Friedrich Merz, the victor of German elections in February is struggling even before he takes office.
Outgoing Chancellor Olaf Scholz’s Social Democrats (SPD) – the election losers – used coalition talks to ram through their policies in a 144-page pact to serve as junior partner to Merz’s Christian Democrats. The accord shies away from any big reforms of the economy, of the creaking social welfare state and even from the no-brainer of reinstating military conscription to help deter Russia.
The agreement is so bad and so dilutes the Economics Ministry’s powers that Merz’s own Christian Democratic (CDU) secretary general, Carsten Linnemann, abruptly declared he no longer wants to take over the portfolio. Linnemann will stay on in his post as the party’s Mann fürs Grobe, or hatchet man.With Germany probably now in a third year of recession, a weak economics minister will be Berlin’s whipping boy.
Conservative voters are drawing conclusions and flocking to the AfD, which came second to Merz’s Christian Democratic bloc (CDU/CSU) at the election. In a stunning development, the AfD has for the first time pulled ahead of the CDU/CSU and leads with 26 per cent to 25 per cent, according to an April 22 Forsa opinion poll.
‘There has never been such a loss of support in the period between the federal election and the formation of a government’, says Hermann Binkert, head of the INSA polling agency.
Germany hasn’t had a properly functioning government since early November when Scholz’s coalition of his SPD, Greens and liberal Free Democrats collapsed. Merz is due to be elected as chancellor of a CDU/CSU-SPD coalition on May 6.
Lack of leadership in Europe’s biggest economy would be bad in normal times but Germany’s economy has contracted in the past two years; its creaking armed forces desperately need rebuilding to counter Vladimir Putin’s pushing into Europe and Donald Trump’s pulling out; and there’s also the small issue of Trump’s tariffs, which threaten to bludgeon German export-oriented industries. The US is Germany’s biggest trading partner but exports as drying up. Audi, earlier this month, simply stopped delivering cars to the US.
To be sure, Merz will be measured by what he achieves in office. But the problem, is he’s so desperate to become chancellor that he ended up giving almost everything to the election losers, the SPD and the Greens. The SPD was Merz’s only road to power given his vow never to rule with the AfD, parts of which are designated ‘confirmed right-wing extremist’ by German courts. Merz rejected setting up a minority government dependent on shifting coalitions. The Greens, although in the Bundestag, lack seats to give Merz a majority.
Being the only possible bride meant the SPD punched way above its weight.
The biggest political change is the ditching of Germany’s debt brake, which many Christian Democrats see as a defeat given Merz vowed in his campaign to maintain strict spending limits.
Now, a brake-exempted €500 billion infrastructure fund will be set up and military spending beyond 1 per cent of GDP will also be exempted. To secure votes of the Greens in the outgoing parliament for this package, Merz agreed to put the goal of German CO2 net neutrality by 2045 into the country’s Grundgesetz, the constitution. The costs of this are anybody’s guess but likely to be astronomic.
This isn’t all that Merz conceded. The SPD drove the bargaining with its ‘Nein’ to almost everything Merz wanted. Nein to clamping down hard on migration. Nein to big, fast tax cuts, let alone a major tax reform. Nein to reforming Germany’s unaffordable social welfare system which, on the contrary, is being expanded. And Nein to the Christian Democratic call for conscription.
AfD chief Alice Weidel is massively benefiting from Merz’s woes. She’s also having her ‘I told you so’ moment given that throughout the campaign, she warned voters that casting ballots for Merz would guarantee continuation of SPD and Greens’ policies. Germany’s new government is over before it’s started.
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