Goodbye Chancellor Merkel, Hello Chancellor Merkel

The joke in Berlin before Germans went to the polls Sunday was that the country’s longstanding chancellor, Angela Merkel, would have to delay her retirement from politics, and would end up delivering the traditional New Year’s address to the nation come January.

And that looks likely.

Germany is facing months-long horse-trading and wrangling over the formation of a coalition government following a federal parliamentary election result that disappointed all the parties, although Merkel’s Conservatives the most. The Christian Democrats, CDU, along with their affiliated Bavarian Christian Social Union, suffered their worst general federal election result ever and were defeated by the left-leaning Social Democrats, SPD.

But even for the SPD, the outcome did not quite match expectations. The hopes of Olaf Scholz’s Social Democrats had been boosted by their surge in the opinion polls in recent weeks that saw them leading their center-right rivals, who have been in power for the past 16 years by around 6%.

According to provisional election results that lead was cut to 1.6%, enough of a gap to declare a moral win but not sufficient to dominate the post-election wrangling over the formation of a governing coalition. Across the country, the SPD won 25.8 % of the vote, while the CDU and the CSU received a combined 24.1%, down from 32.9% at the last elections for the Bundestag in 2017.

Scholz, the outgoing finance minister, said Sunday, as the results started to flow in, that his party had been given “a very clear mandate to ensure now that we put together a good, pragmatic government for Germany.”

He said, “The voters of this country have determined that the SPD is rising on every chart, and that is a great success.”

Limbo

But the election leaves Germany in political limbo with the parties set for a protracted gladiatorial bout that most analysts do not expect to be resolved until next year before the identity of Merkel’s successor as chancellor is clear.

The CDU’s leader, Armin Laschet, the governor of the state of North Rhine-Westphalia, signaled Sunday he means to fight hard to succeed Merkel as chancellor.While saying his party’s loss of votes “isn’t pretty,” he told his deflated supporters “We will do everything we can to form a government.” Laschet added: “Germany now needs a coalition for the future that modernizes our country.”

He said, “We must set a course for the 2020s. No party can do that on its own, and so we now need a great effort of will from all democrats: we must overcome our differences and hold Germany together.”

Merkel will remain as caretaker chancellor until either Laschet or Scholz, the county’s current finance minister, can assemble a parliamentary majority. That is going to be a challenging endeavor with the option of a two-party coalition seemingly off the table.

CDU and SPD insiders discount the possibility of Laschet and Scholz forming a governing coalition together, which in any case would still need a defection of a handful of lawmakers from third parties to command a majority in the Bundestag. Laschet himself said Sunday such an alliance is not possible. “We need a real new beginning,” he told supporters.

So, the CDU and SPD are faced with trying to fashion an ideologically mismatched three-party ruling coalition — the first for more than half a century — with the left-leaning Greens and the pro-business Free Democrats, FDP.

Speaking to supporters Monday in Berlin, Scholz said, “Voters have clearly spoken. They have said who should build the next government by strengthening three parties, the Social Democratic Party, the Greens and the Free Democrats. Consequently, that is the clear mandate that voters of this country have given, that these three parties should create the next government.”

The SPD and the Greens are a natural fit with both wanting to raise taxes on the affluent and to revive a wealth tax, which was abolished in 1997. But the FDP is a natural fit for the CDU and its leader Christian Lindner is unlikely to agree to any tax hikes and wants tax cuts for businesses.

He has also made clear he wants Germany to return to the pre-pandemic limits on government spending, while the Greens want to borrow $586 billion for public investment and want a stiff carbon tax.

Volker Wissing, a senior FDP politician, told reporters last week: “When it’s a matter of tax rises, for instance, we say a very clear ‘No’ to the proposals from the SPD and the Greens. We won’t implement any wealth tax, any loosening of the debt brake [on government borrowing] or any ban on the internal combustion engine.”

The Green party came third with 14.6%, followed by the FDP with 11.5% and the right-wing populist Alternative for Germany, AfD, with 10.4 %. The Greens had hoped for a much bigger upswing, and at one point had even snatched during the election campaign the lead in opinion polls, but they saw their vote share jump by 6% from the 2017 federal elections.

While the FDP saw a modest 1% increase, Lindner is widely seen by political insiders as the key to forming a three-party coalition and has already shown he is willing to stick to red lines. In 2017, he torpedoed Merkel’s efforts to form a coalition government that excluded the SPD, saying, “It’s better not to govern than to govern wrongly.”

And the 42-year-old Lindner Monday indicated he does not see his party — or the Greens for that matter — as junior partners who should take what they are offered by either the SPD or CDU. “About 75% of Germans didn’t vote for the next chancellor’s party,” Lindner said in a post-election TV debate. “So, it might be advisable… that the Greens and Free Democrats first speak to each other to structure everything that follows,” he added.
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