Trending Now
We have updated our Privacy Policy and Terms of Use for Eurasia Group and its affiliates, including GZERO Media, to clarify the types of data we collect, how we collect it, how we use data and with whom we share data. By using our website you consent to our Terms and Conditions and Privacy Policy, including the transfer of your personal data to the United States from your country of residence, and our use of cookies described in our Cookie Policy.
{{ subpage.title }}
Following the end of the "traffic light" coalition, Federal Chancellor Olaf Scholz has submitted a request to the president of the Bundestag for a vote of confidence in the Bundestag.
Viewpoint: Germany seeks new political leadership to address economic crisis
Faced with a political impasse preventing action on acute economic and geopolitical challenges, the German parliament will hold a vote of confidence in Chancellor Olaf Scholz’s government on Dec. 16. Based on an agreement among the main parties in the Bundestag, lawmakers will deliver a vote of “no confidence,” paving the way for snap elections on Feb. 23.
We asked Eurasia Group expert Jan Techau to explain what set off this chain of events and where it is likely to lead.
What has prompted this vote of confidence?
The chancellor called the vote after long-simmering tensions finally brought down the ruling coalition of Scholz’s Social Democrats, the pro-business Free Democrats, and the Greens. There are big ideological divides among these three parties, and it was never an easy marriage. Initially, they could paper over these divides with money for each party’s pet projects. But a little over a year ago, the Constitutional Court struck down large parts of the 2024 budget, saying they were financed with an illegal repurposing of unused pandemic-relief funds. That set up endless negotiations and finally a showdown over the 2025 budget, which ended with Scholz firing the finance minister, the Free Democrats’ Christian Lindner, and the subsequent collapse of the coalition agreement.
So, it sounds like fights over spending priorities are the main issue shaping German politics?
They are a symptom of a broader economic crisis that has undermined competitiveness, growth, and tax revenue. The country has high labor and energy costs and a high reliance on exports, especially to China. For a long time, China bought nearly everything that Germany produced, from machinery to cars and chemicals. But China has developed its own industries and is no longer just a customer but increasingly an aggressive competitor making many of the same goods. To put it simply: Germany is a high-cost country reliant on exports whose main customer no longer wants to buy all its stuff.
How are geopolitical issues shaping the domestic debate?
All these economic problems come at a time of mounting geopolitical challenges. Donald Trump’s election victory in the US is expected to bring increased pressure on Germany and other European countries to harden their stances against China. Trump could force Germany to choose between its economic reliance on China and its security reliance on the US. At the same time, you have the war in Ukraine and Russia’s hostility to Germany and the rest of the West that has prompted significant – and very costly – efforts to rebuild Europe’s defense capabilities.
What seems like the most likely outcome of the February elections?
The conservative Christian Democrats, led by Friedrich Merz, have a substantial lead in the polls. It seems unlikely that any other party will be able to close the gap by Feb. 23. They will need to form a coalition government (one-party parliamentary majorities and minority governments are very uncommon in the German system), probably with the Social Democrats and maybe a third party as well. One key watchpoint will be the performance of the two extremist parties, the far-right Alternative for Germany and the far-left Sahra Wagenknecht Alliance. They have no prospect of entering government this time around, but if they obtain a combined one-third of the seats in the Bundestag, they could block legislation requiring changes to the constitution, which needs a two-thirds majority. Such a blocking minority could hamper the next government’s ability to implement a forceful reform agenda.
What is the reason for the conservatives’ strength?
There are two factors. The first is that voters’ number one concern at the moment is the state of the economy. This issue has traditionally favored conservatives, who are seen as more competent in this realm. The second is the collapse in the popularity of the three parties of the ruling coalition amid a widespread sense of crisis and malaise. They have recovered a bit recently, but at one point the approval ratings of the three parties combined were at about the same level as those of the conservatives.
Assuming a conservative-led government emerges, what does that mean for domestic policy?
If the Christian Democrats form a coalition with the Social Democrats, they will have to jettison many conservative ideas. The German system is geared toward stability and continuity, an approach that has worked extremely well, though the downside is that it’s hard to make big changes when needed. The question is whether the current crisis is big enough to force change. I expect an overhaul of the so-called debt brake, a strict limitation on government borrowing that has restrained policymaking. But beyond that, a raft of politically difficult measures are needed to deregulate industries and lower labor costs to restore German competitiveness. We’ll see if the next government can deliver.
How about foreign policy?
There would certainly be more engagement with the EU. The Christian Democrats pride themselves on being the pro-EU party of Germany in the tradition of Konrad Adenauer and Helmut Kohl. My guess is that the next government will remain reluctant to embrace the proposals for common borrowing backed by some other EU countries. Still, it could be more supportive of other joint initiatives. Merz had been more hawkish in his rhetoric toward Russia but has recently toned it down because he knows there are a limited number of votes he can win with this approach. Regardless, foreign policy will be a somewhat lower priority for the next government than getting the economy going again.
Edited by Jonathan House, Senior Editor at Eurasia Group.
A general view of the German lower house of parliament, in Berlin, Germany.
Germany to hold early elections
Under a plan agreed by Chancellor Olaf Scholz and the opposition, Europe’s largest economy is now headed toward early elections in February.
The move comes after weeks of fraying ties among the so-called “traffic light” coalition, an unwieldy tie-up of Scholz’s center-left Social Democrats (red), the business-friendly Free Democrats (yellow), and the environment-oriented Greens (you guessed it).
The final straw, last week, was a spat over Germany’s budget. Scholz and the Greens wanted to relax Germany’s strict fiscal rules to create room to invest in infrastructure, defense, and Ukraine aid. The Free Democrats rejected that and proposed a more austerity-oriented budget of their own. Scholz, in turn, sacked Free Democrat Finance Minister Christian Lindner, which led to his party leaving the governing coalition altogether.
What happens now: Under the current deal, Scholz will hold a confidence vote in his government in mid-December, which – assuming he loses as expected – will pave the way for February elections, which the parties want to hold on Feb. 23, 2025.
At the moment, polls show the opposition Christian Democratic Union as the clear frontrunner with 32% support, twice that of Scholz’s Social Democrats. The far-right Alternative For Germany polls second, at 17%.
Germany faces political uncertainty after coalition collapse
Carl Bildt, former prime minister of Sweden and co-chair of the European Council on Foreign Relations, shares his perspective on European politics from Stockholm, Sweden.
What does Germany's coalition collapse mean for Chancellor Scholz, the country, and Europe as a whole? Well, the collapse of the coalition government was, to some extent, expected. There had been speculations for weeks on how long it was going to hold together, and finally, the Chancellor himself pulled the plug in a rather vicious personal attack against the finance minister. Then he sacked him and then the government went up in flames. Now, what he wants to do is strangely enough to stay in power until January 15th and vote for the confidence, lose vote the confidence in parliament then, and have elections in March. I doubt that will be the case. I think there is now very heavy pressure by the opposition, needless to say.There's pressure by business, there are pressure by others saying that we can't have this uncertainty going on for months and months, particularly in a situation where other things are happening in the world, mildly speaking. So I wouldn't be surprised if we have, for example, a vote of confidence or he has to put himself a vote of confidence by mid-next week or something like that, and Germany is heading for election perhaps very early next year. Then of course, the other question will arise, what kind of government could possibly arise out of that particular election? That's a later, somewhat complicated issue. I guess we will have reason to return to it.
German Chancellor Olaf Scholz leaves the Bellevue Palace, after he sacked Christian Lindner.
Germany’s governing coalition crumbles over budget battle
Germany’s governing coalition collapsed on Thursday after Chancellor Olaf Scholz fired Finance Minister Christian Lindner, head of the pro-business Free Democrats and a linchpin in his majority, likely spurring a vote of confidence.
Germany is struggling in the aftermath of Russia’s invasion of Ukraine, which has sent energy prices skyrocketing, upped defense spending, and brought in 1.5 million Ukrainian refugees. Lindner wanted to spur the economy through tax cuts paid for by slashing social programs and climate change targets, while Scholz pushed for loosening the spending limit.
Scholz’s “traffic-light coalition” has governed Germany since 2021, but internal tensions have been rising for weeks over the 2025 budget amid a second consecutive year of no economic growth. Now, without a majority, his coalition must rely on individual votes from other parties to pass laws until an election is held.
“The big question about this vote of confidence is not the result but the timing,” explains Eurasia Group’s Europe director, Jan Techau, who says the opposition party will try to pressure the vote to happen as soon as possible, though Scholz will try to hold off until at least January.
“It is clear that Scholz will lose the vote. The entire purpose of the vote is to lose it, thereby clearing the way for elections,” says Techau. How Scholz will fare in elections is unclear but will hinge on issues of migration, pensions, cost of living, and the war in Ukraine.
Migrants on board a ship which disembarked in Salerno, Italy.
Olaf Scholz gets tough on asylum-seekers
The German government on Wednesday announced that authorities will start conducting “flexible spot checks” on border crossings from Poland and the Czech Republic to address an influx of asylum-seekers who have sought to enter the country in recent months.
This comes after Berlin recently joined Italy’s right-wing government in declaring that both countries had reached the “limits of [their] capacity” to take in migrants.
For context, around 204,00 migrants – mostly from Syria, Afghanistan, Turkey, and across Africa – requested asylum in Germany within the first eight months of this year, a 77% jump from the same period in 2022.
But why is the center-left government of Chancellor Olaf Scholz toughening its stance?
This comes just weeks before Germans in Bavaria and Hesse head to the polls in regional elections, and polls show that tough-on-migrant messages are resonating with voters.
In Bavaria, for instance, Germany’s second most populous state, Scholz’s Social Democratic Party is polling at just 9%. Meanwhile, nationally, messaging about border safeguarding has been a boon for the far-right Alternative for Germany Party, now second in an average of national polls.
Facing growing pressure to crack down on asylum-seekers has also brought Berlin head-to-head with Warsaw: At a rally in Bavaria over the weekend, Scholz took aim at Polish officials who had allegedly issued EU visas to Asian and African nationals in exchange for bribes.
Friedrich Merz attends the closed meeting of the CSU parliamentary group in the Bundestag at Andechs Monastery, Germany.
Germany’s Merz steps into controversy
Friedrich Merz has reminded Germany and the world that his center-right establishment party, the Christian Democratic Union, is now in a tight spot. The party leader suggested in an interview televised on Sunday that the CDU would be open to partnering with the hard-right Alternative für Deutschland party, at least at the local level.
"It's natural that we have to look for ways to ensure we can continue to work together" in places where AfD members win local elections, Merz said.
In the process, he implicitly acknowledged the reality that the AfD is polling at about 20% nationally and at about 30% in Germany’s East. But he was also breaking a taboo against mainstream acceptance of a party that, according to Eurasia Group, our parent company, has embraced an “openly xenophobic, anti-democratic, pro-Kremlin agenda.”
That’s why Merz quickly faced a backlash from both inside and outside the CDU, and on Monday morning he used Twitter to backpedal. “Our decision stands: There will not be any cooperation with the AfD, also not at the communal level,” he tweeted.
But the damage was done. Merz hopes to become Germany’s chancellor in 2025, and his biggest challenge in defeating the governing left-wing coalition will be to hold together a party in which western state members treat the AfD as untouchable while those in eastern states treat it as a fact of life. With contradictory statements within a matter of hours, he’s not off to a strong start.
AfD holds "Future for Germany" rally in Erfurt.
Why is Germany’s far right surging?
For extremely obvious reasons, it’s always a little unsettling when the far-right is having a good moment in German politics.
That’s exactly what’s happening now as the avowedly anti-immigrant and Euroskeptic Alternative for Deutschland Party, known as AfD, is now neck-and-neck with the Social Democrats, the party of Chancellor Olaf Scholz. The AfD, which is polling at 19% (to the SPD’s 20%), is closing in on becoming the country’s second most popular political faction. The Christian Democratic Union Party still holds the top spot at 27%.
What explains AfD’s recent upward trajectory, and what does it tell us about the state of German politics 18 months after former Chancellor Angela Merkel left the stage, ending 16 years at the helm?
AfD’s raison d'être. Founded in 2013, the group’s main shtick at the time was agitating against the European Union’s planned bailout of indebted countries after the eurozone crisis. The founders wanted to ditch the single market and bring back the German Deutschmark. (Spoiler: It didn’t happen.)
But when millions of refugees starting streaming into Germany in 2015 in the aftermath of the Syrian civil war, the AfD morphed into an anti-immigrant – and anti-Islam – party and has since called for the German constitution to gut the right to seek asylum.
Evoking outrage has been par for the course for AfD party stalwarts, and in some instances, it’s perhaps the entire point. Consider that the AfD leader of the central state of Thuringia has called for Holocaust memorials to be taken down, while former party leader Frauke Petry once said that refugees should be prevented from crossing into Germany … by using armed force.
It’s in former East Germany – where grievances about economic inequality and second-class citizenship have festered since the end of the Cold War – that AfD’s populist, ethnocentric messaging has gained the most traction.
Still, when Germans last went to the polls in Sept. 2021, AfD was polling at around 10% on average, and the far-right group is now reaping nearly double that at 19%, having seen a four-point bump over the past 12 weeks alone.
“This is not a blip, and not some sort of short-term thing,” says Jan Techau, Germany director at Eurasia Group and former speechwriter to German Defense Minister Boris Pistorius. “We've seen buildup over some time, and now it seems like AfD is solidifying.”
So what explains this seismic shift?
Economic misery and the blame game. Anti-establishment parties almost always get a boost when the economy is hurting. Stubbornly high inflation over the past year – in large part due to the war in Ukraine – has provided an opening for the AfD’s populist message to resonate not only with the extremist right but also with disillusioned conservatives and those opposed to the status quo.
Indeed, although inflation has begun to ease, food prices are still up 15% year-on-year, an enormous strain for working-class Germans.
What’s more, that economic instability has coincided with a rise in asylum-seekers trying to reach the European Union this year by boat – from South Asia, the Middle East, and Africa – has presented the perfect boogeyman for populists and nativists across the bloc, including in Germany.
Consider that in the first four months of this year, initial asylum applications in Germany increased by 78% compared to the same period in 2022. This is in addition to the more than 1 million Ukrainians who’ve crossed into Germany since the war began, though these migrants don’t engender the same national scorn.
While public support for arming Ukraine is at 57%, AfD’s recent rise in popularity suggests that its argument that sanctions against Russia hurt Germany’s economic interests is resonating with at least some voters.
Many AfD backers are “disenfranchised conservatives who see no other alternative because they feel the mainstream conservatives have become too liberal” and aren’t responsive to their bread-and-butter needs, Techau says.
The traffic light turns green. The German coalition government that came into office in 2021 is a varied one. The three-party coalition, the first in Germany’s modern history, includes Scholz’s SPD, the progressive, climate-conscious Greens, and the business-friendly fiscal hawks of the Free Democratic Party. The coalition is known as the “traffic light” owing to the colors of its three members.
With the Greens heading the economy portfolio, climate reform has been at the forefront of the government's domestic agenda, even more so since Russia invaded Ukraine and the EU made a collective pledge to kick its Russian natural gas habit.
Accordingly, the government has sought to slow the use of oil and gas heating systems by 2024, mandating that new heating systems are powered by at least 65% of renewable sources. The government's push to install heat pumps in homes and offices – a very expensive undertaking – has resulted in a massive pushback that the AfD has naturally used to its advantage. (AfD parliamentary leader Alice Weidel has called the government plan a “heating massacre.”)
Techau says that failure to sell this policy to voters has perhaps been the government’s biggest downfall. “When they started to legislate, they were quite ambitious and weren't able to explain it in a way that convinced people,” he says, adding that “people started to react quite negatively to this.”
Extremism abhors a power vacuum. The departure of Merkel after almost two decades at the top left a pair of sensible brogues that no successor has been able to fill. While her CDU/CSU remains the most popular, its support has certainly been slipping since 2020. As a result, some conservatives susceptible to economic populism have been lost to the AfD in recent months.
Tachau says the fact that current CDU leader Friedrich Merz is very unpopular has been a boon for AfD. “He’s not seen as a possible future chancellor, and that means that a good number of voters will go elsewhere,” he says.
This dynamic is exacerbated by the fact that Scholz’s SPD never had that much of an edge to begin with – winning just 10 more seats than the CDU in 2021. Perceptions of Scholz as unable to control infighting with his coalition over how to roll out domestic policies have only added fuel to the fire.
“The ideological leanings and the clumsy craftsmanship of Scholz's coalition, especially on migration and energy, have massively aggravated the situation,” Techau says, adding that while “they are not to be blamed alone, as much of the anger is structural and has built up over a long time, the coalition's performance over the last 18 months made the whole situation boil over.”
Could AfD really rule? All of Germany’s major political parties have committed to putting up a Brandmauer – a firewall – between them and the AfD, meaning that they have agreed not to sit with the formerly fringe group in any governing coalition. But if the far-right party gets more and more popular, could that change by the next election?
For now, Techau doesn’t think so. “In Germany, the ghosts of the past are always quite present,” he says.
However, even though the AfD could be kept out of a government by other major parties forming a broad (and unstable) coalition, that too would only feed into the AfD’s narrative of ostracization and otherness.
Indeed, such a move “would only turn into a shallow mechanism to keep them out,” Techau says. His takeaway? “No matter which way you do it, you're doing it wrong.”
Bundweswehr logo on German soldiers' uniforms.
In a historic shift, Germany decides to bolster armed forces
The shockwaves from Russia’s invasion of Ukraine have hit Germany hard. For much of the post-World War II era, change in German politics, when it occurred, tended to be gradual. But the horror of war in nearby Ukraine has triggered an abrupt and momentous change of German foreign and defense policies. After years of starving its armed forces of resources and of acquiescence to aggressive behavior by Russia, Europe’s economic powerhouse has announced accelerated plans to beef up its military and backed crippling sanctions against Russia. We spoke to Eurasia Group expert Naz Masraff to get more insight into this dramatic shift and its implications.
What are the most important changes announced?
In a reversal of a longstanding policy against delivering arms to conflict zones, Chancellor Olaf Scholz announced that Germany will send anti-tank weapons, surface-to-air missiles, and armored vehicles to Ukraine. He also pledged to raise Germany’s defense spending above the 2%-of-GDP level expected of NATO members and to create a €100 billion fund to jumpstart the effort. In the economic realm, Scholz froze the Nord Stream 2 pipeline meant to transport Russian natural gas to Germany and signed on to an effort by the US and other European countries to unplug Russia from the SWIFT network used for international banking transactions.
Why now?
A toughening of attitudes toward Russia in recent years within German media, think tanks, and its political class helped pave the way for change. Then came the invasion of Ukraine, which took Berlin by surprise. As other Western countries quickly pressed for punitive actions against Moscow, Berlin dithered. It initially resisted, for example, the proposal to disconnect Russian banks from SWIFT, prompting visits from the leaders of Poland and Lithuania to urge a change of course. Polish Prime Minister Mateusz Morawiecki tweeted that he came “to shake Germany's conscience so that they decide on firm and crushing sanctions.” The drama over SWIFT was likely the tipping point, leading the Scholz government to conclude it had to do something big to save its image internationally as well as at home, where there has been an outpouring of public support for Ukraine.
Why has Germany been so hesitant to stand up to Russia?
For decades, Germany’s so-called Ostpolitik (Eastern Policy) formed the basis for its dealings with, first, the Soviet Union, and later with Russia. The policy held that peaceful relations and deepening commercial ties would be sufficient to avert the threat of conflict. Germans widely believe it helped bring down the Berlin Wall in 1989, and until recently thought it could moderate the actions of an increasingly aggressive Russian president. Even after Vladimir Putin ordered the invasion of Ukraine’s Crimea peninsula in 2014 and then sparked a separatist conflict in the east of the country, Germany continued to develop the Nord Stream 2 pipeline, which would have greatly strengthened its ties with Russia. The invasion of Ukraine delivered a rude awakening on the effectiveness of this approach.
What will be the implications of the shift in German policy?
The changes signal that Germany is transforming itself from a country that viewed itself as a “civilian power” and ceded leadership on the international stage to others (usually France) into one that is more assertive and has more normal defense policies for a country of its size. The commitment to raise its defense spending to 2% of GDP will go down well with the US and NATO, and given Germany’s economic heft, could eventually translate into a much more significant military role for Berlin in the alliance. Scholz has already outlined ambitions to develop new weapons systems such as fighter jets and tanks.
What has been the public response in Germany?
Defense spending has traditionally been a very low priority for the German public. But a Forsa poll taken shortly after Scholz announced his plans showed that a remarkable 78% of respondents supported the €100 billion package and the new plans to strengthen the armed forces. Similarly, public opinion on weapons deliveries to Ukraine shifted dramatically, with 78% supporting them compared to 15% in a late January survey by Ipsos. But the polls represent a snapshot in time. War in Europe has become a reality, and the public is concerned about Putin’s broader intentions and the implications for Germany’s security. But pacifist instincts are deeply rooted in Germany’s post-World War II psyche and could re-emerge over time.
With his bold new plans, is Scholz drawing comparisons to his predecessor, Angela Merkel?
Though Merkel lead the EU on many important issues, her leadership didn’t extend to foreign policy. When Russia was massing troops on the Ukrainian border earlier this year, Scholz appeared likely to continue this approach as he let French President Emmanuel Macron do much of the talking with Putin. Then, to everyone’s surprise, he abruptly reversed decades of foreign and defense policy and signaled that Germany wishes to play a much more active international role going forward. Most recently, Scholz met in Ankara with Turkish President Recep Tayyip Erdogan to discuss Russian aggression, with the German leader noting that "there can only be a diplomatic solution."