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Accompanied by tugs, the LNG tanker "Hellas Diana" transports a cargo of LNG to the "Deutsche Ostsee" energy terminal.
Germany rejects Russian natural gas shipments
Danke, but no danke. The German government has reportedly ordered its ports to reject all cargoes of liquefied natural gas, aka LNG, coming from Russia, according to the Financial Times.
The move completes a striking turnaround for Germany, which for decades was the world’s largest importer of Russian gas. But since Vladimir Putin ordered the full-scale invasion of Ukraine in 2022, piped gas shipments have been cut by both sides. Germany now imports zero gas directly from Russia.
The US angle: Geopolitical considerations are afoot. While other countries in Europe still import small amounts of Russian LNG under long-term contracts, the EU broadly is looking to import more of the stuff from the growing American market.
European Commission President Ursula von der Leyenraised this issue with Trump during her post-election phone call to him last week. The EU is likely hoping that increased purchases of American LNG could mollify Trump’s pledge to impose blanket tariffs of up to 20% on all US imports.
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.
A general view of the German lower house of parliament, in Berlin, Germany.
Germany to hold early elections
Under a plan agreed by Chancellor Olaf Scholz and the opposition, Europe’s largest economy is now headed toward early elections in February.
The move comes after weeks of fraying ties among the so-called “traffic light” coalition, an unwieldy tie-up of Scholz’s center-left Social Democrats (red), the business-friendly Free Democrats (yellow), and the environment-oriented Greens (you guessed it).
The final straw, last week, was a spat over Germany’s budget. Scholz and the Greens wanted to relax Germany’s strict fiscal rules to create room to invest in infrastructure, defense, and Ukraine aid. The Free Democrats rejected that and proposed a more austerity-oriented budget of their own. Scholz, in turn, sacked Free Democrat Finance Minister Christian Lindner, which led to his party leaving the governing coalition altogether.
What happens now: Under the current deal, Scholz will hold a confidence vote in his government in mid-December, which – assuming he loses as expected – will pave the way for February elections, which the parties want to hold on Feb. 23, 2025.
At the moment, polls show the opposition Christian Democratic Union as the clear frontrunner with 32% support, twice that of Scholz’s Social Democrats. The far-right Alternative For Germany polls second, at 17%.
Germany faces political uncertainty after coalition collapse
Carl Bildt, former prime minister of Sweden and co-chair of the European Council on Foreign Relations, shares his perspective on European politics from Stockholm, Sweden.
What does Germany's coalition collapse mean for Chancellor Scholz, the country, and Europe as a whole? Well, the collapse of the coalition government was, to some extent, expected. There had been speculations for weeks on how long it was going to hold together, and finally, the Chancellor himself pulled the plug in a rather vicious personal attack against the finance minister. Then he sacked him and then the government went up in flames. Now, what he wants to do is strangely enough to stay in power until January 15th and vote for the confidence, lose vote the confidence in parliament then, and have elections in March. I doubt that will be the case. I think there is now very heavy pressure by the opposition, needless to say.There's pressure by business, there are pressure by others saying that we can't have this uncertainty going on for months and months, particularly in a situation where other things are happening in the world, mildly speaking. So I wouldn't be surprised if we have, for example, a vote of confidence or he has to put himself a vote of confidence by mid-next week or something like that, and Germany is heading for election perhaps very early next year. Then of course, the other question will arise, what kind of government could possibly arise out of that particular election? That's a later, somewhat complicated issue. I guess we will have reason to return to it.
German Chancellor Olaf Scholz leaves the Bellevue Palace, after he sacked Christian Lindner.
Germany’s governing coalition crumbles over budget battle
Germany’s governing coalition collapsed on Thursday after Chancellor Olaf Scholz fired Finance Minister Christian Lindner, head of the pro-business Free Democrats and a linchpin in his majority, likely spurring a vote of confidence.
Germany is struggling in the aftermath of Russia’s invasion of Ukraine, which has sent energy prices skyrocketing, upped defense spending, and brought in 1.5 million Ukrainian refugees. Lindner wanted to spur the economy through tax cuts paid for by slashing social programs and climate change targets, while Scholz pushed for loosening the spending limit.
Scholz’s “traffic-light coalition” has governed Germany since 2021, but internal tensions have been rising for weeks over the 2025 budget amid a second consecutive year of no economic growth. Now, without a majority, his coalition must rely on individual votes from other parties to pass laws until an election is held.
“The big question about this vote of confidence is not the result but the timing,” explains Eurasia Group’s Europe director, Jan Techau, who says the opposition party will try to pressure the vote to happen as soon as possible, though Scholz will try to hold off until at least January.
“It is clear that Scholz will lose the vote. The entire purpose of the vote is to lose it, thereby clearing the way for elections,” says Techau. How Scholz will fare in elections is unclear but will hinge on issues of migration, pensions, cost of living, and the war in Ukraine.
German Chancellor Olaf Scholz reacts at a media briefing following his bilateral talks with Somali's President Hassan Sheikh Mohamud at the Chancellery in Berlin, Germany, November 5, 2024.
German government on the ropes over budget clashes
The government of Europe’s largest economy looked closer than ever to collapse on Tuesday as Germany’s ruling coalition remained unable to agree on a budgetary package proposal.
The coalition has always been a somewhat awkward, loveless marriage between Chancellor Olaf Scholz’s center-left Social Democrats, the left-wing ecologist Greens, and the center-right Free Democrats.
But the differences reached crisis levels last week when the Free Democrats proposed a budget that included spending cuts and deregulation plans that Scholz couldn’t agree with, alongside emissions target postponements that angered the Greens.
The bigger picture is that Germany’s economy is struggling badly, and the government is trying to find ways to boost growth without running afoul of strict fiscal stability rules. After the Free Democrats proposal was rejected, the party leader told his coalition partners to draft their own proposals if they liked.
The coalition is set to meet on Wednesday for a summit that could determine its future. If it collapses, Scholz would have to choose whether to try to govern with a minority government until the next scheduled elections in fall 2025 or call Germans to the polls early.German Finance Minister Christian Lindner, Economic Affairs and Climate Action Minister Robert Habeck, and Chancellor Olaf Scholz attend the 2024 budget debate session of the German lower house of parliament, the Bundestag, in Berlin, Germany, earlier this year.
Will Germany’s ruling coalition survive the winter?
An uncomfortable dynamic: Scholz held a summit on Tuesday to discuss Germany’s economic woes but didn’t even invite his finance minister, Christian Lindner of the Free Democrats, who decided to schedule a competing economic summit the same day.
“The three-party coalition is plagued by a lack of internal discipline, weak leadership by Chancellor Olaf Scholz, record-low approval ratings, and deteriorating trust between its leading figures,” says Jan Techau, a Berlin-based Europe expert at Eurasia Group.
Beyond the economic crisis, issues ranging from the rise of the far-right AfD to growing geopolitical pressures brought on by the war in Ukraine and a more assertive China have placed the German government in “a perfect storm situation,” says Techau.
Germany’s GDP grew in the third quarter, helping it avoid a recession, which Economy Minister Robert Habeck on Wednesday said offers a “ray of hope.”
But there are still concerns that the coalition could soon collapse, which would pave the way for snap elections in the spring. While the probability of an early vote has gone up, Techau says it’s still more likely that the government will complete its full term.
The coalition is held together by the “weakness” of the ruling parties and the fact that “early elections are likely to produce disastrous results for all three of them,” adds Techau.
The next general elections aren’t scheduled until Sept. 2025. We’ll be watching to see whether the German government can keep it together in the meantime.
Protesters, including supporters of Georgia's opposition parties, hold a rally to dispute the Georgian Dream's declared victory in the weekend's parliamentary election in Tbilisi, Georgia, on Oct. 28, 2024.
Hard Numbers: Georgians protest, VW closes plants, China closes kindergartens, Uruguay preps for presidential runoff
1,000s: “They stole your vote and tried to steal your future,” Georgian President Salome Zourabichvili told pro-EU supporters on Monday, urging fellow citizens to take to the streets following the ruling pro-Russian Georgian Dream party’s declared victory in Sunday’s election. Exit polls had offered conflicting trajectories on who would win. By late Monday, tens of thousands of protesters were pouring out onto the streets of Tbilisi to fight for Georgia’s democracy and future.
3: German auto giant Volkswagen, struggling amid weak sales and a slower-than-expected EV expansion, is hitting the brakes on three factories within Germany — the first time in its 87-year history the company has shuttered a plant in Deutschland. The move coincides with plans for layoffs and pay cuts of up to 18% with a two-year pay freeze.
5%: The number of Chinese kindergartens dropped by more than 5% in China last year – pupil enrollment dropped by 11% – owing to the country’s negative population growth. While there were 289,200 kindergartens in 2022, by last year that number had fallen to 274,400, according to China’s Ministry of Education. Some of the facilities were converted into senior care centers to help serve the country’s aging population.
1.06 million: Uruguay is heading for a presidential election runoff next month after no candidate received more than 50% of the vote in the first round on Sunday. Yamandú Orsi, a center-left candidate who’s a two-time mayor and former history teacher, came away with 1.06 million votes. Meanwhile, Álvaro Delgado, the center-right ruling party’s candidate, received 644,147 votes – ahead of the third-place candidate, Andrés Ojeda, who received 385,685 votes. The South American country stands apart from its neighbors, and much of the world, in avoiding highly divisive politics and conducting an election typified by civility.