Europe will benefit from German crisis
New leadership of SPD party may snap links with Merkel, but the resulting turmoil will help Macron’s efforts to revive the European Union
Norbert Walter-Borjans and Saskia Esken, the new leaders of Germany’s Social Democrats (SPD), may be about to do Germany and Europe a favour. That’s not thanks to any inherent qualities they possess; both are colourless and unimaginative left-wingers vaguely resembling Britain’s Jeremy Corbyn, though not quite as reckless. Rather it’s because they may want to take their party out of its coalition with Chancellor Angela Merkel’s centre-right bloc, a possibility that has sparked a fullblown government crisis. Anything that shakes the country out of its torpor offers a ray of hope. The current government of the European Union’s largest economy has been inexcusably mediocre, and is badly in need of change. Name almost any major challenge facing Europe today, and German flexibility and leadership is as needed as it is absent.
The euro area is at risk of stagnating, and Germany is the economy that could help the most, with a big fiscal stimulus. Instead it clings doggedly to its fetish for balanced budgets.
At a time of geopolitical turmoil, Europe must also rethink its military readiness and alliances. Yet Berlin keeps defying calls from its Nato allies to spend more on its army.
All talk and no byte
The Merkel administration’s domestic policy record is even worse. Germany’s last major economic reform took place under her predecessor, Gerhard Schroeder. In her 14 years in power she has attempted nothing on such a grand scale. A tax reform is long overdue, especially as other countries cut their corporate tax rates. Then there’s immigration law, which would benefit from a points-based approach like Canada’s to alleviate Germany’s shortage of skilled workers. But Merkel’s cabinets, three of which have included the SPD, have merely tinkered. A ballyhooed digital upgrade of Germany’s economy was all talk and no byte.
The best that can be said about the present coalition is that it survived the refugee crisis of 2015-16 and restored order subsequently.
The effect is that Germany and Merkel, who’s made herself a lame duck by declaring she won’t run for office again, have forfeited their leadership role. This has left a vacuum at the heart of Europe, which France’s President Emmanuel Macron is trying to fill. He has been asking the big questions about the EU’s future, expecting support, or at least replies, from Germany. The silence in Berlin has been deafening.
In frustration, Macron has started taking ever bigger risks; musing about new European military alliances, a new relationship with Russia, a new economic design for the euro area, and a halt to the enlargement of the EU. The Germans don’t know what to say to such adventurism. Suspecting a hidden neo-Gaullist agenda, with France seizing the reins in western Europe, they’ve reverted to acting as Macron’s spoilers. Berlin hates political crisis. It comes out of a cultural fear of “instability” that dates to the chaotic Weimar Republic (or rather, what came after its failure). But these worries are overblown.
Consider the main scenarios. First, next weekend the SPD must anoint Walter-Borjans and Esken and decide what to do about the coalition. They will no doubt demand a new direction from Merkel, including a boost to the minimum wage and other leftist goodies. The conservatives will have no choice but to stand firm and say no.
The SPD might then attempt to walk out of government. Merkel would in that case probably ask for a vote of confidence in parliament. In Germany, a chancellor can only be voted out if parliament simultaneously elects a new one. So either Merkel or a successor would have a good chance of staying in power as a minority government.
Merkel or her successor would have to seek issue-by-issue support from the Greens or the pro-business Free Democrats. That would at least require open debate, which would be a boon to German democracy after years of parliamentary inertia.
If a minority government fails, Germany’s President Frank-Walter Steinmeier would call new elections. The Greens would replace the SPD as the second-largest party and obvious partner of choice for the conservatives. They’re thriving these days, and would push the government into bolder action. Macron would have somebody to talk to.
The coming weeks and months will make history in post-war Germany, which is not used to such turmoil. But once the dust settles, new constellations could revive political debate and policy-making. For the sake of Germany and Europe, that’s worth a try.
■ Andreas Kluth is a member of Bloomberg’s editorial board. He was previously editor-inchief of Handelsblatt Global.