A political experiment takes shape under Scholz in Germany

After Germany’s 2017 Bundestag elections, almost six months passed before a new coalition government took office. This time it’s different. If, as expected, Olaf Scholz of the Social Democratic party is confirmed as chancellor in a Bundestag vote planned for the second week of December, it will have taken Germany just over 70 days to form a government since the September 26 elections.

The progress has been encouragingly fast, given that the SPD, Greens and liberal Free Democrats faced the task of forming the first three-party coalition to rule Germany since the 1950s. Nevertheless the coalition agreement that was made public on Wednesday conceals what are potentially awkward policy differences among the three parties, which have never governed together at national level. The areas to watch out for are the pandemic, fiscal policy in its German and eurozone contexts and foreign policy with regard to Russia, China and Nato.

Germany’s Covid-19 infection rates have hit their highest levels this month since the pandemic broke out in early 2020. The premiers of powerful western German states such as Baden-Württemberg and Bavaria are pressing for mandatory vaccinations, as adopted in Austria. But several eastern German states where anti-vaccination sentiment is vocal oppose such sweeping measures, as does the FDP.

For the incoming government, the difficulty will be to set out a coherent line on health policy to which all three coalition parties can agree, as far as possible in tandem with Germany’s 16 states. The aim should be to avoid the mixed messaging from the federal and state governments that has confused and divided German society in the closing weeks of Chancellor Angela Merkel’s administration.

Despite being the smallest of the incoming government’s three parties, the FDP can be expected to wield influence above its weight in key areas of coalition policy. This will be particularly true for the management of the public finances if, as appears likely, FDP leader Christian Lindner takes over as finance minister.

The three parties have agreed not to alter Germany’s “debt brake”, a constitutionally-enshrined limit on government borrowing, but the FDP goes further than the SPD and Greens in not wanting the EU’s post-pandemic recovery fund to evolve into a permanent instrument of European economic policy. The FDP takes a similarly hard line on the need for the eurozone to return to the strict fiscal rules suspended during the pandemic.

The incoming government will have to find a way of reconciling its commitment to fiscal discipline with its promises to raise domestic public investment, particularly in digitalisation, infrastructure and climate change measures. The Greens won the argument for bringing forward the phasing out of coal to 2030 from 2038, but this too may test the limits of budgetary restraint. On the EU stage, the new government may face calls from France, Italy and others to be more flexible when it comes to renegotiating fiscal rules.

Finally, the incoming coalition’s three parties do not see wholly eye to eye on foreign policy. The Greens and FDP campaigned this year for a tougher line on Russia and China than was pursued by Merkel’s government, of which the SPD formed part. There have also been tensions over nuclear weapons policy and over Germany’s failure to meet Nato’s target that every member state should spend at least 2 per cent of gross domestic product on defence.

With Merkel’s departure after 16 years in office and the first SPD-led government since 2005, Germany is in new political territory. The nation’s allies and friends are counting on the new government to make a strong start.

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