Germany’s unresolvable crisis

Germany is entering the EU with a quasi-constitutional crisis. Its electoral system, which provides proportional representation to the Bundestag through constituency MPs topped up by allocations from party lists for all parties winning more than 5% of the vote, has provided Germany with 70 years of mostly good governance that have enabled it to become Europe’s foremost economic power by a margin against competitors well exceeding its extra population and also to have gradually built a reasonably harmonious multi-cultural society.

After the election of September 2017 it has for the first time not been possible after more than two months of negotiations to form a government. Angela Merkel, still caretaker chancellor after 12 years in that office and the person in charge of the negotiations, has as a result been badly damaged as the symbol of German stability, and her political mortality has become much more obvious, while there is no obvious successor.

For most of the 70 years the Bundestag has been able to provide majorities for either left-leaning or right-leaning governments, whether through a single parliamentary group (the Christian Democratic Union and Christian Social Union, though different parties, form a single parliamentary group and do not stand against each other) or coalitions. Exceptions have been three “grand coalitions” between the CDU/CSU and the Social-Democratic Party (SPD) one in the 1960s,one in the 2000s and one over 2013-17. Until now they have never lasted more than one parliamentary term. Grand coalitions especially if they last more than a term suffer from the fact that there is no credible alternative government and only a disparate opposition of small parties to left and right. They can often also weaken support for both parties leading to a more disparate political landscape and sometimes more support for parties on the far right or left, especially the far right. It tends to be the junior party, at present the SPD, which suffers most at the polls and for good reason the SPD decided after the September election that it did not want to participate in a new coalition.

The only feasible alternative was a coalition of CDU/CSU with the right wing Free Democratic Party (FDP) and the left wing Greens. It should not be all that surprising that the negotiations failed because any agreement between CDU/CSU and Greens was likely to have elements unacceptable to the FDP and vice versa. What was surprising was that it took three months to discover this incompatibility.  Given that a new election would be unlikely to produce a radically different result the SPD came under pressure not least from the president of the republic, Walter Steinmeier formerly himself from the SPD to negotiate again either to form a government or allow a minority CDU/CSU government to be formed by voting for it in parliament. In practice neither side seemed to want a minority government with outside support, although it might be best for the SPD since it would share less of whatever unpopularity the government may accrue and would be able to present itself as an alternative government.

An outline agreement for a new grand coalition was negotiated in a mere five days which does suggest increased urgency. From the point of view of a pragmatic domestic policy and an open policy to reforms of the euro zone which take account partners’ criticisms of German rigidity under the outgoing finance minister Wolfgang Schauble, and continuing a relatively welcoming policy to refugees (albeit not open-ended), the agreement is a good one. But it suffers from the problem that despite committing to spending the €45bn fiscal surplus on improved public services and investment, it lacks any single major policy initiative which the SPD could point to as its own. And without any high profile policy it will remain difficult to prevent let alone reverse the ongoing decline in SPD support.

One such policy initiative could have been a commitment to radically closing gap between the two tiers of Germany’s health system. It is not a matter of the wealthy insuring for private care that cannot be avoided but of a government funded tier for public servants including not just administrative civil servants but other public professionals like teachers. The CDU/CSU have insisted that there should be two systems to provide competition. But at present the competition is clearly biased in favour of one side due to better funding with waiting times in the former sometimes a third of those in the latter. The SPD should perhaps have pushed for extra funds,  with an SPD minister of health with a mandate to use the funds to endeavour to close the gap by improving the second tier. Indeed this is what was called for after the outline agreement at a special SPD congress. The response of CDU/CSU spokespeople was to insist the outline agreement could not be altered. In normal circumstances this would have been a reasonable response but if the centre-right parties are too rigid they may well face the rejection of the grand coalition by a vote of all SPD members in late February, which would in turn trigger a general election but one which would be most unlikely to produce changes sufficient to enable a different viable coalition.

 

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