Trending Now
We have updated our Privacy Policy and Terms of Use for Eurasia Group and its affiliates, including GZERO Media, to clarify the types of data we collect, how we collect it, how we use data and with whom we share data. By using our website you consent to our Terms and Conditions and Privacy Policy, including the transfer of your personal data to the United States from your country of residence, and our use of cookies described in our Cookie Policy.
{{ subpage.title }}
German Chancellor Olaf Scholz attends a news conference in the Federal Chancellery following the video conference with the country's 16 state leaders on the surge in the coronavirus disease (COVID-19) cases, in Berlin, Germany, December 9, 2021.
Enter Olaf — can he keep Germany’s traffic light blinking?
As of this week, for the first time since Gwen Stefani was topping the charts with Hollaback Girl, Germany is not run by a person named Angela.
Olaf Scholz — the pragmatic, robotic, determined leader of the center-left SPD party — now holds the reins of Europe’s largest economy.
But he also leads a three-party coalition, the first in Germany’s modern history, with the progressively, climate conscious Greens and the business-friendly fiscal hawks of the Free Democrats party. The coalition is known as the “traffic light” owing to the colors of its three members.
Here are a few immediate and longer-term challenges for Scholz.
His first big test is COVID. Germany is currently in the throes of its worst surge since the onset of the pandemic. Between the upcoming Christmas holiday and uncertainty about the omicron variant, Scholz has his work cut out for him. So far he has not announced any new society-wide lockdowns or restrictions. But with Germany’s vaccination rate of 70 percent now an EU laggard, he’s embraced a broad vaccine mandate and wants to get 30 million jabs done by the end of the year.
Foreign policy: Russia on day one. Scholz comes into office right as tensions around Ukraine are soaring again. He will quickly have to stake out a position towards Moscow that satisfies German industries, which rely on Russian markets and energy, but that also reflects the views of the Greens, Russia hawks who see the Kremlin as a menace both to the climate and to democracy. With the Greens’ leader Annalena Baerbock as foreign minister, this is going to be a tough balance to strike.
A crucial near-term decision for Scholz is whether he is willing to include suspension of the Nord Stream 2 Russian gas pipeline project as part of a package of German sanctions meant to deter Russian aggression against Ukraine… at a time of sky-high gas prices.
Going green without getting into the red. Scholz’s government has pledged a massive push on the climate front, promising to phase out coal entirely by 2030, eight years earlier than originally planned, and to double the renewable share of electricity generation to 80 percent by then as well.
These goals are practically existential for the Greens, but getting there will require massive investment — where’s the money going to come from? Scholz has already pledged to reimpose constitutional limits on debt, and the Free Democrats, who control his finance ministry, are opposed to raising taxes.
A bigger question: Can Scholz make social democrats cool again? The SDP victory was something of a stunner for a party that had seemed, just months ago, like it was on the brink of extinction. What’s more, across Europe traditional labor-oriented parties have suffered in recent years.
Now Scholz has a chance to prove that the traditional European center left has some fight in it, at a time when the right — in both its centrist and populist versions — has been defining the landscape for the last decade. Scholz believes the SPD can reconnect with working-class voters — and his coalition’s pledge to raise Germany’s minimum wage for about 10 million people is an immediate part of that.
About a third of EU member states are currently run by social democrats of one stripe or another. They will be watching to see if Scholz can use the bloc’s largest economy as a showcase for the center-left’s bonafides after a long time in the wilderness.
The unknown unknown: the next crisis. Will it be immigration? A terror attack? A financial meltdown? A political scandal? Scholz’s predecessor didn’t come into office as a crisis manager, but she sure left as one. How the new German chancellor holds together his somewhat oddball coalition under unforeseen pressures could prove decisive.Germany’s frenemy kingmakers
The German people have spoken. For the first time in over 70 years, the country's next government is all but assured to be a three-way coalition.
That coalition will probably be led by the center-left SPD, the most voted party, with the Greens and the pro-business FDP as junior partners. Less likely but still possible is a similar combination headed by the conservative CDU/CSU, which got its worst result ever. A grand coalition of the SPD and the CDU/CSU — the two parties that have dominated German federal politics since World War II — is only a fallback option if talks fail badly.
Both the Greens and especially the FDP have been in coalition governments before. But this time it's different because together they have the upper hand in negotiations with the big parties wooing them.
The problem is that the two smaller parties agree on little beyond legalizing weed, and even when they do, diverge on how to reach common goals. So, where does each stand on what separates them?
Climate. The Greens, obviously, believe Germany needs to do a lot more to fight climate change, the most important issue for voters in this election. They want to phase out coal by 2030; for Germany to become carbon-neutral in 20 years; be able to veto laws that contradict the Paris Climate Accord; and invest 100 billion euros ($117 billion) in railways to get rid of most short-haul flights.
The Free Democrats, for their part, aim to tackle the climate crisis but without breaking the bank, prefer private to public spending, and mostly reject more business regulation. Instead, they prefer to decarbonize the German economy through more emissions trading, so companies that pollute less earn more, and pollution becomes very expensive for the rest.
Taxes. The Greens want to cut taxes for low earners, raise them for high earners, and have long pushed for a wealth tax on the richest Germans. The FDP, traditionally opposed to any tax hikes for any reason, softened its position during the election campaign, and now supports some tax relief for poor Germans as well as taxing rich Germans a bit more. But a wealth tax is a non-starter.
Debt. The Greens want to remove or revise Germany's so-called "debt brake" that caps annual public borrowing at 0.35 percent of GDP, enshrined in the constitution since 2009. The limit was suspended in 2020 for three years to allow the government to borrow more to spend on pandemic stimulus, but the Greens say it should be relaxed further to invest more in the country's future.
The FDP, meanwhile, will never agree to take the provision out of the constitution — which Scholz is also against — to protect future generations against profligate public spending and being saddled with repayments they can't afford. This time, however, the fiscal hawks seem willing to be a bit more flexible to boost investment in climate and digitalization.
European economic integration. The EU also suspended its fiscal rules — preventing member states from ever owing more than 60 percent of of their GDP — last year to allow member states to borrow more to deal with COVID, and approved a 750 billion euro COVID relief fund with everyone on the hook. The Greens want to keep it that way even in post-pandemic times because if all countries share the risk, more money will be available to all. Moreover, they believe low-debt Germany should give highly indebted countries like Italy or Spain more wiggle room to repay all the debt they took on because the pandemic hit them harder than the rest.
No way, say the Free Democrats, who like "frugal" EU countries such as the Netherlands insist the pandemic-era fiscal limits must be repealed ASAP: responsible Germans are tired of subsidizing nations that always borrow more than they should.
One thing that the Greens and the FDP do have in common, though, is their popularity among the German youth, with both parties leading among voters under 30. And that, coupled with the declining influence of the CDU/CSU and the SPD, means that the center of political gravity has shifted — five to six so-called "people's parties" and three-way coalitions are here to stay.- Europe after Merkel resigns - GZERO Media ›
- Angela Merkel's farewell song - Kraftwerk mix | PUPPET REGIME ... ›
- All German bets are off - GZERO Media ›
- Is Germany turning Green? - GZERO Media ›
- German election outcome begins new era of three-party cooperation - GZERO Media ›
- Germany's next government taking shape - GZERO Media ›