Finally, after five months of post-election deliberations, Germany has a new Grand Coalition. After Merkel’s Christian Democrat party (CDU) overwhelming approved the pact at its late-February special conference, the Social Democrats’ ballot of members produced a 66 per cent yes vote for another Grand Coalition (‘GroKo’).
What does this mean for the European Union? Answer: don’t expect too much!
First of all we need to return to the election result. The breakthrough made by Alternative for Germany (AfD) with 12.6 per cent and 94 MPs reinforced a populist, identity-based cleavage in German politics.
It adds to the critique offered from the other end of the party spectrum by die Linke, the left-wing populist party that performs best in the former East Germany. This new fragmentation in the party system made coalition-building difficult.
It also provided a challenge to the Federal Republic’s longstanding pattern of centripetal politics, to which the commitment to European integration has been axiomatic since the late-1950s.
Initial hopes for a ‘Jamaica coalition’ of Christian Democrats, Liberals (FDP) and the Greens proved predictably complex due to differing policies. Differences over Europe were an important part of the failure of these negotiations in November, as the Süddeutsche Zeitung revealed.
Christian Lindner, the charismatic leader of the FDP, the party that is most focused on economic liberalism, was unwilling to sign up to the idea of a European Monetary Fund (EMF) – one of the proposals for improving weaknesses in the governance of the eurozone.
The negotiations for a new GroKo have been protracted, and the greatest debate has been in the SPD. On the eve of the election last September, its then leader Martin Schulz advised that it should take a period in opposition to regenerate.
After the failure of the Jamaica coalition the SPD re-considered its position and entered coalition negotiations. It had to fight hard to try and secure a major impact on the draft coalition agreement and in the share-out of ministerial offices. It could not again afford to lose credit to Chancellor Merkel for its policy initiatives.
After criticism of his performance, Martin Schulz stood down in early February. Remarkably, this was barely a year after being unanimously elected by the party faithful. Having led the negotiations for a coalition agreement he did not want criticism of his own position to jeopardise the SPD approval of the Grand Coalition.
His recommendation of Andrea Nahles on the left of the party as his successor suggested an attempt to minimize concerns on the left, particularly the young socialists, about agreeing to the new GroKo.
This will be the third GroKo led by Merkel since 2005. However, this one has noticeably less electoral support. The CDU and the SPD command only 53.4 per cent of the vote, down from a combined vote of 67.2 and 69.4 per cent respectively in 2013 and 2005. Both parties are at historic lows since 1949.
Chancellor Merkel is weakened following the election and this is likely to be her last term. The Bavarian CSU was divided following its poor showing in the federal election and has lost its leader, Horst Seehofer.
He moves from Bavarian Minister-President – and an advocate of a strict ceiling on migration into Germany – and is expected to become Federal Minister of the Interior. The SPD has an acting leader until Schulz’s successor is selected in April.
Whilst this coalition may ‘hold the centre’ of German politics, grand coalitions generally result in a subsequent shift of votes to the extremes because democratic choice is reduced. However, there is a difference this time: the AfD is now the largest opposition party in the Bundestag.
It therefore will chair three parliamentary committees, including the Budget Committee, which is conventionally assigned to the largest opposition party.
Put bluntly, the domestic politics are not very auspicious for Germany to play the leadership role that is expected of it. Eurozone governance, a longer-term strategy for migration, concluding Brexit negotiations, countering the protectionism of Trump’s trade policy, European security: these are amongst the policy issues facing the incoming coalition.
The coalition agreement, entitled ‘A new departure for Europe. A new dynamic for Germany’ gives prominence to European policy goals, which form the agreement’s first section. This is promising in view of the challenges facing the EU. It corresponds to European integration being part of the Federal Republic’s ‘raison d’état’.
Concrete proposals that are mentioned include: a preparedness to contribute more to the EU budget (needed due to the UK’s departure); enhanced cooperation with France; eurozone governance reform; combatting aggressive tax avoidance; and strengthening the European Parliament.
These proposals offer encouragement to those wishing for Germany to play a leading role in the post-Brexit EU, for instance a recent agenda set out for Germany in a paper of the Centre for European Reform. However, there are three big constraints on this agenda.
First, German European policy is politicised domestically in a way that has not been seen since the 1950s. Both the party blocks in the new coalition will doubtless want to challenge the threat from the AfD.
However, the eurosceptic genie is out of the bottle. Greater EU budgetary contributions, for instance, will provide an opportunity for the AfD to pursue its populism on a topic that is likely to have a ready public response.
Further, the coalition parties all need to improve their electoral support but it is difficult to envisage European policy as a vote winner. Germany has a continuous cycle of elections. Poor results, especially for the SPD, could destabilize the coalition.
Secondly, the devil will be in the detail. Even with a Social Democrat Finance Minister – expected to be Olaf Scholz, the mayor of Hamburg, rather than the veteran Wolfgang Schäuble – expectations of a more solidaristic German approach to the eurozone should not be raised too much.
The tone will become more constructive, and a form of EMF may be embraced. But little change can be expected on the idea of a ‘transfer union’ or Eurobonds.
Thirdly, even a relaunched Franco-German relationship is much less influential than prior to enlargement in the 2000s. Divisions will need to be healed with Poland and Hungary. After its election Italy may be less supportive of proposed reforms.
The UK’s departure may make agreement on reforms easier but euroscepticism is now an EU-wide phenomenon that will make it difficult to broker major reforms amongst the EU27.
By Simon Bulmer, Professor of European Politics at the University of Sheffield.