Elections results: Austerity’s black to prevail in the new multicolored German government

German Chancellor Angela Merkel has stressed how hugely important the German automotive industry is for jobs and growth. “We know how important your sector is for our country,” she said at the start of the International Motor Show (IAA) in Frankfurt/Main on Thursday 14 September. Photo: Bundesregierung / Kugler

During the past ten years, Germany has become a politically boring country and yesterday’s election is not going to change that, despite the loss of around one million votes for the Chancellor’s party. Angela Merkel’s win came to none’s surprise and the results permit her to embark on a fourth term in the top job. Her Christian Democratic Union together with the Bavarian sister, the Christian Social Union will stay at the helm of the country with 33% of the votes, blocking any major deviation from the austere policies followed so far, irrespective of who will be the junior partners in her fourth tenure at the Chancellery.

SPD’s U-turn

Mathematically, Merkel needs two minor parties to form a majority government, most probably the Greens and the neoliberal pro business Free Democrats of FDP, after excluding the extreme right and left parties. Both the FDP and the Greens have expressed willingness to participate, but understandably, will dearly sell their backing. SPD, the social democratic party, until yesterday the solid junior government partner for CDU/CSU, will remain in the opposition with only 21% of the vote, suffering a massive loss. In this way, SPD  pays the price of having effectively introduced and continuously supported neoliberal austere policies in 2005.

In a major detour though, early last night the new socialist leadership under Martin Schulz, the former president of the European Parliament, announced they are from now on to occupy the opposition benches in the Bundestag. Obviously, SPD wants to rethink the core of the party’s political ideology and policies and probably oppose the austere tradition of past years. For many years repeated federal and regional elections didn’t change the stern Germanic economic agenda, as if politics didn’t really matter. But who was the architect of austerity?

The architect of austerity

Wolfgang Schäuble 75, the tough minister for Finance and No 2 of CDU until yesterday has said it loud and clear: “Elections shouldn’t change economic policies”. According to him, austerity should be uninterrupted. On such a background, the conviction that the Germans have no imagination has solidified all over Europe. The CDU/CSU pact may have lost around 8% of its votes, but with 220 parliamentary seats, remains by far the strongest political party of Germany and will head a tripartite government, to be formed soon.

This prospect guarantees four more years with no major changes of economic policies in Germany and the EU. The rise of the extreme right, almost fascist, eurosceptic and anti- immigration party, the AfD (Alternative for Germany) with 13% (gained 8%) doesn’t represent a real danger for the German establishment. AfD’s popularity is significant only in the high unemployment regions of the ex-communist East Germany’s DDR (German Democratic Republic) Bundesländers.

Who’s miracle?

In any case, Merkel’s and Schäuble’s economic miracle it’s not only of their own making. It’s based on the groundbreaking neoliberal economic reforms, which were introduced at a great political cost to the two times Chancellor Gerhard Schröder (1998-2002, 2002-2005), the then leader of the socialist SPD party. The socialists, although having lost the election of September 2005 to CDU/CSU, decided to help neoliberalism to reign. To be reminded, SPD supported as junior partner the CDU/CSU Merkel- Schäuble government, in the first and third chancellorships of Angela, with the latter period having ended yesterday.

Now, given that yesterday the Germans endorsed the governance of the Merkel – Schäuble duo, the question of which party will become the junior parliamentary partner in a CDU/CSU government doesn’t matter much. What matters more is the possibility of Schäuble holding on to the portfolio of Finance. If this is the case, Berlin’s economic policies will surely remain boringly and dangerously the same. It’s as if this man wants the earth to stop turning, and here is why: he and what he represents, aka the deep interlock of the political and state elites with the German business world, has gained a predominant position in the global economy, now vies to make the most out of it.

The German dream

Sitting on a cushion of around €1.5 trillion of financial reserves, of which €300 billion being added just last year (2016 foreign trade surplus), the German business leaders and the country’s political elites think it’s time to invest abroad in new factories and business buyouts of global dimensions. The last case was the $66 billion deal when Bayer acquired Monsanto, the American group which spearheads the GMO seed production in the agro-food sector of the US, a world leader in the field.

In the same line of thinking, the giant German automotive groups are planning more and more car producing factories in the US and elsewhere in the world. All this is going forward despite the heavy penalties imposed by the US authorities on German banks (e.g. Deutsche Bank) and the automotive firms (e.g. VW, Audi). The German multinationals have become so rich during the past ten years up to the point of not minding to pay any ‘entrance fee’ into the American markets.

A Teutonic EU?

As if this was not enough, Berlin supported by Paris and Rome, is pressing the European Commission to introduce an additional screen for incoming foreign investments in Europe. This new system controlling foreign presence in the EU will be operated by the Brussels bureaucracy, where the Germans have a key role. The clear target of this new proposed scheme is to block the corresponding Chinese investments and business acquisitions in Europe. The European Sting produced a revealing analysis of this issue. The entire Berlin plan is engineered to strengthen the economic role of Germany in the world, and at the same time to protect Europe from foreign competition in EU’s proper markets, considered to be the backyard of the Teutons.

Coming back to yesterday’s developments, the next few days will produce a new government to be formed in Berlin. Of course, Merkel and the CDU/CSU (the color of the party being black) will be again the driving force of the administration. As noted above, SPD’s decision to remain in the opposition and the mathematics of the results oblige Merkel to look for two junior partners in order to form a majority government in the Bundestag, the federal parliament. No question they will be the Free Democrats of FDP (yellow color party) and the Greens (green color party). In short, the next government will be a black-yellow-green coalition, as the flag of Jamaica. And truly, it will be a coalition of opposites. Yet, the left leaning but flexible Greens will be a minority in a sea of stout neoliberals (CDU/CSU and FDP).

A ‘Jamaica’ partnership without the island country’s spirit

At the end of the day, the two junior partners will actively support or stomach the economic policy tradition of Schäuble, who thinks that elections must not change what the ‘wise Germans’ decide. This is the neoliberal attempt of ‘scientification’ or ‘de-politicisation’ of politics. Under this ideology, which gained momentum in the West during the past few years, there is always one ‘scientifically’ optimum policy decision to be followed and only the ‘experts’ know it. As a result, the job of the politicians is reduced to ‘selling’ it to the majority of voters.

According to this dogma, the ‘optimum’ solution to any economic issue always turns out to be in favor of the big business groups and to detriment of the vast majority of the population, be it taxation options, incomes distribution, environmental problems, health issues or labor legislation. Undoubtedly, FDP, as a government partner will walk happily in this neoliberal direction, while the Greens won’t be able to overturn it, even if they wanted to. As a result, there is no chance that Germany will change its main policy lines, within the country and the EU and without.

Who loves Angela most?

In conclusion, Angela Merkel will be there to use her powers to guarantee that in Germany and the world nothing will change, as far as economic and political ideology and practices are concerned. The most authentic and infallible visionary representative of today’s western capitalism, being at the same time the most successful global investor, Berkshire Hathaway’s Warren Buffett said: “Merkel is an extraordinary personality. Germany and the world, from my point of view, need a leadership personality like Angela.” And yesterday the German voters gave her to him.