Germany’s new government: what the world can expect in a post-Merkel era

Leaders of Germany’s Social Democrats (SPD), Greens and Liberals (FDP) have reached a deal on their coalition agreement for government, paving the way for a new administration to replace that of Angela Merkel.

The agreement is the product of negotiation by some 22 working groups, with around 300 participants from the three parties from national and state levels. It includes a detailed programme for the government to follow. The parties still need to sign off the deal, but an upset looks most unlikely, and the SPD’s Olaf Scholz will be voted in as chancellor in the week beginning December 6.

The document is entitled “Dare more progress: Alliance for freedom, justice and sustainability,” (the unusual formulation a nod to chancellor Willy Brandt’s earlier slogan, “Dare more democracy,” and to the core concern of each of the three parties). There is a strong emphasis on modernisation – in implicit contrast to what Christian Democrat governments such as Angela Merkel’s have stood for.

It should be borne in mind that, while the SPD and Greens are quite closely aligned on policy, the FDP is a much more difficult fit. While it is comfortable with some liberal social goals, this does not apply across the board. Its brand of low-tax, low-spend liberalism, with a distinct scepticism of regulation as a means of combating climate change, is an awkward stance for a party in this governing partnership.

Still, the parties have tried to allow each other some victories, rather than always landing at the lowest common denominator between the three. The SPD gets its minimum wage of €12 (£10) an hour (up from €9.60), and the Greens have secured a commitment to an earlier exit from coal – now timetabled for 2030 rather than 2038. The FDP gets a return to balanced budgets.

There are some striking social proposals in the plan, too. These include allowing cannabis to be sold for recreational use in some settings and removing a paragraph of German law which bans doctors from advertising the availability of abortions.

When these proposals come before parliament, MPs are likely to vote them through (the coalition agreement is considered by most to be binding). On issues affecting Germany’s 16 states, the second chamber, where the new government lacks a majority, might throw the odd spanner in the works.

The goal is also to increase legal routes for migration to Germany and allow more asylum seekers to work - rather at odds with the more restrictive stance taken, for instance, by Denmark’s social democrats.

If enough votes in parliament can be found to change the constitution, the voting age for parliamentary elections will be reduced to 16.

Germany and the world

Passages on foreign and European policy are more equivocal, with some classic German fudging. We learn German-Russian relations are “deep and diverse” and that there will be a “constructive dialogue” between the two countries based on “international law, human rights and a peaceful order in Europe”, which “Russia has already committed to”.

At the same time, the interests of those who feel threatened in central and eastern Europe will be taken on board and the destabilisation of Ukraine is condemned. The relaxation of EU sanctions against Russia is linked to the full implementation of commitments in the Minsk agreement. The hot topic of the Nord Stream 2 gas pipeline between the countries is not mentioned.

There is a commitment to deepening the European Union and it becoming a “federal European state” as a long-term aim. All three parties are strongly pro-European (even if on issues close to German interests, deeds may not always follow words), and there is no question Scholz and his government will seek to provide clear leadership.

A push for qualified majority voting on issues of common foreign and security policy at the European Council (as opposed to unanimous voting now) is also on the agenda. At the moment, what the EU can do is limited, as major global players can often find an individual member state to veto EU proposals.

However, changing EU treaties to make this proposal reality will be very difficult. Several member states, notably Poland and Hungary, are likely to be sceptical.

The language on Germany’s transatlantic relationships is genuinely warm. However, the message to the UK is tougher. One paragraph states that the UK is “one of Germany’s closest partners outside the EU” but there is also a call for “complete adherence” to the Brexit agreement, including in relation to Northern Ireland – with penalties if that doesn’t happen.

It also appears that the new German government will take a firmer line than its predecessor when it comes to the rule of law violations in Poland and Hungary.

Money matters

Yet on European fiscal matters, the more sceptical stance of the FDP is clearly visible. There are references to growth and investment to reduce climate change but they sit alongside a need for “debt sustainability”.

It’s not yet clear how Germany will position itself in debates about the speed of fiscal consolidation in the EU. FDP leader Christian Lindner, however, has sought to reassure poorer member states and says he will play a mediating role.

The biggest challenge for negotiators was marrying SPD and Green appetite for more investment with the FDP’s opposition to new taxes, or relaxing the constitutional rules on new debt (the so-called “debt brake”). In the end, a compromise was found.

Debt related to the pandemic will be paid back slowly. The fiscal rules will apply from 2023 onwards, but it would appear that environmental investments will happen “at an unprecedented level” – seemingly through Germany’s state investment bank (so not counting towards the “debt brake”). All new laws will have a “climate check” (a Green achievement) as well as a “digital check” (an FDP demand to expand digitisation whenever possible).

Ministries have been allocated between the parties, and the division allows the partners to emphasise their strong suits in government. The SPD are leading on “social justice” topics (such as pensions, welfare and a major housebuilding programme), the Greens on environmental questions and foreign affairs, and the FDP on fiscal caution (getting the prized finance ministry) and digital issues.

With rising COVID rates, the new government will take office at an exceptionally challenging time. The pandemic, the need to co-ordinate between three coalition partners, the large number of new MPs, and the big gap between the FDP and its partners on fiscal and environmental policy, all have plenty of potential to throw the new government off course.

Ed Turner receives funding from German Academic Exchange Service DAAD and the Friedrich Ebert Foundation.