A ‘grand coalition’ or weeks of horse trading: What next for Germany?

The moment that French polling stations close on presidential election night, the silhouette of the new president gradually constitutes itself on television screens across the country. When German polls close, a multicoloured graph appears, starting with the leading party on the left and moving across to the “other parties” on the right.

At 6pm German time this Sunday, the two left-hand columns were identical: the estimated share of the vote for the two main parties – the centre-right CDU-CSU partnership, the alliance of the outgoing chancellor Angela Merkel, and the centre-left Social Democrats (SPD) – stood at 25 per cent apiece. Between them, they had shared half the German vote, leaving the messy business of negotiating the country’s next coalition government even messier than forecast. Through the evening, Germany’s party leaders and political observers expressed the hope that there would be a new government in place – by Christmas.

As the hours passed, the distribution of the vote became more precise, along with the allocation of parliamentary seats. There was a narrow winner: the SPD, led by Olaf Scholz, deputy chancellor and finance minister in the outgoing government, had pulled ahead of the CDU-CSU, led by the CDU’s Armin Laschet, with 206 seats, compared to the centre-right’s 196. At the same time, though, the distribution of the vote clarified something else: neither of the main parties would be able to form the two-party coalition they had hoped for, except possibly with each other – as a new rendition of Merkel’s departing “grand coalition”.

The left-leaning SPD-Green coalition that those two parties had favoured was not feasible; nor was a right-leaning CDU-CSU coalition with the free-market Free Democrats (FDP). A so-called “Red, Red, Green” coalition, to include the left-wing party, Die Linke, was out of the running, too, as Die Linke ended up with only 39 seats, having lost votes to the SPD and the Greens. In theory, a right-wing equivalent – with the CDU/CSU, the FDP and the right-wing Alternative fuer Deutschland, which won 82 seat – would make for a plausible coalition, but no one will join with the AfD. Despite its strong showing in parts of the former East, the AfD remains a pariah party that no one will bring into government.

This leaves, as one German headline put it pithily, “Two may-be chancellors and two king-makers”, and total uncertainty about the political complexion or the composition of Germany’s next government. Not only this, but the “king-makers” – the Greens and the Free Democrats – will find themselves in the same coalition if they want a share of power, while being very far apart on the German political spectrum.

Already on election night, they were said to be engaged in talks to try to cobble together a joint position to maximise their advantage in the negotiations to come with the two bigger parties. German commentators described that as a savvy move, but it will be easier said than done.

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The Greens, under the current joint leadership of Annalena Baerbock and Robert Habeck, is very much on the political left. Baerbock, 40, to Habeck’s 51, won the contest to lead the campaign and become the party’s candidate for chancellor back in April. Within a month, the party had soared to 25 per cent in the polls, and Baerbock to an outside bet to become chancellor. For a brief spell, it looked as though she could become the new face of a Green-orientated Germany, a fresh and exciting successor for the post-Merkel age.

Then it all started to go wrong. The closer scrutiny she received as a budding chancellor turned up questions about her readiness for prime-time. There were allegations about undeclared income and inaccuracies in her CV. Whole passages of an autobiography she had written were said to be plagiarised. She muffed some of her lines on the campaign trail, coming out with the opposite of what she meant to say. There was talk of Habert’s frustration and calls in some quarters for him to be parachuted in to replace her.

That did not happen. He kept a low profile, campaigning mostly in his native Schleswig-Holstein, while she criss-crossed the country, recovering some, but nothing like all, lost ground. And while she is hardly lacking in qualifications or experience – she has a degree from Hamburg University and a master’s in international law from the LSE, spent time as an adviser to a German MEP and has served for the past eight years as a Green MP in the Bundestag, as well as being co-leader of the Greens for the past three years – German voters tend to gravitate towards solidity and may have felt that she could do with a bit more.

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Concerns were also expressed in the latter stages of the campaign about the cost of the Greens’ agenda, both to the taxpayer and the economy. The party advocates phasing out nuclear power, which is close to being completed following Merkel’s decision to accelerate the process after the 2013 Fukushima disaster. It also wants to switch away from coal, which could risk many jobs, and develop a “clean” steel industry, which would be expensive. The Greens also want an early switch of car production entirely to electric cars, which could upend Germany’s successful car industry. Challenged about the cost, Baerbock’s standard response was to say it was negligible compared with the cost of doing nothing to avert the climate catastrophe that was surely coming.

As well as presenting a radical climate agenda, Baerbock and the Greens also campaigned on traditionally left-wing causes. In her speeches, she devoted almost as much time to the need to eliminate child poverty, improve the lot of single mothers and provide many more nursery places. She noted the effect of the pandemic in highlighting inequality in Germany, and particularly inequality in the health service, where she wanted a move away from Germany’s (generally well-regarded) insurance system to something more like the NHS.

When I saw her last week, campaigning in her home city of Potsdam, in the former East Germany, she came across as possibly one of Germany’s most naturally gifted politicians. Fluent, compelling, accessible – eminently, as current parlance has it, “relatable” – she commanded the makeshift stage in the Old Market Square, and cheerfully took questions. And this, just a couple of hours before, perfectly composed, she joined all the other main candidates for a televised round-table – the last of the media set-pieces before election day.

Nonetheless, when Baerbock appeared at her party’s election night celebrations, there was a sense – amid the coalition possibilities – of disappointment with the almost 15 per cent of the poll her party had won. There was also a very public effort to display party unity, as she referred to her co-leader, Habeck, and he appeared with her on stage. The Greens are clearly concerned not to jeopardise their first chance of returning to government, since the Red-Green coalitions that preceded Merkel becoming chancellor in 2005.

How the Greens will find common ground with the FDP has to be a very big question. The FDP is a low-tax, pro-enterprise, pro-manufacturing party, which was the preferred coalition partner of the centre-right CDU-CSU party in the past. Although Merkel managed only one of her four coalitions with the FDP, it was arguably her least successful. Tax levels will be a point of contention, especially as Christian Lindner – though sometimes dismissed as a lightweight – led the party to its best result (92 seats) for a decade and has his eye on becoming finance minister.

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At the same time, he has acknowledged that there is a public mood for greater environmental sensitivity, and could be open to an entrepreneurial approach to combating climate change, of the sort Baerbock also says she is interested in. Another, perhaps surprising point of agreement, is that the FDP and the Greens both oppose the Russia-Germany pipeline Nordstream-2 coming in to operation. How much headway they can make with this policy, however, is questionable, as both of the main parties support it. And with Germany in need of energy imports, especially if it seriously intends to curb coal, it will need continuing supplies of Russian gas if it is to keep prices down.

Lindner, still just 42, but with more experience of political wheeler-dealing than Baerbock, was said on election night not only to have begun talks with the Greens, but also with Armin Laschet, the CDU-CSU candidate for chancellor. The attraction for the FDP being that a coalition with Laschet would potentially leave the Greens out on a limb, whereas it would be the FDP that would be in that position in a coalition led by Scholz and the centre-left SDP.

Which underlines another peculiarity of the German electoral system and of this election in particular. The CDU-CSU alliance’s second place in the results does not automatically end Laschet’s chances of becoming chancellor. Indeed, there have been at least two occasions (1969 and 1976) when the victor has not, in the end, become chancellor. If Laschet can agree terms with the two potential coalition partners, and the SPD leader, Scholz, cannot, he wins the prize. When German headlines talked of “power poker” on the morning after the election, they were right.

The point is that this election – a crucial election that was supposed to decide the future direction of Europe’s biggest and richest country after 16 years of Merkel-style stability (or stagnation, as her critics would argue) – ended in what was to all intents and purposes a dead heat. Not only did the two main parties practically tie, but the results showed Germany itself divided almost 50-50 between left and right.

And the long campaign was as much of a roller-coaster for the two main parties as it was for the newly established king-makers. Armin Laschet, who has been prime minister of North-Rhine Westphalia for the past four years and has worked in the past as a lawyer and a journalist, went into the election as the favourite and the heir to Angela Merkel, with what were seen as all the advantages of her legacy.

Things turned out a bit differently. That legacy proved less of an asset than expected, as voters seemed to find a post-pandemic appetite for change. That, and a gaffe when he was photographed smiling and laughing during a visit to the flood-ravaged Ahr region, lost him support, and he went into the election five points behind the SPD candidate, Scholz, in the polls.

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At 60, he has a quiet and somewhat grandfatherly manner, while coming across as doggedly competent, if unexciting. Campaigning is not his forte – as, incidentally, it was not Merkel’s until at least half-way through her years as chancellor. An attempt at assertiveness in the second television debate, when he was at a low point in the polls, did him no favours whatever, and although the polls started to narrow in the final two weeks, he was still expected to lose by a clear margin.

That the CDU-CSU alliance came so close to victory can be explained less by Laschet’s strengths as a candidate than by the alliance’s continued appeal to voters whose chief concern is stability and to the depth of their support in the south and in the Rhineland. Almost overtaking Scholz in the final week is surely one reason why Laschet may have looked so cheerful on election night, even as the CDU-CSU registered their lowest poll on record.

Almost the converse can be said of Olaf Scholz’s campaign. In the doldrums through much of the Merkel era, the centre-left SPD was junior partner in “grand coalitions” and watched its support slide. Going into this election, the party was dismissed by many as in terminal decline. Yet Scholz, 62, managed to tap into elements of post-pandemic discontent, about inequality, working conditions, low pay and intolerance, and proved a convincing campaigner. Among the chief charges against him was that, as finance minister, he had done too little to prevent money-laundering and fraud, but for the most part such accusations did not stick.

In the debates and at rallies, he came across as a sincere, serious and benevolent politician, who could – contrary to pre-campaign impressions – be equal to the job of chancellor. And whereas Laschet benefited from loyalty to the centre-right parties to fill out his numbers, Scholz seems to have drawn a personal vote that transcended people’s concerns about an old-fashioned high-tax, enterprise-quashing, Russia-hugging left. At one of his final rallies in Cologne, there were placards that said: “If you want Scholz as chancellor, you need to vote SPD.” There were no equivalents for Laschet. Germany’s long-standing SPD supporters, used for so long to being on the losing side, rediscovered some of their enthusiasm and waved their flags with gusto.

That the SPD sensed the wind was suddenly behind them was surely one reason why, even as Laschet, with a record-low vote, seemed elated as runner-up, Scholz seemed disappointed. His poll lead suggested he would have a sufficient margin on the night to team up with the Greens, and this did not happen. The prospects now are for a “traffic light” coalition – SPD-FDP-Greens – or for a “Jamaica” coalition (after the colours of the Jamaican flag) – CDU/CSU-Greens-FDP. This is not what anyone really wanted – including, as initial post-election polling suggested, the voters.

Nor would they want it. An admirable 76.6 per cent of voters took part in the election for post-Merkel Germany, marginally more than in 2017, and they expected their vote to count. As it is, they face the likelihood of a three-party coalition government that will reflect weeks of horse-trading in which cherished policies are trimmed or dropped even more than with a two-party coalition, and where the Greens and the FDP, parties in substance very far apart, have had to reach an accommodation.

Not only that, but whichever composition prevails, it could prove an unstable arrangement, regularly subject to bargaining and ultimatums. And this at the very time that the European Union faces dilemmas, not least on defence, and Germany takes over the presidency of the G7, hoping to show that, post-Merkel, Germany’s voice still counts. A three-party coalition, formed after weeks of delay, following the closest of election results, is unlikely to get the new German chancellor off to the strongest of starts.

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That said, there would be a difference between the two likely coalitions, if only in tone and perception initially. A Laschet-led “Jamaica” version would denote more of the same, with a slightly more free-market and greener tinge. It has been referred to by its fans as a German future. A Scholz-led “traffic light” coalition, on the other hand, could constitute more of a break from the past 16 years, and a turn, in social policy at least, to the left. Both would give the greater attention to climate and ecology that is no longer the unique preserve of the Greens, but has irreversibly entered the German mainstream.

There is, though, a third possibility. Four years ago, with a disappointing result in what she said would be her last election, Merkel tried her best to form a “Jamaica” coalition – and failed. The FDP left the talks with their leader – then, as now, Christian Lindner; the chief stumbling block was said to be immigration, a topic conspicuous by its absence from this campaign. Merkel was forced back to another “grand coalition”. Something similar could happen this time, with Laschet – who had seemed to be hinting at preparations for a number two role – and the CDU-CSU becoming the junior partner.

It would not be the worst of outcomes, but it could amplify complaints from sections of the German electorate that, even when they vote for change, everything stays pretty much the same. Except that a Scholz-led coalition could just take Germany in a more socially progressive direction and seize the modernisation agenda, starting to bring what many Germans themselves see as their outdated education and government systems, in particular, into today’s world.

Another “grand coalition” could also avoid, or postpone, the likely internal party bloodbath that would follow either the CDU/CSU or the SPD going into opposition. The knives were already out for Laschet after he lost his poll lead over the summer, with some regretting that Markus Soeder, the leader of the CDU’s Bavarian sister-party, the CSU, was not fronting the campaign. Laschet could also find his job in North-Rhine Westphalia at risk next time around. Scholz’s position looks safer, given the revival of the SPD, but at 63 and having served as deputy chancellor, he might look for something else to do.

Meanwhile, Merkel remains acting chancellor until there is a new government. And she might well see her past flashing before her eyes, with the Scholz-Laschet contest re-running her own fractious duel with Gerhard Schroeder after the close election of 2005; the new support for the FDP harking back to its surge in 2009, and a “Jamaica” coalition back on the agenda, just as it was, for a while, in 2017.

She might have wished to head into a well-earned retirement after 16 years at the top of German politics. Instead, she finds herself doing what she does so well for a little longer: watching the world from Berlin and keeping Germany’s show on the road.