parliament, let alone a minister in government.

The FDP’s future emergence out of the current wilderness will depend on winning dissatisfied voters on the right, a fertile ground in times of grand coalition. Presenting itself as an anti-establishment outsider force will be a tempting strategy for FDP activists hungry for power and revenge.

To be clear, the FDP is anything but right-wing or conservative on issues such as gay marriage, cultural diversity and human rights. The leader who brought the FDP to September’s disastrous defeat was Germany’s first high-ranking minister of Asian background.

But the party’s long-standing flirtations with ever more hard-line anti-welfare and anti-taxation policies are set to be firmed up in the coming years. If this message starts dominating political discourse and forces the grand coalition into pre-emptive copycat neoliberal reforms, many millions of low-paid Germans will suffer heavily.

Mini-jobs

Germany’s low employment economy is the result of radical labour market reforms launched a decade ago that have forced around a quarter of the national workforce into low-paid, insecure and part-time employment.

The Jobwunder, Germany’s hyped employment miracle, is built on mini-jobs, an exploitative form of low-wage, flexible employment that traps millions of Germans in poverty.

European economies with higher labour market standards can’t compete against this social dumping and thus the German export machine rules supreme.

A new dose of neoliberalism could forever undermine the values that have traditionally underpinned Germany’s beleaguered social-market economy, swelling the Federal Republic’s legion ranks of the working poor.

German income inequality is already growing at record rates but as the American example shows, there are no built-in limits to how much further this socially damaging process can go.

Alternative for Germany

The FDP is one of two right-wing forces in Germany that could realistically cross the 5% threshold and enter the Bundestag at the next federal election. The more radical Alternative für Deutschland narrowly missed the Bundestag threshold in September. The newly formed party gained a spectacular 4.7%.

If more bail-outs and Eurozone instability ensues in the coming years the AfD, which wants to leave the Euro currency zone and reintroduce the Bundesmark, could gain a serious number of seats. Polling before the September federal elections consistently showed that around a quarter of German voters could imagine voting for an anti-Euro party like the AfD.

The AfD is an economically nativist and backward-looking party, nostalgic for the stability of the Bundesmark. If a more general revivalism of Germany’s past glories gathers momentum, the party’s support risks morphing into something nastier still.

Ominously, the neo-Nazis of the NPD have praised AfD for the “important function it serves in breaking the ice and opening doors for the NPD's criticism of the euro and the EU.” The AfD has been forced to actively vet new members for right-wing extremist backgrounds with unknown effect.

A new monster?

The FDP’s absence from the Bundestag is not the only way the Federal Republic’s third grand coalition will be different from the preceding two. The grand coalition will govern at a time of the worst economic crisis since the Great Depression. The bailout and ensuing austerity has led to right-left polarisation across the Western world. Germany is by no means an exception.

In major economic downturns, right-wing politics takes upon itself the role of preventing and destroying popular moves towards establishing left-wing socialism. Today’s perceived threat looms large in the shape of Germany’s third largest Bundestag party, the firmly socialist Left Party called Die Linke.

Scared of Die Linke’s anti-capitalist programme, business leaders and wealthy elites will pump even more money in the party coffers of the FDP and will be increasingly tempted to fund the AfD.

In return for their money, they will get even harder anti-state, anti-spending and anti-welfare policy stances. Outrage at perceived concessions by the moderate right to the left under the grand coalition will be thrown in for good measure.

If business leaders and wealthy donors persist in going down this road, the establishment risks setting free forces beyond its control. That scenario, of course, looks very much like how the extremist economic dogma of the Tea Party was unleashed.

Germany risks creating its own monster.