September 18, 2017 / 9:56 AM / a year ago

Breakingviews - Colour-coding Germany’s election

LONDON (Reuters Breakingviews) - Germany’s election is not short on colour. Angela Merkel is all but certain to secure a fourth term as chancellor, and the right-wing Alternative for Germany (AfD) will most probably win its first parliamentary seats. But otherwise the poll remains an open race. Breakingviews breaks down the possible combinations, and their consequences for Germany – and for Europe.

An election campaign poster shows Angela Merkel, top candidate of the Christian Democratic Party (CDU) for the upcoming general elections, stickered with badges reading "Merkel must go", in Frankfurt, Germany September 17, 2017. REUTERS/Ralph Orlowski


Actually it is quite gripping. Expect an eventful night of results on Sunday, followed by months of haggling. Merkel’s right-of-centre Christian Democratic Union (CDU) is on track to become the largest party. Opinion polls consistently put its share of the vote at between 36 and 38 percent, 15 or so percentage points ahead of the Social Democrats (SPD). But due to Germany’s system of proportional representation, Merkel will still need a coalition partner. And small changes in the result can lead to hugely different outcomes.


Germans love to colour-code different parties. The CDU is black, the SPD red, the pro-business Free Democratic Party (FDP) is yellow and the Greens are, well, green.  So a Jamaica coalition would combine the colours in that country’s flag: black, green and yellow. The “Ampel” (traffic light) coalition brings together red, yellow and green. The current black-red coalition is also called “GroKo”, shorthand for grosse koalition (grand coalition) as it involves the two largest parties. The only party which nobody wants to team up with is the far-right AfD, which is expected to get between 8 and 11 percent of the vote and could become Germany’s third-largest party.


It’s too close to call. Due to quirks of the electoral system, around 48 percent of the vote is usually enough for an absolute majority in the national parliament, the Bundestag. Polls show the CDU and FDP together are within striking distance of that threshold. If they scrape together enough support, they’ll form a government. The parties are historical allies and last teamed up in 2009 to 2013. Merkel herself has more in common with the SPD and the Greens. But the CDU’s conservative Bavarian sister party and its own right wing would put pressure on the chancellor.


It would be bad news for European integration. The FDP, which crashed out of the Bundestag in 2013, has developed some rather crass views on the euro and the future of the European Union. The party is not eurosceptic. But leader Christian Lindner, who would probably become vice-chancellor in a black-yellow administration, wants to kick Greece out of the single currency. He also opposes more bailouts for the country.

On fiscal policy the FDP is at least as austere as the CDU. Both parties promise to run balanced budgets for the foreseeable future, and even think of actively redeeming government debt while cutting taxes. This would narrow the fiscal leeway for a much-needed boost to government investment. Alexander Hahn, a member of the FDP’s national executive, on Monday said naming the finance minister should be a condition for the FDP to back the government.

It would also make it harder if not impossible for Merkel and French President Emmanuel Macron to secure a grand bargain to overhaul the euro zone. The FDP on Sunday vowed not to team up with the conservatives if the chancellor supports French plans to deepen fiscal integration in the single currency area. The best hope is that the FDP repeats its habit of making big campaign promises and delivering little.


Then things really get interesting. Polls suggest the Greens will at best match the FDP’s performance, so a black-green alliance won’t command a majority either. Hence the talk of “Jamaica”: a coalition between the CDU, the Greens and the FDP. Such an alliance has been struck in a couple of German state governments. But at the federal level the two smaller parties are far apart on issues like climate change, diesel emissions and free trade. Green leader Cem Oezdemir in September ruled out the “Jamaica” option. In that case, another “GroKo” might be the only realistic option left.


It will be even more reluctant than in 2013. Back then, the SPD’s top brass won over an unwilling party base after pushing through key campaign pledges like the introduction of a minimum wage, tighter rent control and more generous pension perks for some workers.

Yet while the SPD delivered, it hasn’t been rewarded by voters. A poll by Infratest Dimap on Sept. 14 projected the party will get just 20 percent of the vote. That’s close to the worst result for the SPD in free elections since 1887, and could trigger a revolt among the party’s grassroots.

Two forces counteract the SPD’s desire for opposition. The first is the career prospects of the party’s leaders, for whom life is much better in government. Former leader Sigmar Gabriel clearly wants to stay on as foreign minister, while his successor and the SPD’s lead candidate, Martin Schulz, may also want an attractive job. These selfish arguments are paired with the party’s long-standing sense of acting for the greater good of the state. If other combinations are not feasible, walking away from another coalition could plunge Germany into a political limbo.


One way of dealing with a hung parliament is to hold another election. However, after the bad experiences of the Weimar Republic, the masterminds of Germany’s postwar constitution deliberately made it difficult to dissolve the Bundestag early. Moreover, it’s unclear a second election would deliver a different result, and would risk pushing frustrated voters towards the AfD.

Another option, first proposed by Christian Odendahl, Berlin-based chief economist of the Centre for European Reform, is a Merkel minority government, relying on support from other parties. The advantage of this arrangement is that the SPD could regroup. Time is on the party’s side: Merkel is 63 and unlikely to run for a further, fifth term, which would take her past her 70th birthday. It will be easier to campaign against her relatively inexperienced successor.

Yet a minority government would be untested at the federal level. Given the fundamental reforms under consideration in the EU – including bigger transfers from rich to poor countries and less austerity – Merkel might balk at ruling without clear parliamentary support. And it’s hard to imagine that German voters, with their appetite for political stability, would welcome such a setup.

Whatever Sunday’s result, hammering out an agreement will not be straightforward. German voters – and the rest of Europe – may have to wait some time before they can see the new government’s colours.


Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

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