23 Sep 2013

After the German vote, will Mutti let go of Europe’s fiscal whip?

The unbroken drab grey skies and uninterrupted purpose of Berlin commuters might make you think that Angela Merkel’s victory last night will ensure cast-iron continuity for Germany and her position in Europe.


But things may change, albeit incrementally. “Mutti”, as the voters like to call her, has been deprived of the smallest child in her coalition family. The Free Democrats have bitten the dust at the polls, unable to garner enough votes to get into the Bundestag.

This means that the party most wedded to the fiscal whip in the German government has gone. It was the FDP that mounted the barricades over the mere mention of Eurobonds, demanding the gruel of austerity in return for any bailout money to Greece or Portugal.

German Chancellor and leader of the Christian Democratic Union Merkel arrives for a CDU party board meeting in Berlin

Angela Merkel broadly agreed with them, but she hails from the leftish, more moderate wing of her party and, having won an election by reassuring Germans that their hard-earned euros were not being wasted on profligate Italians, she may now be in a position to relax the reins.

If, as is widely predicted, she forges a Grand Coalition with the Social Democrats, you can expect Germany to shift towards a more pro-growth policy in Europe. But like most things touched by Frau Merkel, this shift will be incremental rather than radical.

After all, the reason why her junior coalition partners have been ousted is that their support was bled by the eurosceptic Alternative for Germany party. Their support was based on one very poignant question that vexes the vast majority of Germans: why should we be asked to pay for wayward Greeks?

The answer is obvious. Because they buy your washing machines and cars. This is Angela Merkel’s message and she would do well to keep reminding her country of it. “Our economy is based largely on exports in the eurozone. If they are strong, we are strong,” as she put it in her final campaign speech. “If they are weak. We are weak.”

By the way, eurosceptic in Germany means to be sceptical of the euro, the single currency and its tangled web. It does not mean to be sceptical of the EU. This country remains as instinctively pro-European as the UK does not.

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12 reader comments

  1. quietoaktree says:

    The Social Democrats (SPD) and the Greens appear to have more ´coalition problems´ than Merkel. If they don´t sit on ´Mutti´s knee´ and force new elections — they risk being ´slaughtered´ by the German voters who would vote for stability.

    Neither would the AfD want another try to reach the 5% without being offered new EU problems to complain about. Only the FDP (liberals) would appreciate another try at the 5% — and perhaps Merkel will oblige them —

    –if ´push comes to shove´?

    1. Andrew Dundas says:

      Many Germans now appreciate the reforms that Chancellor Gerhard Schroeder introduced when the SPD held office from 1989 to 2005. [I was born on the same day as Gerhard, so I find his career especially interesting]. But his far-sighted policies were not appreciated at the time.
      Mutti opposed Schroeder’s labour market policies then. But, sensible leader that she is, Mutti is now pressurising the Med. States to adopt them now.
      For all of those reasons and more, a Grand Coalition that rejects the FDP woulds be good for Europe. True, the idea that every State should run have a trade surplus is unachievable. But that’s just rhetoric.
      What’s needed now is a cut in BRD’s VAT rates and the launch of a spending boom in the EU.

  2. Jane McIntosh says:

    Delighted to read that Matt Frei is going to Berlin. Look forward to some intelligent comments. While agreeing to the blog above, also cause for Teutonic malaise that the Germans have something in the region of a trillion euros deposited in their banks and so on. Memories of wheelbarrows of worthless currencies are only a couple of generations ago. And perhaps still in a collective memory.

  3. HenPen says:

    The two parties which were in coalition with the Merkel led CDU in the last two parliaments suffered huge losses in the following elections. ANY party will be aware of this by now and will be reluctant to go into a coalition which will give them little chance to gain a positive profile. It actaully can be a problem for democracy in Germany if the other large party, the SPD, declines further.

  4. BK FR says:

    People talk about the possibility of new elections in Germany but as far as I recall, the German constitution does not strictly allow this. Frequent dissolution of parliament and new elections were a major contributing factor of the downfall of the Weimar republic. For this reason, the framers of the German post-war constitution imposed the 5% threshold and removed the right of parliament to dissolve itself.

    In Germany’s post-war history parliament was only dissolved once to force a new election and that required trickery and bending the law. It was very controversial at the time. Somehow I doubt Germany will do a rerun of this.

    1. HenPen says:

      I think you are right. If Merkel cannot find a coalition partner, she will form a minority government. In 2005 chancellor Schroeder was in a similar position and indeed did he manipulated the rules. I, can’t see Merkel doing this.
      If he forms a minority government then it is only a question of time until there is a vote of confidence against her as the chancellor. For this to succeed the opponents to the government must raise more than 50% of the vote which means that people in her own party will have to turn again her.
      It is still far-fetched so let’ s wait to the end of this week. If Merkel has to form a minority government it could be a chance for the right wing in her party to get rid of her rather elegantly. As for ‘the will of the people’, devastating…..

  5. Jim Burt says:

    When did Matt leave Washington?
    Is his new posting in Europe permanent?
    His reports second to none!

    Many thanks,

  6. quietoaktree says:

    BK FR

    You are correct.

    Article 67
    [Vote of no confidence]

    (1) The Bundestag may express its lack of confidence in the Federal Chancellor only by electing a successor by the vote of a majority of its Members and requesting the Federal President to dismiss the Federal Chancellor. The Federal President must comply with the request and appoint the person elected.

    Article 68
    [Vote of confidence]

    (1) If a motion of the Federal Chancellor for a vote of confidence is not supported by the majority of the Members of the Bundestag, the Federal President, upon the proposal of the Federal Chancellor, may dissolve the Bundestag within twenty-one days. The right of dissolution shall lapse as soon as the Bundestag elects another Federal Chancellor by the vote of a majority of its Members.

  7. quietoaktree says:

    BK FR

    You are correct.

    Cannot post ART. 67 and ART. 68 of German Constitution pertaining to ´No Confidence´

    BBC software detected ´repetition´

  8. quietoaktree says:

    Article 67
    [Vote of no confidence]

    (1) The Bundestag may express its lack of confidence in the Federal Chancellor only by electing a successor by the vote of a majority of its Members and requesting the Federal President to dismiss the Federal Chancellor. The Federal President must comply with the request and appoint the person elected.

    Article 68
    [Vote of confidence]

    (1) If a motion of the Federal Chancellor for a vote of confidence is not supported by the majority of the Members of the Bundestag, the Federal President, upon the proposal of the Federal Chancellor, may dissolve the Bundestag within twenty-one days. The right of dissolution shall lapse as soon as the Bundestag elects another Federal Chancellor by the vote of a majority of its Members.

  9. BK FR says:

    Actually, reading up on this a bit I found that article 68 was used twice to force new elections. First in by Helmut Kohl in 1983 and then by Gerhard Schroeder in 2005.

    Nevertheless, this was controversial in both cases and was challenged before the constitutional court who in 1983 imposed additional “unwritten” rules they felt were apparent in the constitution even if they weren’t written into it. They ruled that a material lack of continuity of the present government is required for article 68 to be used to force new elections. When the device was challenged again in 2005, the constitutional court ruled that such material lack of continuity was present, but dissenting judges said this was not written into the constitution to begin with and no such requirement existed, that article 68 shouldn’t be used to force new elections.

    Some say that a constitutional reform should take place to give parliament the right to dissolve itself with a special majority vote and they point out that it wasn’t parliament dissolving itself during the Weimar republic that led to instability but the federal president being able to dissolve parliament at will.

    In any event, this is a controversial issue in Germany and I doubt Merkel would want to go down that path. Considering that her style of government is very much consensus oriented I’d imagine that she is rather well suited to running a minority government.

    Minority governments are not necessarily a bad thing. Norway has had minority governments and fared rather well.

  10. quietoaktree says:

    Merkel´s consensus achieving abilities are already apparently in action –tax increases for the wealthy as the price for SPD or Greens as coalition partners.

    With FDP members reported to be ´banging at the AfD door´ for entry –the EU German election could be interesting. That three former GDR States delivered 6% for the AfD suggests stormy weather is forecasted for the future –but with different ´East´and ´West´ German aspirations.

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