The terrible timing of Germany's coalition meltdown
While all eyes are focussed on a tumultuous election week in the world’s largest economy, Europe’s economic engine is caught up in its own political crisis.
Germany has been thrown into uncertainty after Chancellor Olaf Scholz fired his dissenting finance minister and leader of the Free Democratic Party (FDP), Christian Lindner, causing the country’s dysfunctional traffic-light coalition government to come crashing down.
At a hastily called briefing in the Bundestag following Lindner’s dismissal, Scholz did not mince his words. He labelled his former partner-in-government “irresponsible” and “petty”, claiming he had broken his trust and been unwilling to compromise for the good of the country.
There will be no shortage of commentators today arguing that Germany’s ruling coalition - formed three years ago between Scholz’s centre-left Social Democratic Party, Lindner’s liberal Free Democrats and the Greens - was always destined to fail.
It was, in many respects, an unnatural union. And, as Germany’s Budget approaches, ideological differences over fiscal policy have become too difficult to reconcile.
Scholz’s party and the Greens wanted to suspend the constitutionally enshrined spending limit and take on more debt in order to bolster a Ukraine support package by €3 billion to €15 billion and to initiate a programme to save jobs in the car industry. Lindner, a fiscal hawk, is opposed to new borrowing, instead calling for lower taxes and cuts in social spending.
What now?
Germans may be heading for the polls.
Without the FDP, the Chancellor cannot push through any new measures without opposition support. And the 2025 Budget was supposed to be agreed next week.
Today, Scholz called on opposition CDU leader, Friedrich Merz, for support in passing his economic programme and boosting military aid for Ukraine.
But Merz, who has waited 25 years to become German chancellor, has different priorities. He has demanded snap elections in January, and other opposition leaders have backed his call. German elections aren’t scheduled until September.
While the call will be driven in part by self-interest, the CDU leader makes a fair point: there are big decisions to be made in Europe right now, he reasoned, meaning Germany needs strong leadership, and it needs it now. The country cannot afford to be led by a minority government for months, followed by many more leaderless months as election campaigning gets underway.
Merz is right that Germany needs a united and effective government, urgently. Though there’s nothing to guarantee that early elections will be a speedy resolution to political stability. (See France). Especially if the election leads to big gains for Germany’s increasingly popular AfD - a hard-right party that other mainstream parties in Germany have refused to form coalitions with. (Again, see France).
Berlin’s government breakdown is, at the risk of stating the obvious, very bad timing. Something Scholz acknowledged himself. Though, for this, he blamed his estranged coalition partner, saying it was incomprehensible that Lindner would decide to force his hand on the day of the US election.
Ukrainians will be watching on anxiously. Germany is second to the US in financial support for Kyiv.
With an isolationist and protectionist US President elect posing a potential threat to Europe’s national security and economic interests, now more than ever is the time for cohesion and strong leadership on the continent. Something Emmanuel Macron argued today. Addressing leaders during a gathering in Budapest in light of Trump’s resounding victory, the French leader made a call for unity, adding that Europe needs to grow some teeth or risk being eaten by the world’s “carnivores”.
But a second Trump presidency won’t collectively concentrate minds on the continent if European countries are too busy dealing with their own domestic crises.
Caitlin Allen
Deputy Editor
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