German Coalition Building

Angela Merkel’s Christian Democrats (CDU), the Christian Social Union (CSU), the Free Democrats and the Greens are in the tumultuous process of perhaps forming the first four way coalition on the federal level in Germany. The CDU and CSU did not win enough votes to govern alone in a coalition, with Merkel’s party winning 30.2 percent of the votes in the September 24th election. The possible coalition is sometimes jokingly referred to as the Jamaican coalition because the party colors of yellow, green, and black match the Jamaican flag.  Never before has Germany attempted a four party coalition in the federal government, and only two of its states have ever done likewise. Analyst Uwe Jun, a professor of political science at the university of Trier, gives the coalition a 2 to 1 chance of success. Carsten Nickel, partner and managing director for Europe at risk consultancy Teneo Intelligence, told CNBC that despite the possible coalition being untested, he believes the parties can be successful and the “parties represent a very centrist coalition”.   

German Exit Poll / http://news.bbc.co.uk/2/hi/europe/8277526.stm

This predicament comes after Merkel’s party, the CDU (Christian Democrats), and the Bavarian CSU (Christian Social union) suffered historic losses to the right wing populist party Alternative fur Deutschland (AfD). The CDU specifically lost 55 seats. The AfD made its premier in the parliament as the third strongest block with 94 seats in the 709 seat legislature.

The smaller parties involved in the coalition negotiations have voiced concerns about new elections being required. The Free Democrat party has gone as far to state to the press that his party has “no free of new elections”. Despite this, Merkel has stated that she expects to move into official talks by the 16th of November and that progress does not depend on interviews given or threats by parties.

Despite some confrontational rhetoric, the Greens have recently rolled back on some of rhetoric and policy to better enable a coalition to be built. Greens have admitted that a ban on combustion engines by 2030 may be unrealistic, and have altered a plan to close down all coal power plants until 20 are left. Still, the pro-business Free Democrats are opposed to a sharp pivot away from coal. Climate change is a critical source of tension and the leader of the Green Party, Simone Peter, has been very critical of the Free Democrats acting as “climate change deniers”.

Other issues that may cause tension include: Germany’s rule in the European Union, topics related to education, and Turkey. Both the CDU and the Greens have appeared very open to Macron’s further integration of Europe. The Free Democrats are less open and feel that this could place a large burden on Germany to hold up the economy of Europe. Merkel has been driving for a possible compromise on this issue. Regarding education, the Free Democrats and Greens have been at work to convince the CDU and CSU to join them in lifting the prohibition on federal aid for school. Another area of needed compromise is Turkey’s bid for EU membership. The Christian Democrats have officially rejected the idea of Turkey as an EU member. All parties condemn President Recep Tayyip Erogan’s government crackdown on democratic institutions and journalists in Turkey.  Whatever compromise is found is expected to take a tough line. Immigration is also a tough issue to compromise on, with strong stances existing on all sides.

An issue with a growing consensus across groups  is Germany’s digital future. In past years, there has been a growing push for access in rural areas. The Free Democrat Party has suggested financing this by selling government stakes in Deutsche Telekom AG and Deutsche Post AG, and says that improvement to digital access is extremely overdue. Another issue all ll parties also emphasize is lower taxes, especially the CDU. Merkel has pledged to lower income taxes by 15 billion euros.  Additionally, all parties are in agreement to  reduce some fossil fuel use. Claudia Kemfert, an economist at the DIW institute, believes the more marketable compromises the coalition puts their plan, the better.

Although a four-party coalition is almost unprecedented and has the potential to be cumbersome, Holger Schmieding, an economist at Berenberg, believes itcould be an opportunity for intelligent compromises. There is hope that the coalition will be able to come together and be a productive, functional government.

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