Following Sunday’s election, the post-Merkel Germany landscape is still quite foggy. But the political shifts in Berlin over the past several days are slowly revealing a new political landscape. Here is what we expect:
A weaker EPP – in Germany and across Europe
The EPP, the largest political family in Europe, is facing a perfect storm: Angela Merkel – the EPP’s most powerful leader – is leaving after 16 years which leads to a massive void in leadership. She was the go-to politician among European and global leaders whenever an EU position had to be formed on truly relevant subjects, ranging from common debts and immigration to climate change and foreign policy.
Besides, the EPP has not only suffered a weakening blow in the largest EU member state. The most likely coalition to be formed, as CSU leader Markus Söder put it, is “the one that has a public mandate to govern”, which will be led by an SPD Chancellor, Olaf Scholz. This means that the EPP now finds itself in the historically rare position that it neither leads the German, nor the French or Italian government. The traditional EPP summits used to be the central decision making power on European policy, often pre-empting major decisions to be adopted in the Council. Consider that gone for the time being.
The SPD victory is neither a sign of its strength nor means an upwards trend for the S&D
If you take a deep dive into voter movements and motivations, you quickly find that the major reason for the surprising rebound of the SPD in Germany was the weakness of the CDU, not the strength of the SPD. Given this reality, political analysts and outside observers should not jump to the conclusion that the SPD is thriving.
Scholz is still being haunted by a financial scandal in which he is being accused to have intervened twice, as Head of the Hamburg State and later as federal Minister of Finance, to save MM Warburg Bank (Hamburg) from having to pay back two illegal tax refunds worth 40 and 47 million Euros. And two days after the federal elections, the state prosecution ordered raids in the premises of a close friend of Scholz. If these produce new evidence, Scholz himself could be either weakened or even toppled.
The Greens and FDP are no longer foes
While policy disagreements still exist between the liberal-conservative FDP and the leftwing Greens, these are no longer an obstacle to working together in a coalition government. These two parties have transformed themselves in recent years as they realised they were effectively fighting for the same electorate and with that becoming actually more similar than you would expect. FDP Chief Lindner, who is said to become the next Minister of Finance and possibly also the Economy, described the two parties as the key progressive forces in German politics – the ones that stand for change. This is what they have in common.
While the FDP sees its role as the guardian of reasonable economic policies and austerity, both parties have similar views on internal affairs and a range of topics,including immigration, foreign policy and the legalisation of cannabis. Even around the major election topic of climate change, the two are aiming for the same goal, albeit coming from different angles. While the Green party seeks subsidies and stronger regulation to push Germany’s CO2 ambitions, for example by prohibiting combustion engines by 2030, the FDP prefers programmes that promote green technologies and industries, in particular in the wind, solar, hydrogen and e-mobility sectors. None of this sounds like compromising will be too tough. Important for businesses: The two parties’ cooperation promises more progress than threats – unless your business is CO2 heavy.
It is noteworthy that the FDP was often criticised for their surprise exit from the 2017 coalition negotiations that could have already placed them in government with the Greens back then. There is pressure on the FDP not to repeat that. Besides, communication channels have intensified in recent years, including a regular discussion forum of MPs dubbed “Pasta-Connection”.