Rethinking Europe

Germans Live in Interesting Times

Four questions about the country’s near-term political path.

Credit: Mathias Liebing www.flickr.com

Takeaways


  • New elections being held in Germany between February and April are quite possible, but not inevitable.
  • Germans are not natural fans of instability, minority governments or immediate repeat elections, to put it mildly.
  • Current polls project that repeat elections would yield a result similar to that of the September 24th vote.
  • German policies without Merkel would not change much under any realistic scenario.

1. Are repeat elections inevitable?

New elections being held in Germany between February and April are quite possible – and more likely than a prolonged period of a minority government. They are not yet inevitable, though.

The German constitution sets high hurdles for repeat elections, making it comparatively easy for a caretaker or minority government to stay in office. According to the country’s Basic Law, the federal president has to propose a candidate for the chancellorship to the Bundestag.

If the candidate is subsequently not elected by a majority of Bundestag members, parliament then has a further two weeks to vote in a new chancellor with a majority of its members.

If that fails, as it probably would after an inconclusive first round, the federal president can decide whether to appoint a candidate who has achieved a plurality (but not majority) of votes in the Bundestag.

The President can also dissolve parliament for new elections within 60 days. In a first comment today, president Steinmeier seemed to counsel against repeat elections.

After the failure of the four-way coalition talks, we now have to watch the reaction of the various parties and their political bases. Germans are not natural fans of instability, minority governments or immediate repeat elections, to put it mildly.

The political parties may also decide to go over the substance at stake again, although that may not yield any significant change in their positions, especially on the most contentious issue of migration.

More importantly, we have to watch whether the political basis of the FDP, the party that walked out of the negotiations, supports that decision. Otherwise, the FDP may find a face-saving way to return to negotiations after a period of reflection for new talks on a possible “Jamaica” coalition.

Whereas it is not impossible that the SPD reconsiders its position and joins Merkel as a junior partner in a renewed “grand coalition,” this seems very unlikely. SPD leaders may believe that – after their heavy losses at the 24 September election, they can’t fall much further and may have a chance to recover some support instead at repeat elections.

2. Would repeat elections change much?

Opinion polls are no reliable guide to an election outcome. For what they are worth, current polls project that repeat elections would yield a result similar to that of the September 24th vote (CDU/CSU 32.9%, SPD 20.5%, FDP 10.7, Greens 8.9%, Left Party 9.2%, AfD 12.6%).

The other parties including the right-wing AfD and the left-wing Left Party may hope to benefit from the failure of the CDU/CSU, FDP and Greens to form a government.

Even in that case, it would be highly unlikely that votes shift so strongly to make a government against the CDU/CSU possible, that is an SPD, Green-Left Party coalition.

In September, the protest parties had done well partly because most voters considered the outcome of the vote a done deal. They assumed that Merkel would win anyway and thus felt free to cast a protest vote.

In a politically charged atmosphere of repeat elections, the mainstream parties CDU/CSU and SPD may be better able to mobilise their usual base. Chances are that the AfD will not gain many further votes.

Regardless as to whether the AfD wins or loses votes in repeat elections, it would not be included in any government. The FDP, having now walked out of talks largely because of their disagreement with the Greens, would not support a SPD-Green alliance. In brief: New elections may not change much.

3. Will Merkel stay on?

If she wants to, she can probably stay on. However, the election result and the failure of the coalition talks have weakened her position.

What helps her is that she has no obvious rival or successor in the CDU. An outright challenge to her from within her own party ahead of potential early elections still seems unlikely.

In the not very likely case that Merkel were to withdraw on her own initiative, a potential young successor could be Jens Spahn, a somewhat conservative deputy finance minister.

Of course, other names may get mentioned as potential candidates to replace her on an interim basis, for instance old CDU stalwarts such as Ursula von der Leyen, Wolfgang Schäuble or Thomas de Maziere etc.

But would the CDU really want to go into possible repeat elections with an interim leader? So far, it still seems more likely that Merkel stays on. If the CDU really needed a new leader in the end, it would probably opt for a fresh new face such as Spahn.

Of course, the SPD may be tempted to try to topple Merkel, offering the CDU/CSU to join a coalition if Merkel withdraws. There may be some talk about this option.

However, the CDU would most likely reject such a demand unless Merkel were to withdraw on her own.

Also, the SPD might first want repeat elections and possibly enter coalition talks with the CDU/CSU from a potentially stronger basis, perhaps with a demand that Merkel should not stay on as chancellor. This does pose a potential risk to Merkel. On balance, expect Merkel to remain chancellor for a fourth term.

4. Would German policies change without Merkel?

Not much under any realistic scenario. For the time being, the current government stays on a caretaker basis without a time limit.

By and large, German policies reflect a consensus of those parties currently in government (CDU/CSU and SPD) and those wielding veto power in the upper house of parliament (the Greens, owing to their being part of several state governments).

The most radical change after new elections would be an SPD-led alliance with the Greens and the Left Party. However, such alliance remains so far behind in opinion polls that this seems very unlikely.

Such an alliance would stand for significantly more social spending and a modest re-regulation of the labor market. It would also take a softer line on European issues.

But as most decisions on European issues would have to be approved by the upper house of parliament where CDU/CSU would have a veto, changes would be limited even in such a case.

Other potential governments, notably a renewed CDU/CSU-SPD coalition, would not stand for major changes in policy — except for modest increases in social and infrastructure spending.

Any government including the FDP would go further with income tax cuts, while a government without the FDP would put less emphasis on tax cuts. However, the differences between various political options are modest.

Tags: , , , , , , , , , , , ,

About Holger Schmieding

Holger Schmieding is chief economist at Berenberg Bank in London. [United Kingdom] Follow him @Berenberg_Econ

Responses to “Germans Live in Interesting Times”