Omar El-Nahry

As Britain obsesses over Brexit and our future relationship with the EU, we are discovering a new-found interest for  or suddenly waking up to the importance of  continental politics. The fates of Emmanuel Macron and Angela Merkel matter more to us now than ever, as both have a hand in the future of the UK outside the union. With just over a month to go until the German elections on 24th September, friend of Atlas, Omar El-Nahry, explains the internal mechanics of the contest, and why no outcome is likely to enhance the UK’s negotiating position.

 

One thing is clear, no matter what coalition Germany’s Autumn election produces, the Bundestag will re-elect Angela Merkel as Chancellor. Her strengths remain undiminished and she faces no serious opposition. Yet, Merkel’s fourth – and likely final term – is set to be her most challenging.

 

The Election Landscape

Six parties are vying for the votes of the German electorate this September.  Four can realistically hope to find themselves in power. At the centre are Germany’s so-called Volksparteien, the centre-left Sozialdemokratische Partei Deutschlands (SPD) and the centre-right grouping of the Christlich Demokratische Union (CDU) and the more conservative Christlich Soziale Union (CSU). No government can be formed without either the SPD or CDU and their respective candidates for chancellorship, Martin Schulz and Angela Merkel.

Given the Conservatives are currently polling around 40% and the SPD around 25%, either party will likely follow the norm of German politics – and form a coalition government. Another grand coalition between the ‘Unions’ (CDU and CSU) and SPD is the least preferred option, as emphasised by high-profile figures in both parties. So, two smaller parties will play an important role as potential coalition partners: The Green Party, traditionally an ally of the SPD, and liberal Freie Demokratische Partei (FDP), which has worked with both Union parties, can currently expect between 8% and 9% of the vote.

Finally, the far-left and far-right spectrum are covered off by the Left Party (Die Linke), polling at around 8% and the Alternative for Germany (Alternative für Deutschland, AfD), the far-right populist party, which polls at around the same percentage. While AfD will not be asked to join any coalition, the Left Party has signalled it is open to an (unlikely) union with the SPD and Greens.

 

The Challenger’s Challenge

Martin Schulz, the Social Democratic candidate, has little political experience at the national level. After serving as Mayor of a small German city near Aachen and a long career in the European Parliament, he returned to German politics in early 2017 to lead the SPD back into power. His most realistic chance to challenge Merkel is to attack her credibly on vulnerable policy fronts. While her government has presided over strong economic growth and budget surpluses, Germany has been falling behind on spending on education and infrastructure. Social divisions created by pervasive low-wage employment have been readily exploited by parties on the far left and far right. The country is also involved in a national debate over the best response to the large numbers of refugees that have arrived in the last two years. Yet, turning such grievances into an election-winning strategy will be difficult for the social democrats.

Firstly, Schulz would have to advocate for significant expenditure in the present, which would only likely pay off in a somewhat distant future. This is the very nature of spending on education, health and infrastructure, or making changes to employment laws. Relatively inexperienced on the domestic scene, this approach will make him an easy target for the CDU, which embodies fiscal discipline in the eyes of many Germans, and especially a resurgent, market liberal FDP. After several years outside of parliament, the FDP has regained its zeal for curtailing the spending power of the state, a message likely to resonate among the upper-middle class and Germany's ‘Mittelstand’ SME business leaders.

Secondly, it appears Schulz is willing to accept the intellectual framework created by Merkel. He has stated that he is planning to increase public spending and investment in the name of social justice – but also that he would maintain the Schuldenbremse, the "debt brake" imposed by finance minister Wolfgang Schäuble. This may remind British readers of the approach by Tony Blair in 1997, promising to keep within Tory spending limits to give Labour more fiscal credibility, but the circumstances in Germany today are different. Rather than providing the centre-left with an air of economic competence, Schulz’s acceptance of the rules of Merkel’s game is akin to conceding defeat. It seems impossible to beat a master politician like her on her own terms. Observe Germany's vote on gay marriage, in which Merkel not only used the opposition to introduce a long overdue reform, but also managed to maintain the mantle of a credible conservative through her personal no-vote.

This may be an unfair double-bind for the SPD. However, breaking the Merkellian mould would require a bolder left-wing party that is able to formulate a convincing alternative to Merkel’s successful, managerial and cautious approach to government; and is willing to show how this approach is unsuited to addressing the challenges facing the country in 2017.

 

Lessons from history

To understand what this could look like, it is worth turning to the recent past. Contrast Schulz’s seeming acquiescence with the sweeping style and approach of the last left-wing government under former chancellor Gerhard Schröder. Despite creating controversy at home and abroad, be it over the Hartz reforms to the social and employment system or Germany's involvement in the wars in Kosovo and Afghanistan, Schröder was able and willing to break with the political tenets established under 16 years of continuous CDU rule. 

In fairness, Schulz and Schröder challenged a long-time CDU incumbent under vastly different circumstances. In 1998, Germany under Kohl was stagnant, its economic model seen as outdated, making it the "sick man of the euro". Helmut Kohl, who served as Chancellor between 1982 and 1998, was tainted by a party financing scandal that had begun to chip at his mystique as "Mr German Reunification".

By contrast, Germany today appears to be at its height of post-war economic and political power. Merkel, more than once compared to Teflon in the German press, has not been affected by as much as a whiff of scandal. Add to this picture that she is riding on the success of the economic and social reforms undertaken by Schröder – a fact she freely admits, while the SPD is left attacking its own legacy – and you can see that the social democrats are in an uncomfortable position. Timidity and a lack of vision will make their position even more difficult.

 

Merkel’s Options

While there are five possible coalitions after the September vote, current polling favours another grand coalition dominated by the CDU and led by Merkel. This construct may look odd to British observers. Yet, there is great value in Germany's consensual style of government. It stands in stark contrast to the contemporary extreme partisanship of the Anglo-American world, or the ugly politics of the AfD and other far right parties. However, while another CDU-SPD marriage would yield a stable government, it would not be good for German democracy. Disenchantment with politics is already high and the slow decisions and murky compromises that are the price for this configuration are likely to increase it further.

Depending on final numbers, Merkel also has several other options: She could rule with the FDP and a slim majority – a risky approach, as highlighted by the recent defection of a Green Party regional MP to the CDU, resulting in the SPD-led regional government losing its hold over Lower Saxony. In a less likely case, Merkel could also form the first three-party coalition since the 1950s, involving both the FDP and the Greens.

Schulz, on the other hand, would not only have to overcome Merkel’s political strength, but also more complex coalition negotiations. Barring a dramatic swing in the polls, he would have to assemble a coalition with the Green Party, increasingly amenable to a coalition with the CDU, and Die Linke, whose uncompromising stances place it firmly in the opposition, not in government.

While the polls are no more infallible in Germany than in the UK or the US, there are few events that would allow Schulz a Corbyn-style surprise on election day. Protest voters have been drawn away from the SPD and into the camps of Die Linke and the AfD, with the former likely to become more rigid in its demands as its share of the vote increases. A terrorist attack would further strengthen the far right. And Schulz is unlikely to change his principled, yet relatively moderate rhetoric and approach to politics to energise those that feel disillusioned by the political system.

 

No Help for the UK

Whatever the outcome of the election, nothing will provide much comfort to those in the UK hoping for a favourable Brexit deal. No party that could be part of the Federal Government is Eurosceptic. Merkel will continue to be the Government’s dominant figure and she has placed the integrity and stability of the EU – or at least her vision of the EU – at the very heart of her policies.  While some figures in the FDP oppose making an example out of the UK and emphasise the opportunities for business, the party is also aware that Germany’s economic success depends on an open European bloc. The pro-business party will also look unkindly at British attempts to bargain with the success of German companies in the UK. As such, Britons hoping on support from the new German Government should reign in their expectations.

 

The Outlook

Ultimately, Merkel’s final term will be her most challenging and the most crucial for her legacy. She has presided over what has largely been a good decade for Germany and perhaps most Germans. The next four years however will require a number of hard choices to be made. The country needs to start investing its considerable surplus now to ensure future prosperity. Scandals have left the once invincible German economy looking surprisingly fragile. Society, more polarised by issues such as refugees, immigration and inequality needs to find a uniting narrative to move forward. And Europe, beyond Brexit, needs open discussions, compromises and likely the flexibility to break with some aspects of Merkel’s European vision. The next four years will tell if Merkel has the courage, and not just the management skills, to address these issues.

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