Olaf Scholz’s “traffic lights” coalition takes shape

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ODO NOT THING seemed clear during the election campaign upside down Germany. Whatever the outcome, the negotiations necessary to form the first government of the post-Angela Merkel era would be complex, difficult and extremely long. A fragmented electorate was likely to force Germany to form its first three-way coalition since the 1950s, binding together parties previously united only by mistrust and disagreement. Ms Merkel, some thought, would have to don one of her famous colorful blazers for a final New Year’s speech as chancellor, as the coalition talks in January.

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The election result was indeed messy. Yet, less than a month later, things progressed more smoothly than anyone dared hope. The Social Democrats (SPD), who won a narrow victory over Merkel’s conservative Christian Democratic bloc, are discussing a “traffic light” coalition (the name comes from the party colors). with the Greens and the Free Democrats (FDP), a pro-business outfit. The parties’ negotiators spent a week huddled in a Berlin showroom discussing their differences. So far, they seem to have gotten along well.

On October 15, the three parties released a 12-page document with the results of their deliberations to date. The FDP, the strange man of what would otherwise be a left-wing coalition, has secured a guarantee not to increase taxes on personal or corporate income, and that the “debt brake” limiting the deficit of the Germany, enshrined in the constitution, will not be affected. These are concessions to reality as much as to FDP. Progressive parties could not hope to obtain tax increases or constitutional changes through the Bundesrat, Germany’s upper house.

Seeking to prove that their putative alliance can be more than the sum of its parts, its members promote a “modernization” narrative. This translates into commitments to halve the approval time for infrastructure projects, accelerate digitization, relax immigration laws, increase R&D expenses and reduce the voting age to 16. There are also commitments to boost housing construction, fight child poverty and raise the minimum hourly wage to € 12 ($ 14), the signing policy of Olaf Scholz, the SPDcandidate for chancellor.

Yet the paper is vague, or silent, on the more delicate issues. His proposed adjustments to the creaky public pension system will not be enough to prevent a demographic crisis to come. His ambivalent statement on the EU’s fiscal rules, which governments will abolish early next year, “just shows that we couldn’t agree on anything coherent,” says Sven Giegold, an environmentalist European deputy involved in the negotiations.

The biggest open question is how the government can hope to finance the huge investments needed for the energy and digital transitions promised by Germany. Experts are teeming with ideas, including the creation of public enterprises or complex off-budget vehicles. But for now, the parties simply promise to “guarantee the necessary investments … within the framework of the constitutional debt brake”. Threading that needle may be the trickiest part of official coalition talks to come.

Nearly 300 negotiators, divided into 22 working groups, will now spend the coming weeks discussing the details. Their bosses must manage the delicate question of the distribution of public employment: FDP and the Greens are both eyeing the finance ministry, currently occupied by Mr Scholz. (After Jens Weidmann’s surprise resignation on October 20, they also have to agree on a new Bundesbank president.) All is well, the parties will strike a formal coalition deal – likely the length of a small book – in December. . Assuming that it is approved by the members of the Greens, and perhaps by that of the SPD, Mr Scholz will make his wish to be crowned chancellor before Christmas come true, and Mrs Merkel will make her wish to leave her blazer in the wardrobe on December 31.

For more coverage of the German elections, visit our dedicated hub

This article appeared in the Europe section of the print edition under the title “Lit vert”


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