Germany’s New Grand Coalition bodes ill for German leadership
The new grand coalition (GroKo) deal struck between Germany’s center-left Social Democrats (SPD) and center-right Christian Democrats (CDU/CSU) was received with surprising exuberance from the EU. The agreement, with an opening chapter titled Ein neuer Aufbruch für Europa (“A new Departure for the EU”), was hailed as good news for Germany and especially for Europe by EU Economics Commissioner, Pierre Moscovici.
It is easy to see the cause for this celebration: a grand coalition is by far the best outcome of the German attempts to create a new government if you are looking for a strong German partner for French President Emmanuel Macron’s vision of reforming the EU.
However, this particular GroKo (grand coalition) lacks the domestic support of previous grander coalitions, offers weak support for the deepening of defense cooperation within the EU (in the form of PESCO), and is similarly meek on comprehensive reforms of the European Monetary Union (EMU). This not-so-grand coalition is not going to be a heroic partner Macron needs to advance the agenda to strengthen the EU.
For French President Macron’s ambitious vision for the EU, laid out in a much-discussed speech at the Sorbonne just two-days after the German elections last year, the first step forward is a strong Franco-German partnership. Macron openly pushed for a grand coalition deal, noting that the French ambitions for the EU must be “accompanied by Germany’s ambitions.” Chancellor Merkel has a good working relationship with Macron, and a continuation of Merkel’s leadership of Germany would seem to bode well for a new Franco-German locomotive. A stable government in the largest economy of the EU with moderate Merkel at the helm ready to collaborate and the pro-EU SPD as a governing partner seems like an unmitigated boon to the prospects of EU defense and financial reform. However, a closer look at the context of this GroKo suggests it is not yet time to pop open celebratory champagne.
First, the GroKo is not a sure thing. After marathon negotiations the three parties emerged with a detailed 177-page coalition agreement there is one last hurdle to pass: a postbox ballot for SPD members to approve the coalition. The party vote will be announced on March 4. At one point, approval of the coalition deal seemed almost perfunctory with the SPD having already approved the preliminary agreement. But despite successful negotiations public support for the SPD has sunk to a record low of 16% in recent polls, and there is a general lack of enthusiasm from the public for yet another grand coalition. This strengthens the hand of the faction of the SPD who never supported entering into GroKo negotiations. It would be logical to think that with sinking public support for their party, SPD members would not wish to see snap elections (the probable outcome if the GroKo fails) — but in 2018 only a fool would count on politics as usual.
The government ministries have been divvied up between the CDU, CSU, and SPD respectively with agreed upon choices for each posting circulated widely in the press. The glaring exception is the foreign ministry. Initially, it was reported that Martin Schulz would leave the post of SPD party chief, leaving that job to Andrea Nahles, and would assume the role of foreign minister. Nahles has been confirmed as the new nominee for the position of party chief, but Schulz has reportedly been pushed out of the foreign minister position. The keys to the ever important and influential Finance Ministry have reportedly been given to Olaf Scholz, Hamburg’s SPD mayor. The Finance Ministry moving from the more austerity-focused CDU to the SPD is indeed a positive sign for progress on EU reforms — especially if you consider the vague but intentional language in the coalition agreement’s chapter on Europe that pledges more money for the EU budget from Germany. However, outgoing Finance Minister Wolfgang Schäuble’s shadow looms large. Olaf Scholz’s political leanings put him closer to Merkel on the political spectrum than much of the SPD. Reforms of the Eurozone structure are likely to be supported in theory, as the coalition agreement exhibits, but practice may look different.
Second, time is not on the side of EU reform. This not-so-grand coalition deal has a two year check-in appointment. The formal mid-term evaluation of the grand coalition’s progress on the political priorities outlined in the coalition agreement is a new addition. The clause outlining the evaluation period is vague but opens the door to a full reconsideration of the grand coalition by all three parties and their supporters. Two years is not very much time to forge ahead with the ambitious EU reform agenda. Some consider it likely that Merkel will step away from the Chancellorship after the two-year mark, leaving Macron without his partner. Within these two short years there will also be elections for a new President of the European Commission and European Parliament elections, further taking energy away from ambitious euro area and defense reforms, even if they are agreed to.
Third, domestic issues such as how to prepare for rapid demographic changes of an aging population, the integration of migrants, the ongoing refugee crisis, economic competitiveness, and a myriad of other issues will hold the focus of the GroKo. The far-right Alternative für Deutschland (AfD), now holding the primary opposition position within the Bundestag will certainly further occupy the attention of the German political system. For the EU the Brexit negotiations, democratic backsliding among EU member states, and an often disrupting transatlantic partner, will all distract from the focus on integrating EU defense and reforming the euro area. All of the issues outlined potentially add to the pressure for stronger European leadership, but, odds are great for more bold proclamations followed by little action. It is possible that an ambitious reform agenda will be enacted, but I wouldn’t order the party balloons just yet.
