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Germany

Assessing the potential coalitions that might emerge after Germany’s federal elections

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roslerFDP

With now less than 40 days to go until Germany’s federal elections, polls show that chancellor Angela Merkel is by far the most popular candidate to return as chancellor and her party, the Christlich Demokratische Union (CDU, Christian Democratic Union), will clearly be the largest bloc in Germany’s Bundestag after the election. Germany Flag Icon

Polls have been remarkably consistent throughout much of the year leading up to the September 22 vote.  The center-right CDU, together with its Bavarian sister party, the Christlich-Soziale Union in Bayern (CSU, the Christian Social Union), overwhelmingly leads Germany’s largest center-left party, the Sozialdemokratische Partei Deutschlands (SPD, the Social Democratic Party), and voters overwhelmingly prefer Merkel to the SPD’s candidate for chancellor, Peer Steinbrück — by a nearly two-to-one margin.  Here’s the trendline from Infratest dimap, which released its latest poll this week:

chancellorgraph

This week’s news that Germany leads GDP growth in the eurozone, which itself pulled out of recession in the second quarter of 2013, will only buoy Merkel’s chances.  Barring a huge shift in public opinion that has only calcified over the past year, Steinbrück, a bland technocrat who comes from the right wing of the SPD and who served as finance minister in the ‘grand coalition’ government of 2005 to 2009, will lead the SPD to a loss of nearly historic proportions.  But while that means Merkel is very likely to return as chancellor, the composition of Merkel’s third government is less certain.

That’s because support for Merkel’s current coalition partners, the free-market liberal Freie Demokratische Partei (FDP, Free Democratic Party), has collapsed since the previous September 2009 election, when it won 14.6% of the vote and 93 seats in the Bundestag, a record-high electoral performance for the party.  But since 2009, the FDP has struggled to maintain a presence in local Germany elections, losing support in state after state.  Its decade-long leader Guido Westerwelle, the first openly gay party leader in German history, stepped down in April 2011 as party leader and vice chancellor (though he remains foreign minister) after the FDP won barely 5% in the state elections of Baden-Württemberg.  His successor as FDP leader is the Vietnamese-born Phillip Rösler (pictured above), who began his career in Lower Saxony (Niedersachsen) and who had served previously as health minister in the CDU/FDP coalition government from 2009 to 2011.

Although Rösler has not lifted the FDP back up to its 2009-level heights, he has managed to staunch the party’s decline.  In the May 2012 elections in North Rhine-Westphalia, Germany’s most populous state, the FDP managed to win 8.6% of the vote, an increase of nearly 2% from the previous election, though that’s largely due to the popularity of Christian Lindner, who led the FDP’s 2012 campaign.  More recently, though, in Lower Saxony’s state election in January 2013, the FDP won 9.9% of the vote, a gain of 1.7%.

It’s also because Germany’s electoral system is notoriously complex.  Germans will actually cast two votes in September — the first is for a candidate to represent one of 299 electoral districts in Germany, the second is for a German political party.  The second ‘party vote’ is meant to determine the party’s ultimate total share of seats in the Bundestag, and so a party will receive additional seats on the basis of the party vote sufficient to provide that its percentage of seats in the Bundestag is roughly equal to the percentage of votes it received pursuant to the party vote (so long as the party receives at least 5% of party vote support).  That means that the number of seats in the Bundestag changes from election to election — although it must have a minimum of 598 seats, it has had as few as 603 and as many as 672 since German reunification.

The FDP has struggled all year long to achieve merely 5% support in opinion polls and, while it’s doing better in polls than it was at the beginning of the year, there’s no guarantee that it will meet that threshold:

trendline2013germany

That means that, more than anything else, the composition of Germany’s next government turns on the FDP’s performance.  If it wins less than 5%, Merkel will not have the option of continuing a coalition with the FDP.  Moreover, even if the FDP wins more than 5%, it may still not win enough seats to cobble together a CDU/FDP majority in the 598-member Bundestag.

Furthermore, polls show that while German voters overwhelmingly prefer Merkel as chancellor, they actually favor a return to the CDU/SPD grand coalition, more than the current CDU-led government or a potential SPD-led government:

preferredcoalitions

Two additional coalitions — a CDU/Green government and a united left coalition among the SPD, Green and Die Linke (the Left Party) — also win significant support.

But what are the chances that any of these five coalitions will actually emerge after September 22?  Here’s a look at each potential coalition and the chances that it could form Germany’s next government.

CDUpreferredcoalitionThe current government: CDU/FDP.

Merkel prefers to continue her current coalition over any alternative because her political agenda matches well with the FDP’s political agenda.  Any negotiations between Merkel and the SPD or the Greens would entail huge concessions from Merkel that she would not otherwise have to make in coalition with the FDP.  But, as noted above (and as represented in the graph to the right, on the basis of current polls), it’s unclear if that coalition can win a majority.

Under Rösler’s leadership, the FDP is running on a campaign of lower taxes and liberalizing Germany’s economy, which is standard Free Democratic fare, and both the FDP and Merkel’s CDU oppose new tax increases.  Their largest policy difference might be same-sex marriage — the FDP supports it and the CDU (and especially the Catholic-influenced CSU) oppose it, although the FDP has taken a much stronger stand on privacy rights than Merkel’s CDU.

Even if they win enough seats to form a majority, no one expects the margin to be larger than the government’s current 21-seat margin.  So even a single-digit majority could turn out to be a Pyrrhic victory if Merkel finds herself forced to look outside her own government to enact her legislative agenda on an ad hoc basis, especially with respect to European Union matters, given the sometimes eurosceptic nature of many CSU deputies.  That’s hardly a recipe for stable government.

Polls in August show that together, the current government will win between 44% and 47% of the vote if the election were held today.  Unfortunately, that doesn’t give us much of an idea about whether they’ll have enough support in the Bundestag to form a majority.  Since reunification, Germany has held only six federal elections — they’ve resulted in three CDU-led governments, two SPD-led governments and a single CDU-SPD grand coalition. Continue reading Assessing the potential coalitions that might emerge after Germany’s federal elections →

Greece

Greek government, troika reach agreement on Greek bailout

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It seems all but done — Greece’s government and the ‘troika’ of the International Monetary Fund, the European Central Bank and the European Commission have reached an agreement on the latest disbursement of funds that Greece needs to finance government operations, in exchange for a series of budget cuts and labor market reforms. 

In an additional twist, there are quasi-official reports from both Germany and Greece that the bailout program will be extended from the end of 2014 to the end of 2016, which will give Greece until at least 2016 to whittle down its budget deficit to the 3% required under EU rules, though it seems unlikely that Greece’s budget will be anywhere near to closing in on that target by even 2016.

The details are essentially as described over the past four months — €13.5 billion in budget cuts over the next two years, €9 billion of which will take effect in 2013.  The bottom line for Greek finances is that a Greek exit from the eurozone, which seemed virtually inevitable through much of 2012, has now been delayed, and delayed for a significant amount of time (Citi, for example, lowered its odds of a ‘Grexit’ to 60%, and predict it could still happen, but only in the first half of 2014).

That’s a significant victory for Greece’s prime minister, in office for barely four months, Antonis Samaris (pictured above, right, with Euro Group president and Luxembourg prime minister Jean–Claude Juncker), and it will now give him some breathing space to turn to Greece’s economic depression.

For me, there are three notable political aspects to the deal worth noting:  Continue reading Greek government, troika reach agreement on Greek bailout →

Germany

Wolfgang Schäuble, the ‘big beast’ of German politics and a vital European policymaker at age 70

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I am also a week late to this — but it should be noted that Wolfgang Schäuble turned 70 last week, and it’s been an opportunity for the German media to reflect on a man who’s been a “big beast” (to steal a term from the UK’s Kenneth Clarke) of German politics.

The Guardian called him “the politician who has done more to shape contemporary Germany and Europe than anyone else currently in office in the EU.”

Schäuble, a lion of the Christlich Demokratische Union Deutschlands (CDU, Christian Democratic Union), has been a member of the Bundestag, the lower house of Germany’s parliament, since 1972.  He served as a key ally of chancellor Helmut Kohl during Kohl’s reign from 1982 to 1998, including as minister of the interior and chair of the CDU in the Bundestag in the 1990s, leading negotiations on behalf of the Federal Republic of Germany (i.e., West Germany) for reunification with the German Democratic Republic (i.e., East Germany). He, alone among the current German government, was present in 1992 when the Maastricht Treaty brought the single currency into existence.

Kohl, however, refused to cede the limelight to Schäuble — the CDU lost the 1998 election and Schäuble himself was implicated in a party funding scandal in 2000.  By the time that the CDU regained power, it was under Angela Merkel and not Schäuble.  The falling-out between Kohl and Schäuble was so acrimonious that even today, Kohl refuses to take part in the many celebrations of Schäuble’s 70th birthday.

In 2004, Merkel refused to nominate him for the largely ceremonial role of the German presidency, another rebuke to a man who was all but assumed to be, at one time, a future chancellor.  But Merkel’s relationship to Schäuble has taken a different turn than his relationship with Kohl.  Schäuble, who served again as interior minister during Merkel’s “grand coalition” government from 2005 to 2009, has now served as finance minister since 2009.

As such, Schäuble, who has been paralyzed and uses a wheelchair since a 1990 assassination, at age 70, is arguably at one of the most engaged — and vital — points of his lengthy career in public service.

In the past week alone, he’s been talking up a plan to leverage the European Stability Mechanism, boosting the value of the euro when he said the currency’s salvation was “worth any effort,” and throwing cold water on the idea of a European bailout for Spain (picking a subtle fight with France while doing so).  The week before, he got into a row with Jens Weidmann, the president of Germany’s Bundesbank (Germany’s central bank) — Weidmann has opposed the move for the European Central Bank to buy the debt of eurozone countries directly.

It’s safe to say that he is second only to Merkel herself and European Central Bank president Mario Draghi in his centrality to determining the future of the euro.  Big beast, indeed.

When I think of Schäuble, I can’t help but also think of Clarke — if Clarke is a One Nation Tory, I think of Schäuble as a kind of One Nation Christian Democrat.

  • They both entered politics in the early 1970s, and rapidly became rising stars.
  • They both served as finance minister (in the UK, Clarke served as chancellor of the exchequer, which is the equivalent) in times of currency crisis — Clarke in the wake of the 1992 sterling crisis and Schäuble today, during the eurozone crisis.
  • They both watched their leadership prospects crumble away as their parties passed them over for a new generation (Merkel, in the case of Schäuble, and David Cameron and others, in the case of Clarke).
  • And they have both been, despite right-wing pressures from their respective parties, champions of the European project throughout their careers.

For better or worse, whatever the solution to the eurozone crisis, it seems nearly certain that Schäuble will be among its authors.