Olaf Scholz arrived at the end of the race. The government of the German Social Democratic Chancellor has entered a crisis precisely in the hours in which Donald Trump was re-elected president of the United States. For an American administration in the process of being formed, there is a German one in the process of being dismantled. With the expulsion of the liberals opposed to new deficit spending, the “traffic light” coalition no longer has a majority in the Bundestag and the opposition has pushed for rapid early elections. They were requested by both the Christian Democrats of Friedrich Merz and the right-wing sovereignists of the AfD, formations with the wind in their sails. But also the BSW, the socialist and nationalist party founded by Sahra Wagenknecht, former group leader of the social-communists of the Linke. Having plummeted in the polls, the Social Democrats are in no hurry to return to the voters. An unexpected assist to the head of government came from Mrs Ruth Brand, president of the Federal Statistical Office and Germany’s top electoral official. Once the government falls, Brand made it known that there would be “high risks that the cornerstone of democracy”, i.e. the electoral process, “and trust in the integrity of elections could be violated” in the event of an accelerated return to the polls. And that, thanks to the untouchable Christmas holidays, there would perhaps be a lack of paper for the ballots, she added, immediately accused by the opposition of working for the SPD while the paper industrialists denied her words.
Brand exaggerated, many wrote, reminding her that Germany is the fourth largest global economy – and the first in Europe – that the Germans have a reputation for being great organizers. Recent news, however, is on the side of the “defeatist” official: in September 2021 the legislative elections were held throughout Germany and the regional elections in Berlin. Due to a series of irregularities (missing or incorrect ballots, endless queues and polling stations open outside the established hours) the regional elections were canceled and repeated in February (giving the capital the first non-“red” mayor in 22 years) while another half million Berliners had to vote again in February 2024 for a partial rerun of the legislative elections. Scholz himself then put an end to the sadness of the debate on the alleged inability of the nation to prepare short-term consultations: he said he was ready to face a vote of (dis)confidence in a short time and early elections on February 23rd, but the discussion signals that Germany has stopped believing in itself. However, disappointment over the end of the first three-party coalition in its history remains widespread in the country. For over two years the parties have argued over the management of the economy and today the polls are merciless. According to an Insa survey for the Bild tabloid on November 10, the chancellor’s SPD would have just 15 percent of the vote; less than half of the 32 percent attributed to Merz’s CDU/CSU and four points less than AfD, now the second largest party in Germany. The Greens were also significantly reduced at 10 percent while the new entry, the BSW party, would be at 7 percent. The social-communists and liberals would remain below the threshold of 5 percent, the latter punished for having caused the crisis.
Germany, in other words, would be heading towards a period of greater instability, due to the presence of the AfD on the right and the BSW on the left, two parties not considered “drinkable” by the other historical formations and therefore forced into unnatural alliances between them such as the traffic light coalition. If in recent decades Germany has rhymed with stability (Helmut Kohl was chancellor for 16 years, Gerhard Schröder for over seven and Angela Merkel for another 16), the early fall of the Scholz government could be the first of a series destined to last until to a substantial reorganization of the political landscape. However, the Federal Republic is going through a phase of stubborn stagnation in production and would need a government with clear ideas. On October 30, the German Institute for Economic Studies (Diw) wrote that its economic barometer stopped at 85.4 points, therefore far from 100, a sign of average economic growth. The third quarter of 2024 went a little better than expected, the DIW notes, «but this should not yet trigger new momentum. Bumpy foreign trade continues to significantly dampen growth prospects,” wrote Geraldine Dany-Knedlik, Diw’s head of forecasting and economic policy. «Demand for “Made in Germany” products will remain weak at the end of the year, because the German export industry barely benefits from the economic recovery in other industrialized nations». Trump’s arrival in the White House shortly does not bode well. For Moritz Schularick, director of the Kiel Institute for Global Economy (IFW), his victory corresponds «to the beginning of the most difficult economic moment in the history of the Federal Republic of Germany. In addition to the internal structural crisis, the country is now facing massive trade policy and foreign security challenges for which we are not prepared.” Reckless fears? Perhaps, but in 2023 the United States confirmed itself as the leading country for German exports for the ninth consecutive year, absorbing goods and services for 158 billion euros, equal to 10 percent of the Federal Republic’s exports. The Germans, on the other hand, imported only 94.7 billion from the United States, closing the year with a surplus of 63.3 billion: The Donald will want to rebalance the balance. Beyond the possible risks, there are the current problems: in the first quarter of the year, GDP grew by 0.2 percent, fell by 0.3 percent in the second quarter and grew again by 0.2 percent. between July and September; too little, as also explained by the DIW, to pull the country out of the 2023 recession (GDP –0.3 percent, the worst in the eurozone). What saves Germany from bigger troubles is the job market. “Despite a slightly increasing number of unemployed, employment remains at a very high level.” The latest quarterly reports of the major car manufacturers, with plummeting turnover and profits, however, raise fears for the stability of the employment lever. Certifying the difficulty of the automotive sector, on 8 November the Munich Ifo wrote: «44 percent of companies are affected by a shortage of orders. The last time such a high figure was recorded was in July 2020.”
The Scholz executive, however, is not only crippled: in the event of new elections the chancellor himself could leave while the SPD would rely on the much more popular Defense Minister Boris Pistorius. Whatever happens, there won’t be a new government for several months and the new one is unlikely to have a cohesive majority, especially if the Liberals, the traditional crutch of the CDU, remain out of the Bundestag. If they succeeded, a CDU-liberal alliance would still not reach 40 percent and a partner would have to be sought in the Bundestag between the Greens and the SPD: there would then be the risk of a new push and pull between those who intend to stimulate the economy by lowering taxes (the CDU) and those who aim to provide widespread aid by encouraging, for example, the purchase of new cars (the SPD), perhaps electric ones to also obtain the support of the greens, who are more friends of the rail and fuel taxes. And then: a policy of rigor or a policy of expansion? Zero emissions immediately or slow ecological transition? More welfare or more defense? Support large businesses or SMEs? And finally: help Ukraine again or soften the attitude towards Russia (to go back to buying its gas) as a quarter of the electorate who votes for AfD and BSW asks? If the CDU wins but has to ally itself with one or more left-wing parties, we can imagine that the balance will tip, but only a little, towards liberal policies. Unstable and indecisive, Germany, in short, risks losing another race.
