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Germany’s political crisis, explained
While the United States was still busy counting votes, Germany’s ruling coalition led by Chancellor Olaf Scholz suddenly fell apart last Wednesday, plunging Europe’s largest economy into chaos. Now, Germans are set to head to the polls on Feb. 23 – seven months earlier than originally planned – to elect a new government at a particularly challenging time for their country, the EU, and the world.
What happened?
After less than three years in power, the so-called “traffic light” coalition of Scholz’s center-left Social Democrats, the environmentalist Greens, and the pro-business Free Democrats collapsed on Nov. 6 when the chancellor unceremoniously fired his finance minister and the Free Democrat leader, Christian Lindner.
The move followed months of bitter negotiations over how to plug a roughly €10-billion hole in next year’s federal budget. The coalition’s progressive partners favored taking on more debt to boost spending on infrastructure, defense, and aid to Kyiv (Germany is the second-largest contributor of military aid to Ukraine after the US). The fiscally conservative FDP opposed any new borrowing despite Germany’s low debt-to-GDP ratio, instead pushing for tax and spending cuts that would reduce welfare transfers, aggravate Germany’s malaise, and curtail support for Kyiv.
The standoff came to a head because Germany has a strict constitutional debt limit the government is not allowed to exceed outside of exceptional circumstances like the COVID-19 pandemic. When Scholz asked his finance minister to suspend the “debt brake,” citing the exceptional impact of the war in Ukraine, Lindner refused to budge, and the traffic light broke.
This was the conclusion of an uneasy marriage of convenience riven by ultimately irreconcilable differences about how to kickstart Germany’s long-stagnant economy and execute the foreign and security policy Zeitenwende (or “turning point”) that Scholz proclaimed when he replaced Angela Merkel as chancellor in 2021. One Russian invasion of Ukraine and three years of gridlock, high energy costs, and flat growth later, Germans have soured on their government. A recent poll found that only 14% of voters were satisfied with the ruling coalition, with 54% wanting early elections.
What now?
Scholz’s Social Democrats and Friedrich Merz, who succeeded Merkel as leader of the opposition conservative Christian Democratic Union, have agreed to hold a vote of confidence to trigger the dissolution of parliament on Dec. 16. Provided Scholz loses it – as is widely expected – early elections will then be held on Feb. 23.
In the meantime, Germany will be in a limbo of sorts. The chancellor and his remaining Green coalition partner will remain in office until a new coalition is elected, but as the head of a minority government, he now has to secure support from opposition parties on a case-by-case basis to get any laws passed. In particular, Scholz needs votes from Merz’s conservatives to pass an all-important 2025 compromise budget. But that’s a very tall order, requiring not only painful concessions from the CDU – especially on the suspension of the debt brake – but also that the SPD give up core elements of its legislative agenda in return.
If no budget is passed by year-end, as looks likely, Germany will enter into “provisional budget management” – a state of limited government operations and funding based on 2024 numbers. While this won’t lead to a government shutdown like it would in the United States, no new obligations or programs could be passed before a new government finally approves a 2025 budget, potentially not until the second or third quarter of next year. This would restrain Berlin from active policymaking during the critical early days of Donald Trump's presidency, at a time when Europe is more rudderless than ever and Russia continues to threaten Ukraine and NATO.
The road ahead
The opposition CDU/Christian Social Union center-right alliance leads the national polls with 34%. Of the “traffic light” coalition parties, Scholz’s SPD is polling at around 16%, while the Greens hover at 11%. Lindner’s Free Democrats, meanwhile, are currently below the 5% threshold required to get into parliament.
The far-right Alternative for Germany is the second-most popular national party, with 17% support, but all other parties continue to explicitly rule out the possibility of entering into a coalition with it. The newer pro-Russian, anti-immigration, left-wing Sahra Wagenknecht Alliance, which made large gains in September’s state elections, is somewhat less domestically toxic than AfD and polling at 6%.
Of course, there are still more than three months to go until the election, and these numbers will change, especially in the wake of the government’s collapse. But barring any major surprises, the CDU’s Merz is all but certain to become the 10th German chancellor since 1949. Assuming the conservatives’ most natural partner, the FDP, is unable to clear 5%, the only open question is whether the next government will be a grand coalition of the CDU/CSU and the SPD or another three-way coalition including them plus the Greens.
Grand coalitions have a long history in Germany and are popular with voters for their track record of delivering moderation and stability. Three-way coalitions, by contrast, are an unwieldy, unstable last resort for mainstream parties to form majority governments in Germany’s increasingly fragmented party landscape – a challenge that is only going to accelerate as the anti-establishment AfD and BSW continue to grow in popularity.
Whatever it looks like, the next government will have to contend with the big challenges that the current administration failed to address. Germany faces deep structural problems, including chronically low productivity and investment, high energy and labor costs, unfavorable demographics, a fragile export-dependent growth model, and an overly rigid debt limit rule.
But Berlin’s biggest challenges aren’t economic – they’re existential. At a time when Russia is testing NATO's resolve, China is challenging the Western-led international order, and America's commitment to Europe is in question, Germany must decide what kind of power it wants to be.
Will Europe’s economic engine finally step up as a geopolitical leader, or will it continue to punch below its weight? For Germany’s next government, there may be no more kicking this can down the road.
Participants in a left-wing demonstration walk along a street with a banner reading "AfD ban now!". Several hundred people protest against the AfD's performance in the state elections in Saxony.
AfD makes historic gains in eastern Germany
German voters delivered the hard right a significant victory in Sunday’s election, as Bjoern Hoecke’s Alternative for Germany party, or AfD, captured 32.8% of the vote in the central-eastern state of Thuringia. The result marks the first time since World War II that a far-right party has won the most seats in a German state election. In neighboring Saxony, the AfD virtually tied with the center-right Christian Democratic Union, with 30.6% to 31.9%, respectively.
The AfD’s gains have unsettled many Germans, including Chancellor Olaf Scholz, who called the results “bitter” and “worrying.” Business leaders cast their own blame on Scholz for creating an environment of anxiety for voters, which they say led to Sunday’s result and could sully Germany’s business environment.
But Scholz is also feeling the heat from a new leftist party, Bündnis Sahra Wagenknecht, which melds left-wing economics with anti-immigration and pro-Russia policies. The BSW won nearly 16% and 12% respectively in Thuringia and Saxony, cannibalizing Scholz’s junior coalition partners, the Greens and pro-business Free Democrats, who now risk losing their official status in the Thuringian state parliament.
Even though other parties pledge to exclude the AfD from government, there are fears its success, and that of the BSW, could pressure Scholz to take a harder line on immigration and a less supportive line on Ukraine ahead of next year’s national elections. When Ukrainian President Volodymyr Zelenskyappealed to the German Bundestag in June for additional support, AfD and BSW lawmakers left the building – a stunt that appears to have paid dividends in Sunday’s vote.Attendees of Germany's Alternative for Germany (AfD) campaign event for the Saxony state elections leave, as counter protestors stand in the background, in Dresden, Germany, August 29, 2024.
Immigration backlash to boost populists in Germany’s local elections
Populist opposition parties of the right and the left are set to make big gains in local elections in two key eastern German states this Sunday.
The far-right Alternative for Deutschland party is the front-runner in Saxony, eastern Germany’s most populous and prosperous state, and is expected to lead in neighboring Thuringia as well.
The staunchly anti-immigrant party — which is under investigation for ties to right-wing extremists — has surged in popularity over the past decade, especially in the former East Germany, where incomes continue to lag behind the former West. Meanwhile, the newish hard-left Sahra Wagenknecht Alliance, which also seeks to reduce immigration, is also positioned to do well.
This weekend’s election comes as the national coalition government led by Chancellor Olaf Scholz’s establishment, center-left SPD faces a growing backlash over immigration. The recent stabbing rampage by a Syrian refugee in the western German city of Solingen has exacerbated those concerns.
No “Alternative” path to power: Even if it comes in first, the AfD would need a coalition partner to govern, and there is no obvious match. The mainstream center-right CDU — currently in opposition nationally — is polling second in both states and has ruled out a tie-up. But a CDU alliance with Wagenknecht Alliance remains possible in Saxony. In Thuringia, the Left Party, which currently oversees a minority coalition government, is likely to suffer a defeat but could still be a kingmaking coalition partner for either Wagenknecht or the CDU.
The bigger picture: Misgivings over immigration continue to be a major factor in the slow-motion erosion of Germany’s centrist establishment parties.Marine Le Pen, president of the French far-right National Rally (Rassemblement National) party parliamentary group, gestures during the party's campaign for the EU elections, in Paris, France, on June 2, 2024.
Viewpoint: Far right poised for gains in EU elections
Nearly 400 million people across the 27 countries of the EU will be eligible to vote from June 6-9 for members of the European Parliament. These representatives will serve a five-year term and be charged with passing and amending EU legislation. But their first order of business will be to elect the president of the European Commission, the EU’s executive body. They will vote on a candidate proposed by the European Council, which comprises the EU heads of state or government, based on the parliamentary election results.
Amid intensifying economic concerns and longstanding fears of migration, far-right parties are expected to expand their parliamentary representation. We asked Eurasia Group experts Anna-Carina Hamker and Mujtaba Rahman why that is and what this strong showing could mean for EU policy and politics over the next five years.
What issues are shaping voter preferences?
Unsurprisingly, there is some variation across member states. According to recent Eurobarometer polling, security concerns are greater in eastern European countries that are closer to the war in Ukraine, whereas climate change and the economy top the list of concerns elsewhere. But broadly speaking, the economic situation, public health, the fight against poverty and social exclusion, and defense and security are key issues in most European countries.
Far-right parties appear poised for strong gains – why is that?
Amid sluggish economic growth and high inflation, policies to mitigate climate change and favor agricultural imports from Ukraine have prompted a public backlash to which established conservative and socialist parties have been slow to respond. The discontent spilled out into the streets earlier this year in a series of protests by farmers and truckers. Sensing an opening, far-right parties threw their support behind the protests and have seen their popularity soar.
A more structural factor of support for these parties is concern over migration, which really started to gain traction with the large flows of refugees fleeing the war in Syria in 2014. European countries have long histories of receiving migration but lack steering mechanisms such as functioning integration policies. Center-left and center-right parties have ignored the issue for decades, resulting in high levels of integration failure in European societies.
How big do you expect these gains to be, and what will be their impact on EU policy?
Far-right parties will likely expand their representation from less than 20% of seats to about 25%. Overall, that will not materially affect policymaking on key issues such as Ukraine, competitiveness, and enlargement over the next five years, which was already going to be difficult. But it will have an impact on the EU’s environmental agenda and its stance on migration. Far-right parties have already helped drive an overhaul of the bloc’s migration framework and dilute some aspects of the green agenda.
The next commission will have to tackle the next big phase of the green transition, which will involve more politically costly measures for households and firms to achieve net zero by 2050. Ad-hoc cooperation between centrist and right-wing groups on these issues will likely delay or dilute some of these measures. Nonetheless, it is unlikely to derail the EU's climate ambitions overall, as all the major party groups and the vast majority of national governments remain committed to meeting both the 2030 and 2050 goals.
What will be the consequences of these gains for domestic politics in prominent member states?
A strong result for the far right would likely have the biggest impact in France, where polling suggests that Marine Le Pen’s National Rally party will outperform President Emmanuel Macron’s Renaissance Party. That would increase the odds of a successful censure motion against the government in parliament that would trigger early parliamentary elections. If Le Pen’s formation were to win half the seats in those elections (which is unlikely), that would force Macron to appoint her or someone else from her party as prime minister.
Meanwhile, a strong showing for Alternative for Germany would further fuel the debate about migration and give the party a boost ahead of important elections in three eastern German states in September and general elections next year. Similarly, a strong showing for Italian Prime Minister Giorgia Meloni’s Brothers party would reinforce its standing within the ruling coalition. Moreover, there is speculation that Meloni could offer her support for European Commission President Ursula von der Leyen’s bid for another term in exchange for a weighty portfolio in the next commission and policy concessions that would help Meloni’s domestic agenda.
What are the biggest policy challenges EU institutions will face in their next mandate?
Providing diplomatic, military, and financial support for Ukraine will remain a top priority for the EU, especially considering expectations of a weaker US commitment. A potential return to the White House by Donald Trump would create new difficulties for EU institutions, particularly on trade, as Trump would likely increase tariffs on European goods. Trade relations with China will also deteriorate as Brussels rolls out tariffs on electric vehicles and considers additional steps—and Beijing prepares retaliatory measures. Beyond these immediate challenges, Brussels faces the difficult task of doing more for its security by enacting more robust defense policies. Enlargement will be another important issue. Finding ways to shoulder the financial burden of welcoming new countries and tackling potential trade distortions that would affect some member states more than others will be among the priorities.
Edited by Jonathan House, senior editor at Eurasia Group.
Disgraced AfD leader Maximilian Krah.
Euro Parliament group expels AfD
Even the far right has its limits. The European Parliament’s “Identity and Democracy” group of populist right-wing parties – including the Alternative for Germany, France’s National Rally, and Italy’s League, among others – expelled all nine AfD members on Thursday.
The move comes just weeks ahead of European Parliament elections on June 9 in which the far right is expected to make serious gains. It also comes a day after Maximilian Krah, head of AfD, said he’d step down over two scandals – one involving a senior staffer being charged with spying for China, and another stemming from Krah telling an Italian newspaper that not all members of the Nazi SS were war criminals. But sacrificing Krah wasn’t enough – and National Rally leader Marine Le Pensaid her party needed a “clean break” from AfD.
The expulsion was a bold move, given the AfD’s popularity. As recently as January, it was Germany’s second most popular party, polling at 22%, though it has since dropped six percentage points to tie for second place with the Social Democrat Party.
Polls have predicted the Identity and Democracy group’s number of seats in the European Parliament could rise from 59 to about 84 (some predicted a high of 93 before AfD’s recent scandals). National Rally, meanwhile, is surging in the polls.
What does this mean? Apart from hurting its reputation, expulsion means AfD loses access to the group’s shared resources, collective voice in parliament, and possibly some funding. But it doesn’t mean AfD members can’t run. In fact, party leaders said Thursday that they remained optimistic about the election. “We are confident we will continue to have reliable partners at our side in the new legislative period,” they said.
Property investor Heinrich XIII Prinz Reuss and his lawyers arrive for his trial for a suspected "Reichsbuerger" plot to overthrow Germany's democracy in a courtroom in Frankfurt, Germany, May 21, 2024.
German prince goes on trial over alleged coup plot
In news that might make you wonder what year it is, a trial for a German prince accused of spearheading a failed, far-right coup plot began on Tuesday.
Heinrich XIII Prince Reuss, 72, is being tried alongside eight others — including ex-lawmaker Birgit Malsack-Winkemann and several ex-army officers — for alleged involvement in the scheme.
The suspects are accused of plotting to violently overthrow the German government by storming the Reichstag parliament in Berlin and taking lawmakers hostage. The prince, who holds a fancy title but is simply a descendant of an aristocratic (not royal) family, was allegedly set to become head of state after the coup.
“Slightly crazy.” Prosecutors say the accused are conspiracy theorists who believe Germany is being run by a “deep state.” The alleged plotters are connected to the Reichsbürger, an extremist movement that aimed to undermine the modern German democratic system. “They’re not terrorists. They’re slightly crazy," defense lawyer Roman von Alvensleben said of the plotters.
Though it’s unlikely such a plot could succeed, the trial is taking place against a backdrop of growing concern over the surge in support for far-right and extremist ideologies ahead of the European Parliament elections in June. Earlier this year, scores of Germans took to the streets to protest against far-right extremism and the German government has made tackling the issue a bigger priority.Alice Weidel and Tino Chrupalla, chairs of the AfD parliamentary group, comment in the German Bundestag on the ruling of the North Rhine-Westphalian Higher Administrative Court on the classification of the AfD as a suspected right-wing extremist organization.
Court ruling: “Germany can spy on the AfD”
Germany’s interior minister lauded the ruling by asserting the BfV had tools to protect the state from extremism and that “it is precisely these tools which will now be deployed.” Eurasia Group’s Jan Techau notes that, though we shouldn’t expect a sudden flurry of (surveillance) activity to emerge, “this ruling will not be lost on agencies in other federal states who now might feel emboldened to increase their activities.”
The verdict, from the Higher Administrative Court of North Rhine-Westphalia, one of Germany’s largest states, also applies to the party’s youth organization and a group inside the party known as the “Wing.” It cannot be appealed.
This major legal defeat is the latest in a series of setbacks for AfD, which has at times polled as one of Germany’s most popular political parties. Multiple scandals, including charges that one senior party official had spied for China while others had ties to white nationalists, have weighed heavily on the AfD’s approval numbers in recent weeks.
A demonstrator holds a sign reading "Hate makes you small" at a rally organized by the German Trade Union Confederation on "For Democracy and Solidarity" on Jan. 27, 2024.
A black eye for Germany’s far right
That’s one way to understand why the Alternative for Germany party, or AfD, was narrowly defeated last weekend in a local election in a place it has scored wins in the past. A recent scandal involving contact between AfD leaders and officials considered neo-Nazis – conversations that reportedly centered on plans to deport immigrants, including some who have German citizenship – set off a firestorm.
Last weekend, anti-AfD protests filled the streets of some 30 German cities, and that sentiment appears to have pushed higher-than-expect turnout among anti-AfD voters for the election in the German state of Thuringia.
There will be larger elections in this region in September, and AfD may well perform much better. But last weekend’s protests and local election results, from a place considered an AfD stronghold, remind us that Europe’s anti-populist political forces are strong too.