Germany’s recent election brings an end to the long tenure of Angela Merkel. Malte Zabel, Co-Director, Europe’s Future at Bertelsmann Stiftung in Germany, and Brandon Bohrn, Project Manager, Transatlantic Relations at the Bertelsmann Foundation in Washington, D.C., reflect on what might be expected of the new “traffic light” coalition.

1. What is your take on the coalition negotiations in Germany? Who will become the next German chancellor?

Malte: Olaf Scholz is clearly holding the pole position. That said, there is still quite a way to go for a “traffic light” coalition government to take office. Negotiations over a number of issues, including the question of who will get which job, are just beginning. Nevertheless, the pace of the exploratory talks, its constructive fashion, and the progress that has already been achieved are remarkable.

For the first time ever, German policymakers were obliged to build a three-party coalition at the federal level by the election result (as another Grand Coalition had been ruled out widely already during the campaign.) This made things more complex than in the past. Against this backdrop, it proved very effective that the Greens and the FDP, the parties with the allegedly biggest differences, were the first who started talking.

That both quickly agreed upon a common goal of moving ahead was a crucial precondition for initiating talks in a three-party setup and strengthened their position vis-à-vis the election’s biggest winner, the Social Democrats.

Brandon: All signs point to Olaf Scholz becoming Germany’s next chancellor, leading the first-ever “traffic light” coalition at the national level, comprised of the SPD, Greens, and Free Democrats. From the opposite side of the Atlantic, Americans looking for a quick post-Merkel transition have been sorely disappointed.

Patience is the name of the game. The rate at which negotiations have proceeded, however, has been a bit quicker than most pundits suggested on the night of Election Day, as onlookers fixated on the most fragmented electoral outcome in German history. Indeed, despite the split results, the three-party coalition negotiations have moved at a steady and productive pace. Of course, the lessons from 2017, when the FDP walked away from the negotiating table comprised of the Greens and Christian Democrats, show that nothing should be taken for granted.

For Americans frustrated by hyper-partisanship and its far-reaching consequences on policymaking, the degree to which Germany’s political parties have been willing to compromise and negotiate indicates a comparatively healthy and stable democratic process.

2. What will this mean for German domestic politics? More of the same or do you expect major changes?

Malte: On a systemic macro-level, nothing will change with a “traffic light” coalition (or any other theoretically feasible government). Germany will remain a social market economy with solid welfare systems. However, within this given framework, the SPD, Greens, and FDP are indeed likely to tackle a number of reforms: additional and more ambitious measures against climate change, accelerating digitalization, tax reform, different basic security benefits for job seekers and children, adaptations of pension policies, and alterations of the German health insurance schemes –to name a few.

However, all these potential reforms depend on a more general matter which is not settled yet: the space for public spending. Red, green, and yellow agree that dealing with climate change, digitization, and demographic change will cost a lot of money. But they entered talks with different positions on how to finance it. While SPD and Greens favor more public investment, the FDP has a strong, fiscally conservative focus. To be successful, the coalition talks must lead to a political compromise bearable for everyone.

Brandon:  Once the new government enters office, it will likely focus heavily on domestic policy – much to the dismay of transatlanticists hoping for increased cooperation between the U.S. and Europe. The ideological differences among the “traffic light” parties (mainly between the SPD and Greens on one side and the FDP on the other) have undermined the potential for cooperation in the past.

The so-called exploratory phase of the coalition talks, however, has produced an agreement among party leaders that signals a certain bridging of these gaps. Almost all of the points are domestic in nature. Party leaders have agreed to end coal-fired power plants at a quicker pace, forgo any new taxes, increase the minimum wage, expand investments in innovative, green renewable energy, and secure long-awaited improvements to digitalization.

Despite these tentative agreements, however, this is the first time in Germany’s democracy that the two junior coalition partners together, the FDP and Greens, will be larger than the senior coalition partner, likely to be the SPD. The absence of one dominant party could lead to policy paralysis and the inability to affect significant change. The negotiations are far from over, so onlookers will have to wait and see how the ultimate agreements look. In any case, those watching Germany are largely expecting more of the same.

3. What direction will Germany’s European policy take? Will the new government play a leading (more active) role in strengthening Europe’s sovereignty?

Malte:  This is a tough one. European and foreign affairs, in general, played only a marginal role during the election campaign. And Olaf Scholz has not come up with a big European vision yet (and he is not very likely to do so in the near future). However, all lights of the traffic light do have a pro-EU-stance. Scholz has been one of the driving forces behind the European recovery fund and has established himself as a widely accepted pro-integrationist figure among his European counterparts.

Furthermore, particularly the Greens and a bit less loudly, also the FDP have been pretty outspoken on a number of topics which are implicitly linked to the need for more European sovereignty: they have been criticizing Putin, spoke in favor of a tougher European stance on China and of more European engagement in its neighborhood (the latter was part of the green election manifesto).

In principle, all “traffic light” partners support the idea of a sovereign Europe, which increases its ability to act and decreases its geoeconomic dependencies. However, such commitments are easily said on a Sunday, and it remains to be seen to what extent they will be underpinned by real political action from Monday to Saturday.

Brandon:  A new government of the SPD, Greens, and FDP led by Olaf Scholz will likely not change Germany’s position in and approach toward Europe. Germany is still the economic powerhouse on the continent. As Europe begins to build back better in the wake of COVID-19 through initiatives like the Next Generation EU Fund, Germany’s role is of paramount importance.

Most polling suggests that the EU-27 sees Germany as the most influential power within Europe. Furthermore, the Biden administration’s efforts to engage with Berlin signal that Washington still views Germany as the most important European actor. Still, Germany will be inward-facing in the next months.

The compromises required of a three-party coalition could also mean that the government may be limited in its ability to pursue a more active Europe policy. Therefore, Europeans wanting Germany to take a far more leading role in European initiatives may be disappointed. A stable status quo will likely prevail. When looking at the volatility surrounding the upcoming French election and the ongoing democratic backsliding taking place in central and eastern Europe, stability might be just what Europe needs at this time.

4. Will a new German government seek closer ties with the U.S.? Or will divergence of interest increase to the detriment of the transatlantic partnership?

 

Malte: In general, all parties of a potential “traffic light” coalition want stable and good relations with the United States. However, this does not imply that like-mindedness between Washington and Berlin, precluding any conflicts of interest, will be a given. Afghanistan and Aukus just illustrated that America’s and Europe’s strategic goals or the means to reach them do not automatically converge.

That said, the elephant in the room is China. Under Merkel, Germany followed a rather economy-oriented China strategy causing some indignation on the other side of the Atlantic. As part of the still incumbent Merkel government, Scholz backed this course, including the German dedication to the CAI. Washington should not expect a traffic light coalition to change Germany’s China policy in a way that is harmful to some of its major industries – despite the fact that there are indeed prominent characters, in all of the parties supporting a rather value-based approach, which might induce a slightly more critical approach.

Brandon: Fortunately, from an American perspective, the parties likely to lead Germany’s next government favor a close relationship with the United States in most areas. They support the cornerstones of the transatlantic relationship: a strong trading partnership and a robust security alliance under NATO. Despite several setbacks faced by the transatlantic relationship in recent months – mainly AUKUS and the Afghanistan withdrawal – the Biden administration is pro-European at heart. Both American and German leaders see the relationship as important. That might explain why Chancellor Merkel was the first foreign leader President Biden called when entering office and was also the first to visit the White House in July.

Similarly, Olaf Scholz has visited Washington twice this year, as recently as last week, signaling his acknowledgment of the U.S. as an important ally. The Biden administration’s decision to back off of Nord Stream 2 signals its ability to respect the wishes of its partners, despite divergences of interest.

However, on the issue of China, Germany’s long-standing balancing act between Washington and Beijing is increasingly becoming a less maintainable option. Most anticipate a “traffic light” coalition to take a slightly tougher approach toward China, but not to the extent that Germany’s economic interests will suffer. This will likely be a point of frustration between Washington and Berlin moving forward.

5. Any final thoughts?

Malte: Maybe a hope rather than a thought. Naturally, any new government’s room to maneuver on the international stage is initially constrained by domestic politics. This is even more, the case in these pandemic times.

However, Germany is in urgent need of a strong and sovereign Europe. Europe, in turn, needs a committed Germany to become more sovereign. So my hope is that this paradigmatic connection will receive more reflection in the next government’s real politics than it did throughout the election campaign.

Brandon:  The window for Germany and the U.S. to secure substantive progress is closing very quickly. By the time the next coalition government enters office later this year or early next, there will only be a short amount of time before the U.S. starts ramping up its midterm election campaigns.

The Biden administration is likely to focus its priorities inward ahead of those elections, leaving out room for transatlantic engagement. Similarly, Germany’s main European partner, France, will also begin looking inward as it approaches its own election in April. Whether combating climate change or forging closer engagement vis-à-vis China, the next six months will prove critical to pursuing tangible transatlantic cooperation.

 

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