Germany’s Götterdämmerung

Germany is experiencing a political watershed.

It is not just that the exit of the Free Democrats (FDP) from coalition talks has cast doubt on whether Chancellor Angela Merkel of the Christian Democratic Union (CDU) will remain in power. The FDP’s departure from negotiations with the CDU, its Bavarian sister party the Christian Social Union (CSU) and the Greens marks the end of a willingness to forge stable coalition governments that has defined German politics since the last days of Konrad Adenauer’s post-war chancellorship.

Of course, without the FDP’s participation, Merkel could pursue a coalition government with the Social Democrats (SPD). But the decimated SPD says that it is determined to remain in opposition, in order to recover from its crushing defeat at the polls. Any other possible coalition is out of the question, because neither the far left nor the far-right Alternative für Deutschland (AfD) are seen as acceptable partners.

A minority government under Merkel, however, is conceivable. Given that President Frank-Walter Steinmeier has expressed his distaste for calling a new election, such a scenario could become likely if Merkel does not resign on her own. 

And even if there is a new election, the outcome would not be much different, unless SPD leader Martin Schulz steps down.

A minority government might be formed by the CDU and the CSU without the formal participation of other parties. A minority coalition that included the Greens would force the CSU to compromise on migration issues and climate policy, which would be unnecessary otherwise, given the inability of the SPD, Die Linke (The Left), and the Greens to block legislation.

And Merkel herself will try to avoid a minority coalition with the FDP, in order to avoid becoming dependent on it. 

The FDP, for its part, would like to participate in such a government for exactly that reason. It would then be able to contain Merkel’s red-green affinity.

A minority government, whatever its composition, would not necessarily be a bad thing. With the government seeking partners to enact legislation on an ad hoc basis, the Bundestag would finally become the site of genuine public debate once again. 

For too long, coalition partners have negotiated government decisions behind closed doors, with the Bundestag either rubber-stamping or vetoing the results.

Those who stand to gain the most from such a strengthening of parliament will be the small parties that otherwise have little chance of asserting their influence. 

Above all, the AfD, Germany’s version of the French National Front, which emerged from nothing as Germany’s third-largest party in the September election, will benefit from open debate.

So far, the media have largely focused on discrediting the party. But a more proactive Bundestag would inevitably become a showcase for the AfD’s arguments and rhetoric.

At the same time, a minority federal government’s foreign policy would undoubtedly be weakened, and Merkel would find it difficult to play an active part in European politics. This would also mean, however, that Germany’s European partners would struggle to force compromise upon the German government.

This dynamic will be particularly important for France, given President Emmanuel Macron’s goal of consolidating the eurozone by providing it with more attributes of statehood, and his desire to push ahead with a two-speed Europe comprising a eurozone and a large non-euro fringe consisting of northern and eastern EU countries.

A German minority government would have to hold lengthy debates with all of the Bundestag’s parliamentary groups on every major decision before it could assent to Macron’s proposals — or any other, for that matter.

Effective opposition at home means that the government would no longer be able to acquiesce in the dead of night to various rescue operations for Germany’s EU partners.

That is what happened in May 2010, when Merkel’s government was forced by the French triumvirate of European Central Bank President Jean-Claude Trichet, IMF Managing Director Dominique Strauss-Kahn and French President Nicolas Sarkozy to violate the Maastricht Treaty by establishing a rescue fund for Greece’s foreign creditors, primarily French banks.

Germany was also forced to compromise in 2012, when Merkel was pushed into agreeing to a banking union and the ECB’s “outright monetary transactions” programme, which effectively turned European government bonds into Eurobonds.

Likewise, kneejerk decisions by Merkel — such as her move to phase out nuclear power within a few months of the Fukushima accident in Japan, or to allow refugees to enter Germany from safe third countries — will now be impossible. 

That is welcome, because too often politicians, driven by the momentum of their own thoughts, make decisions that have serious adverse consequences in the long term.

With the nuclear phase-out, for example, Germany can now honour its commitments to combat climate change only by damaging, and perhaps losing, part of its industrial base.

By admitting 1.5 million migrants in just two years, Germany has also placed a massive burden on its welfare state, inadvertently encouraged the Brexiteers, and rallied all of Eastern Europe against it.

It is too early to tell how the political uncertainty now confronting Germany and Europe will be resolved. But a Merkel who can be called to account by the Bundestag may be the best alternative Germany has.

The writer, professor of economics at the University of Munich, was president of the Ifo Institute for Economic Research and serves on the German economy ministry’s Advisory Council. ©Project Syndicate, 2017. www.project-syndicate.org