Instability beneath the surface – Germany’s Grand Coalition continues

After casting their ballots nearly six months ago, Germans finally found out on Sunday that Chancellor Merkel of the conservative Christian Democratic Union (CDU) will enter her fourth term in office with the center-left Social Democrats (SPD) in tow to form a Grand Coalition government.

The SPD has dragged its heels over the prospect of serving as a junior partner to Chancellor Merkel, since it has lost significant support after doing so twice already. But the SPD leadership appealed to its members to swallow a bitter pill, so that Berlin can get back to business and Germany could avoid repeat elections. Two-thirds of SPD members listened and voted to allow for continuity with a Grand Coalition – which in past Merkel governments coincided with economic growth and international renown for Germany. Yet the forced arrangement this time around could hamper Germany’s global influence, because both the CDU and SPD are paralyzed with identity crises and with a combative opposition at home.

{mosads}When Angela Merkel was first elected chancellor in 2005 she did not emerge as a clear victor. The CDU did not win enough seats to form a government with its preferred partner the Free Democrats (FDP), and it took lengthy negotiations with the SPD to form a Grand Coalition. Flash forward to today, and Chancellor Merkel finds herself in a similar situation, although her reputation and Germany’s international standing have grown immensely in the last decade.

Riding on the economic reforms of her predecessor Gerhard Schroeder, skillfully navigating the 2008 financial crisis, and consistently promoting German business interests, Chancellor Merkel currently represents an export powerhouse with low unemployment and a budget surplus of 36 billion Euros from last year thanks to record tax revenues and an uptick in growth. Nonetheless, the federal election last fall resulted in the CDU’s worst performance since 1949.     

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Germany’s economic strength has allowed it to play a dominant role in the European Union and a significant part in managing international challenges common to countries in the transatlantic arena. Whether it is curbing Iranian nuclear ambitions or Russian aggression in the Ukraine, Chancellor Merkel has been a steadfast advocate for coordinated action among allies to safeguard the liberal international order. Even though weak militarily, Germany with Chancellor Merkel at the helm has had the credibility to weigh in on international matters especially because predicaments, such as economic stagnation, integration, and populism, afflicting Germany’s partners seemed far away from Berlin.

In November, Germany topped the Nation Brands Index (NBI) for best international branding. But in her fourth and likely last term in office, Chancellor Merkel will have to contend with many of the same challenges confounding western democracies which might cause Germany to temporarily retreat from its trajectory in becoming a bolder, globally-responsible player.  Both the CDU and the SPD have voiced ambition for Germany to step up to a  leadership position, but that will be put on the back burner as both big tent parties have to transform in order to shore up support among German voters.

The major parties can certainly point to successes while in office together. The SPD introduced a minimum wage for Germany and rolled back the retirement age for manual laborers, while the CDU has basked in the shadow of Chancellor Merkel’s sky-high popularity. But by governing from the middle, both parties left the door open over the years for populist parties to surge on the left and right and blended together so that voters have a hard time distinguishing them apart.

The SPD is well aware of the stakes as it is precipitously close to being eclipsed in current polling by the far-right Alternative for Germany party (AfD). A little over a decade ago, the SPD, Germany’s oldest party, garnered support from more than a third of the electorate. During the election last fall it captured about a fifth of voters.

The fragmentation in the political party system, there are seven parties in the German Bundestag, to a large degree related to repeat Grand Coalitions, has cursed the SPD into a straitjacket.  The party is being propelled to be junior partner once more so that Germany can have a stable government. But below the surface both parties realize that breaking this unnatural bond would allow for renewal. Voters are yearning for new faces and messaging that resonates with their concerns about integrating migrants and refugees as well as adapting to a digital economy.

The SPD’s new general secretary Lars Klingbeil admitted that even with the mandate to govern again, the SPD has to restructure starting today. The CDU is in the same boat, and Merkel is accommodating by including younger peers in her cabinet to appease her critics.  This third iteration of the Grand Coalition will be an interregnum moment since both parties will be cautious and hedge to prepare for the post-Merkel era.

Sudha David-Wilp is senior transatlantic fellow and deputy director of the Berlin office of the German Marshall Fund of the United States.