A long German political winter is on the way

Berlin 24/10/2017. After the constituent session of the 19th German Bundestag, the outgoing government will remain in office until a new coalition is forged, as provided by Article 69 of the German Basic Law or constitution. Chancellor Angela Merkel (second from right) received the interim mandate from President Frank-Walter Steinmeier (first from right). Vice Chancellor Sigmar Gabriel (in the center) looks on. Foto: Bundesregierung/Zahn.

Germany enters into a long period of political uncertainty. The ‘Grand Coalition’ of the conservatives (Christian Democratic Union/Christian Social Union) and the Social Democrats of SPD, which can offer a stable government, may take months to form. Then, even after fashioned, it will not function without friction, as  used to be the standard for Germany. The problem is that a new election in spring is unlikely to change the fission of the political party landscape, and will turn out a worse version of the same stalemate. It will further favor the smaller parties and penalize both conservative and socialists. More than one poll arrives at this conclusion.

The new round of talks between the acting Chancellor and President of CDU Angela Merkel and the leader of socialists Martin Schulz is to awkwardly start today, Thursday. They are not expected to really discuss the formation of a coalition government though. It will be just the launch of the beginning. More than half of SPD party members and Schultz himself prefer a ‘toleration’, where CDU/CSU governs and SPD either supports or abstains in Parliament, the Bundestag. In this case, there have to be lengthy and frictional ad hoc deliberations on every single legislative item or anything else that has to be approved by the legislative.

A new ‘grand coalition’

Under such an arrangement, Berlin’s position will be very weak on the global platform. Internally, every CDU/CSU ‘tolerated’ government minister will be obliged to get the green light from his or hers SPD ‘shadow’, before and while shaping any new legislative item. From an international perspective Berlin may end up unable to determinedly contribute, as was the custom until today, to hot issues like the Brexit or the remodeling of the European Union. This eventuality will destabilize Europe, affect the scenery of international relations and alter the division of global political power. It will also be very unlikely to Merkel’s silent but commanding ‘modus operandi’. That’s why she has definitely excluded the formation of a minority government under herself.

From the socialist side, Schulz, despite having denied some weeks ago the option of a ‘grand coalition’, last Monday acknowledged he is ready to start talking about that with the conservatives. This is expected to happen today, Thursday, after both sides meet with President Frank-Walter Steinmeier. Schulz also clarified that ‘no option is off the table’, in an obvious reference to the possibility of a CDU/CSU minority government backed ad hoc by his SDP.
The socialists clearly prefer the solution of a ‘tolerated’ administration than participating in it. They are afraid of a precarious unraveling of their center-left image, if they participate for a third time in ten years in a ‘grand coalition’ government with the conservatives. Schulz is not exaggerating in dreading a downfall of the once almighty Social Democratic Party.

Disappearing socialists

Other European powerful socialist parties have vanished or have been belittled after some years in coalition governments with the conservatives or after following by themselves neoliberal conservative policies. The Greek PASOK, the Spanish Socialist Party (PSOE) and the French socialists are well known cases in this category. Even the British Labour Party shrank after the many neoliberal years of Tony Blair and Gordon Brown (1997-2010). As for SPD, it has already lost half of its appeal to German voters for exactly the same reasons. Obviously then, four more years in a ‘coalition’ with Merkel’s conservatives will disdain the party of Billy Brand and Helmut Schmidt. Yet, a minority government doesn’t seem viable and Steinmeier, a socialist himself, presses Schulz hard to participate in a ‘grand coalition’. What about it?

A compromised government

In view of all those reasonable reserves, the Socialists have about the ‘grand coalition’ option, Angela Merkel appears ready to compromise heavily for it. According to the reliable news group ‘Handelsblatt’, Chancellor Angela Merkel says “is prepared to make compromises because Germany is in need of a strong coalition”.

The question is if those compromises go as far as Merkel herself be sacrificed for the ‘grand coalition’. For the economy of the analysis though, the assumption that Merkel stays in the Chancellery doesn’t seem farfetched. Let’s examine, then, how a joint conservative-socialist government can function. Already, there are signs for heavy storms ahead.

Forecasting bad weather

Soon after it was made known there will be negotiations for the ‘grand coalition’, Andrea Nahles, an SPD parliamentary leader denounced Merkel of a “massive breach of trust”, regarding the incumbent temporary ‘grand coalition’ administration. The stake is very important. It’s about the license of the ‘glyphosate’ pesticide in the European Union, a chemical regarded by the World Health Organization as potentially carcinogen.

The SPD minister for the Environment Barbara Hendricks accused the CDU minister of Agriculture Christian Schmidt of having breached her confidence. Hendricks said she had agreed with Schmidt that Germany is to abstain in the European Union vote for the extension of the ‘glyphosate’ license. Instead, Berlin voted ‘yes’, casting the decisive ballot to extend the use of this chemical in Europe for another five years. Hendricks said, “Anyone who is interested in building a dialogue of trust cannot behave like this”. To be noted, ‘glyphosate’ is a key and incredibly profitable product of the notorious US company Monsanto, in line to be bought by Bayer for $65 billion in an all cash deal.

A dangerous substance

The European Sting has closely followed the ‘glyphosate’ affair in Brussels and the world. On 14 November our Corporate Business Analyst wrote: “The chemical has been used by farmers for more than 40 years, after agrochemical giant Monsanto synthesized the agent first in the 1970s. Its history changed in 2015, when the World Health Organization’s International Agency for Research on Cancer (IARC) concluded it ‘probably causes cancer’, and photo reports on how the chemical would allegedly be causing severe health issues in Latin America started to circulate”.

The confrontation over the glyphosate’s license in Europe is not a small thing. It illustrates the central policy differences between Merkel’s conservatives and Schulz’s socialists in a long line of key subjects. More so in the new ‘grand coalitions’ than in the currently ending one, in which the SPD leadership will probably have the future of the party in mind. So, the socialists will probably vie to make visible that they have big differences with the conservatives of CDU/CSU and can even partially impose their options, for all Germans to see.

Under this light, the negotiations to form the next government in Berlin may take months and hundreds of pages to write it down. The socialists will insist in putting down in detail of what is to be agreed, regarding all and every possible and impossible policy questions, ranging from Brexit and the future of the EU to the color of uniforms of…beekeepers.

An impossible agreement?

However, even if the CDU/CSU – SPD agreement extends to thousands of pages, it’s impossible to cover all future policy dilemmas which the German government may face in the coming four years. So, every time that an issue not covered in detail by the ‘agreement’ arises, Berlin will remain for some time in limbo. So the world will have to wait for the Germans to…deliberate.

In conclusion, the next German government, in whatever way is formed, from this parliament or after another election, will be in great difficulty to play its role. It’s not only the fact that Europe and the European Union are accustomed to take seriously into account what Berlin has to say. The same is more or less true for the entire world. If Berlin has difficulty to formulate policies, then the global scenery will surely be more obscure in the sense of really not knowing what comes next.

In the internal front, the policy problems may be less intense, because the German export machine is well structured and maintained. If the socialists try to change some big gears in it though, there will be also uncertainty within the country. In short the long German winter is ahead of us.