Saturday

21st Oct 2017

German election: More of the same for EU?

  • "Successful for Germany". The boring campaign belies the potential significance of the vote for the rest of Europe. (Photo: CDU/Facebook)

The German election campaign has been - without doubt - a dull, lacklustre affair. In fact, for months, it has felt like a long set-up for a foregone conclusion in Sunday's (24 September) vote: A fourth term for Angela Merkel.

The chancellor's Christian Democratic Union (CDU) along with their Bavarian allies, the Christian Social Union (CSU), are striding towards victory, polling at around 36 percent - a significant stretch ahead of their coalition partners and main rivals, the Social Democrats (SPD), who are currently on less than 23 percent.

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  • One of the election's main questions is whether the liberals, led by Christian Lindner, will go into a coalition with Merkel's christian-democrats. (Photo: INSM/Flickr)

Yet, the boring campaign belies the potential significance of the vote, not just for Germany, but also for the rest of Europe.

After all, the makeup of the new government of the EU's biggest country and economy could determine what stance Berlin takes on a number of forthcoming EU issues.

Most pressingly, it could determine to what extent it is receptive to the proposals of the French president, Emmanuel Macron, for eurozone reform, which he is due to outline more concretely early next week.

"Merkel's choice for a junior coalition partner ... will definitely have an impact on the future of the eurozone," Carsten Brzeski, chief economist in Frankfurt for ING bank, wrote in a recent note.

More status quo?

One possibility is, of course, a return to the status quo, a so-called grand coalition with the SPD. If they did return to government, the party, led by the former European Parliament president, Martin Schulz, has already indicated that it was open to Macron's proposals for a eurozone finance minister and budget.

Most analysts predict, however, that if the SPD polls lower than its worst ever result in 2013, 23 percent, then the centre-left grassroots will balk at returning to another CDU-led government, instead preferring to regroup in opposition.

As such, the hotly contested race for third place is the one being watched most closely. The smaller parties - the pro-business Free Democrats (FDP), the environmentalist Greens, the socialist Left Party and the far-right Alternative for Germany (AfD) - are all hovering around the 10 percent mark.

The FDP have long been regarded as the CDU's natural ally. At the same time, the smaller party had a bruising time in coalition with Merkel from 2009 to 2013, failing to push through their election pledges, and then crashing out of the parliament for the first time since their foundation after World War II.

As such, they have sought to raise the bar, with their charismatic 38-year old leader, Christian Lindner, making a number of tough demands before considering entering into government.

In particular, the party has set out a decidedly eurosceptic stall.

The FDP, which has suggested that Greece should leave the eurozone, wants to see the European Stability Mechanism diminished and then shut down, while establishing mechanisms for exiting the eurozone and managing sovereign restructuring.

"Everything that goes in the direction of financial transfer on the European level, be it a eurozone budget or a banking union, is a red line for us," Lindner said at the weekend.

The question is whether the FDP in government would "make it impossible for Merkel to follow through on whatever she has been saying regarding closer cooperation with France," said Carsten Nickel of the political risk firm Teneo Intelligence.

Brexit issue

On the issue of Brexit, however, the FDP is unlikely to differ from the other parties significantly, despite speculation in the British press that the party could push the German government to soften its stance.

"If you are pro-business in Germany, you are going to have to be for the preservation of the single market, and if Britain wants to cherry pick, then this is what you have to prevent from a pro-business perspective," Nickel told EUobserver.

Meanwhile, the other small party in the running for a government role, the Greens, are far more pro-European, pushing for the ESM to be turned into a European Monetary Fund, supervised by the European Parliament.

"They are much more integrationist than the FDP and the CDU right now, so I think if they are part of the government we could expect some meaningful steps towards reform and toward more integration," Joerg Haas, a fellow at the Jacques Delors Institut in Berlin, told EUobserver.

With the Greens currently polling at 8 percent, it is highly unlikely that they will muster enough seats to form a coalition with Merkel on their own.

That means the chancellor may need to forge an unprecedented three-party alliance with the FDP and the Greens.

There are problems with this model, due to the animosity between the two small parties, which have been trading barbs throughout the campaign.

But such a government could combine different approaches when it comes to the eurozone, said Haas.

Finance scuffle

He said that if Germany backed both a European monetary fund and a European insolvency mechanism, "it would actually give countries the opportunity to decide, if you are in economic trouble, do you want strong support from the European Monetary Fund, or do you want to manage things on your own and ultimately face some kind of debt restructuring?".

Of crucial importance will be the post of finance minister, currently occupied by the 75-year old Wolfgang Schaeuble.

Merkel has indicated she would like him to stay on, even though the FDP staked a claim for the ministry this week, if it were to become a coalition partner.

"I'm pretty sure that regardless of the coalition composition, Schaeuble will retain the finance ministry," Nickel, from Teneo, predicted.

Even if the FDP enters government, he doubted that they would "really seriously try to challenge Merkel and Schaeuble on the eurozone beyond noise and rhetoric."

The CDU, for its part ,will continue to resist anything that smacks of a "transfer union." In the run up to the election, it has explicitly stated that there will be "no mutualisation of debts."

"Merkel will, in effect, have been re-elected with a mandate to keep doing what she has been doing for the last seven years since the crisis began.

In other words, Europe can expect more of the same from Germany," Hans Kundnani of the German Marshall Fund wrote this week in an editorial for Spanish daily, El Pais.

The major difference after Sunday will be outside the government, with the arrival of the AfD. The anti-immigrant, eurosceptics will be the first far-right party in the federal parliament since World War 2 - giving them a much bigger platform.

As with right-wing populists in the Netherlands and France, it is dangerous to be too complacent just because they have not won elections this year, analysts warn.

"These people don't have to be in government to shape the political agenda, to constrain the room for manoeuvre of the centrist parties," said Nickel.

Just having them in the parliament "does something to the political conversation," he said.

Investigation

The rise of the German alt-right

Ahead of Sunday's German elections, a growing number of anti-establishment, anti-Islam websites have created an echo chamber for the radical right.

Schulz mauls Merkel as German vote nears

Merkel has “lost touch” with ordinary people, does not know how to handle Dieselgate, and is too soft on Turkey, her main election rival has said.

Analysis

Merkel-Macron: An EU motor in the making

Merkel's re-election is expected to revive the Franco-German EU motor, but the German leader and France's new ruler are still searching for a common vision.

Merkel survives election 'earthquake'

Christian-democrat leader set to rule Germany together with liberals and greens, but with a new troublemaker - the AfD party - on the scene.

Czech election stalemate on joining euro

Whilst committed to joining the euro in theory, most Czech parties seem to be stonewalling on 'when' in the run-up to the 20-21 October election - and Andrej Babis, favourite to be prime minister, has ruled it out.

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