By Dr. Daniel Eisermann

For many years Europe was used to a politically stable Germany. The country could attribute part of its stability to the European level where Germany and Chancellor Angela Merkel have formed a solid decision-centre based on good relations with France and other European partners and cooperation with the EU institutions. But suddenly, Germany has been tied up with the unexpected complications of forming its new government, and, for the time being, will not be able to take an active role in EU politics.

The main reason for the political crisis is a major shift in Germany’s political landscape, with new fault lines emerging. The country continues to enjoy economic prosperity, but political divisions, aggravated by migration issues and Germany’s role in the Eurozone crisis, have deepened. Since 2005, Merkel and the Christian Democrats (CDU) have led three coalition governments with the Social Democrats (SPD), the Liberals (FDP), and with the Social Democrats, respectively. The election on 24 September 2017 changed the party system in a way not seen for decades. The Social Democrats only got 20.5 percent of the vote and opted to take on the role as leading opposition party. The FDP returned to the Bundestag and the right-wing Alternative for Germany gained 12.6 percent of the vote, enabling it to enter parliament for the first time. With a total of 32.9 percent, when combined with its Bavarian allies (the CSU), the CDU remained the strongest party, so it had the choice of continuing with a Grand Coalition, or of forming a multiparty “Jamaica coalition” together with the Greens and the Liberals – named so, as the three parties’ colours correspond to the colours of the Jamaican flag.

Collapse of the Jamaica talks

The SPD immediately excluded the first option, so Chancellor Merkel set to work building the so-called Jamaica coalition. It soon became clear that negotiations would be difficult, with politicians at loggerheads over questions of migration, climate and energy policy, and finance. The public mood, however, remained confident that Angela Merkel, who has been the architect of so many Brussels backroom deals, would somehow emerge as winner once again, by drafting a lengthy consensus document that the parties could agree on. In the end, it was the young leader of the FDP, Christian Lindner, who ended the talks at midnight on 19 November 2017, saying they were leading to nowhere or to negative policy decisions that were not supported by his party.

Many observers felt that Merkel may have leaned too much on her favoured partners, the Greens, leaving few leftovers for the FDP. An example came in the final evening of the doomed negotiations, when the CDU refused to fully commit to the political trophy that the FDP cherished most; the full abolition of the so-called “Solidarity Surcharge” within the next four years. The tax, commonly called the “Soli”, was introduced in 1991 and justified as a temporary measure caused by the additional costs of German reunification. The abolition of the “Soli” has long been discussed in public as the reunification is now in the past.

Debate on what exactly led to the collapse of the negotiations will probably go on for a long time. For most onlookers, controversy over migration appeared to be the hardest point of conflict – specifically the issue of whether war refugees from Syria should have the right to bring their families to Germany. As for the coalition talks, CDU, CSU and Greens opted to extend deadlines over and over again, with dozens of policy issues unsolved, whereas the FDP finally took the step to end the talks, putting German politics into turmoil. 

The next phase of the crisis

There are a few options left: snap elections; a renewed Grand Coalition of the two largest parties; or some other kind of cooperation which would enable Merkel to stay on by forming a minority government. The latter has never been tried in Germany before, while the Chancellor has already made it clear that she would not support the idea. The SPD could, however, be tempted into pushing Merkel and the CDU into such a position, with the hope of making the Chancellor look weak while simultaneously eroding the CDU’s power. This would, however, be a high-risk manoeuvre for the SPD as well, because a collapse of a minority government would certainly lead to fresh elections, which could see the SPD taking part of the blame for a failed policy experiment. Instead, just days after the collapse of the Jamaica talks, the SPD changed course, and seemed ready to start negotiations with the CDU, which could lead to a new Grand Coalition government.

There are certain legal conditions that may impact on the denouement of the crisis. Firstly, the German constitution favours the government in place, which means that the current caretaker government can proceed with only a few limitations, including Merkel being prohibited from appointing new ministers. If a minister wants to resign and asks for permission to leave the caretaker government, such as long-term finance minister Wolfgang Schäuble who recently got elected as president of the Bundestag, one of the ministers in place has to take over the vacant position.

The caretaker government can start legislative initiatives like before – which means that the government is not as powerless as it appears to Germany’s European partners. The caretaker government is certainly lacking political legitimacy, one has to admit, to start any major legislation on the scale needed for enacting the kind of EU reforms suggested by the EU Commission or French president Emmanuel Macron.

Interestingly, the German constitution sets no time limits for the election of a new chancellor. According to prevailing opinion, however, President Frank-Walter Steinmeier should nominate a candidate within an appropriate time period. Around January 2018, the public will expect the president to start the voting procedure. The election process of a new chancellor follows a rather unique constitutional design. Once the president nominates a candidate, he or she needs the absolute majority of the parliamentarians, the “Chancellor’s majority” in German political language. If the nominee is not elected, which has never happened before, specific deadlines come into place and the clock begins to tick. The Bundestag then has two weeks to attempt one or several election rounds. Once the two weeks are over, a final round has to take place without any further delay. If again no candidate gains the absolute majority, the president, who is otherwise assuming only a representative role, has to take a major political decision. Within seven days, he can either appoint the candidate with the greatest number of votes or trigger a new election.

And there could be yet more surprises on the way. For example, it cannot be excluded that Angela Merkel would actually gain, even without the support of the SPD, an absolute majority. It is a secret ballot, and many parliamentarians from different parties may secretly look for a way to keep the government in place and avoid a snap election. This remains speculative, but without a formal agreement with the SPD, Angela Merkel will be in a very uncomfortable position.

Political change ahead

It now seems that the most probable outcome is another Grand Coalition. President Steinmeier, the former German foreign minister, successfully convinced his former SPD party colleagues to enter negotiations with the CDU. The President apparently argued that an immediate new election, which has no precedent in post-war Germany, would only increase political instability. The risks of a new election are that it could either strengthen the more radical opposition parties or deliver a similar result as in the last election. The SPD, it seems, cannot expect anything positive from a new election, which is more likely to put the party in a more precarious position – raising the same key question which now needs to be solved: What is the political price that the SPD and Chancellor Merkel could agree to pay in order to continue the rather unpopular Grand Coalition?

It seems obvious that the SPD will ask for some major concessions, in the form of health insurance or pension reform for example, which will be hard for the CDU to swallow. The SPD might also target the finance ministry and demand increasing influence on EU decision-making. Negotiations could develop into a number of particularly tough concessions from a CDU point of view, which could lead to tensions within Merkel’s own party. The chairman of the SPD, Martin Schulz – who has been criticised from within his own party since the September election, making his own political future unclear – stated that SPD party members should be asked whether the SPD should enter another Merkel government. The whole process could drag on for weeks, so it’s now an open question as to whether the country will have any more clarity before Christmas.

If the two major parties cannot agree on a formal coalition agreement, new elections in the next few months remain the most likely outcome. Even in the case that another Grand Coalition will be formed in December or January, Germany will not regain the degree of political stability that it had enjoyed for so many years previously. Chancellor Merkel has certainly lost part of her authority. Four opposition parties – the Left Party, the Greens, FDP and Alternative for Germany – would attack the government from both left and right flanks. It would be a surprise if both major parties could manage to govern for another four years without hitting new, significant stumbling blocks.

European partners may have to get accustomed to a Germany that will be more oriented toward its own domestic political debate. As in other countries, controversy on EU reform could further deepen internal divisions. Merkel and her party are therefore likely to continue to act with caution. CDU and SPD, being part of the same government, will have even more problems than before in formulating a coherent position on EU reform. All forecasts point towards a political change for both Germany and Europe.