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.
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.
Federal Chancellor Olaf Scholz (SPD) attends the wreath-laying ceremony at Fronhof in memory of the victims of the knife attack at the Solingen town festival. I
What do East German elections mean for next year’s national election?
The far right prevailed in East Germany over the weekend, with the Alternative for Germany party, or AfD, winning its first-ever election in Thuringia and nearly winning in Saxony. The outcome dealt a blow to Chancellor Olaf Scholz’s center-right coalition government and boosted the far right and left ahead of the 2025 federal election.
The far-left BSW party secured third place in both states, making it a key player in upcoming government formation negotiations. Scholz’s SPD party – which barely managed to retain parliamentary representation in both states – is pushing the CDU, the only centrist party to perform strongly on Sunday, to partner with the left to box out the AfD. “In both states, the core of such alliances would be the CDU and BSW,” says Eurasia Group’s Europe Director Jan Techau, “which all by itself is a curious formation given that these two are at opposite ends of the political spectrum.”
What does this mean for the 2025 election? While the far right and left are much weaker on the national level, this election foreshadowed growing division in Germany – as well as Scholz’s rising unpopularity. It also showed that migration and Germany’s support for Ukraine will be the main campaign issues next year. “The AfD will mercilessly exploit these topics, and so will the BSW,” says Techau.
“[Scholz’s] ability to instill discipline in a very diverse coalition was never great and is now further diminished,” Techau adds. “He needs to deliver meaningful migration reform and a halfway solid budget for 2025. These are the two benchmarks. If he can’t do this … his position as the party’s candidate for 2025 will be at risk.”Participants in a left-wing demonstration walk along a street with a banner reading "AfD ban now!". Several hundred people protest against the AfD's performance in the state elections in Saxony.
AfD makes historic gains in eastern Germany
German voters delivered the hard right a significant victory in Sunday’s election, as Bjoern Hoecke’s Alternative for Germany party, or AfD, captured 32.8% of the vote in the central-eastern state of Thuringia. The result marks the first time since World War II that a far-right party has won the most seats in a German state election. In neighboring Saxony, the AfD virtually tied with the center-right Christian Democratic Union, with 30.6% to 31.9%, respectively.
The AfD’s gains have unsettled many Germans, including Chancellor Olaf Scholz, who called the results “bitter” and “worrying.” Business leaders cast their own blame on Scholz for creating an environment of anxiety for voters, which they say led to Sunday’s result and could sully Germany’s business environment.
But Scholz is also feeling the heat from a new leftist party, Bündnis Sahra Wagenknecht, which melds left-wing economics with anti-immigration and pro-Russia policies. The BSW won nearly 16% and 12% respectively in Thuringia and Saxony, cannibalizing Scholz’s junior coalition partners, the Greens and pro-business Free Democrats, who now risk losing their official status in the Thuringian state parliament.
Even though other parties pledge to exclude the AfD from government, there are fears its success, and that of the BSW, could pressure Scholz to take a harder line on immigration and a less supportive line on Ukraine ahead of next year’s national elections. When Ukrainian President Volodymyr Zelenskyappealed to the German Bundestag in June for additional support, AfD and BSW lawmakers left the building – a stunt that appears to have paid dividends in Sunday’s vote.Olaf Scholz popping out of a toaster, surrounded by burnt toast.
Why Olaf Scholz smells like toast
When Olaf Scholz replaced Angela Merkel as Germany’s chancellor in 2021, hopes were high, in Germany and beyond, that a shift to new leadership might reinvigorate the nation at the heart of Europe. The remarkable Merkel had led her center-right Christian Democrats, her country, and the EU through a series of crises during her 16 years in power. Scholz rose to the top three years ago by casting himself as both a steady pair of hands in the Merkel mold but also as a center-left leader with a progressive view of Germany’s future. When Russia invaded Ukraine in February 2022, Scholz surprised many with the boldness of his response. The “new era” he declared in Germany’s attitude toward Russia and the countries still trapped in its shadow defied his image as a skilled bureaucrat without a strong public voice or vision.
But as Chancellor Scholz prepares to visit Washington this weekend, he faces a rising tide of criticism back home. The German public mood has grown darker over the past year, mainly because the economy is limping, and inflation has taken a bite out of both consumers and industry. Workers are angry. Business leaders are frustrated. And the coalition Scholz formed to win power – an increasingly uneasy partnership of establishment socialists, ambitious Greens, and the fiscally hawkish, pro-business FDP – is wearing badly.
The poll numbers speak for themselves. In January, the government’s approval rating hit 17%, a record low. Scholz’s personal popularity hovered at 19%, the lowest mark for any chancellor in a quarter century. Finance Minister Christian Lindner (FDP) and Economics Minister Robert Habeck (Greens) aren’t faring much better. Recent polls show the current three-party coalition’s expected vote total has dropped from a combined 52% in 2021 to just 32%. By itself, Scholz’s SPD is attracting just 15% support.
The center-right opposition, the CDU-CSU alliance, now leads the polls with 30%-34% of support. But Friedrich Merz, Angela Merkel’s successor as CDU chairman, isn’t much more popular than Scholz. Instead, it’s the far-right Alternative for Germany party, or AfD, that’s making headlines. Noisy recent protests in dozens of German cities make clear that the popularity of the AfD’s increasingly radical, openly xenophobic, anti-European, and pro-Russian platform has its limits, and all other parties now represented in parliament have pledged never to partner with them. But nationwide polls show the AfD’s support has grown from just 10.3% at the 2021 election to between 19% and 22% today.
The state of play
Now come the elections. First, the SPD expects a beating in June’s European Parliament elections and a humiliation this fall in eastern German states considered strongholds of the populist right. Germany’s next national elections (for the Bundestag, parliament’s lower house) must be held no later than Oct. 26, 2025, and will most likely occur in September next year.
Perhaps Scholz’s biggest challenge will be managing his increasingly unwieldy coalition with the Greens and FDP through this gauntlet of political tests. Much of Scholz’s weak image comes down to open public criticism from his own finance minister, the FDP’s Lindner, who has accused Scholz of creating a dysfunctional welfare state. The Greens, unsympathetic to Scholz’s need to carefully manage the country’s energy transition as Germany moved to halt hydrocarbon energy imports from Russia, have accused Scholz of being soft on the fight against climate change. The Greens’ insistence on shutting down the last of Germany’s nuclear power plants last year made matters worse.
And if the SPD takes the expected beatdown in European elections in June, some within the SPD may begin pushing for a change in party leadership to rescue its chances of survival in power.
What might save Scholz?
Scholz and his coalition smell like toast. But 19 months is a long time, and much will happen between now and the next national elections in fall 2025. A return of Donald Trump to power and/or shifts on the battlefield in Ukraine could offer Scholz opportunities to rally Germans to their flag – and, by extension, to the incumbent government.
Scholz’s best hope lies not in some newfound strength or a new harmony within his coalition. It’s the weakness of others that might still save him. In particular, the establishment center-right CDU/CSU faces its own tough challenge. While offering a vision of a stronger and more self-confident Germany, the party must distance itself from the AfD, which remains anathema to many German voters, and Merz may not be the man for the job. He has already pandered to AfD voters with comments about Muslims, migrants, homosexuals, and the Green Party that were ham-handed at best and deeply offensive to many Germans, and he’s not immune to an internal party leadership challenge either.
The longer-term challenge
The biggest challenge for the SPD in coming years will be similar to the one faced by center-left parties across Europe: Voters are drifting away in all directions. Some of the party’s working-class voters have moved from blue- to white-collar jobs and now see their interests differently than they did a decade ago. Others have moved to the right in the face of rising numbers of foreign migrants. Many younger voters are moving toward the Greens or even to the populist left Sahra Wagenknecht Alliance, which represents a mix of welfare state generosity and sharp limits on immigration. The SPD has seen its party membership rolls cut nearly in half since the year 2000.
It’s a complex problem for even a skilled political leader, and Olaf Scholz has yet to prove he’s up to the task.
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.
French President Emmanuel Macron and China’s President Xi Jinping gesture during a press conference in Beijing.
Most of the world prefers not to choose
As the US-China rivalry deepens, many countries – including close US allies – have made it clear that they don’t want to be forced to choose between the world’s two largest economies. They are engaging in an increasingly delicate dance to try and maintain constructive relations with both.
This tricky balancing act has been particularly hard for European heavyweights, like Germany and France, that share values and many interests with Washington, but also benefit greatly from economic integration with China.
While France’s Emmanuel Macron has taken a more combative approach, saying recently that it would be “a trap for Europe” to get embroiled in crises “that aren’t ours,” German Chancellor Olaf Scholz vigorously defended a recent trip to Beijing with a host of German business leaders, writing that “we don’t want to decouple from China.” (It’s no wonder that Berlin won't roll over on this issue considering that German exports to China have tripled since 2000.)
And what about countries in the Global South that are being wooed by both the US and China? Many countries across South America, Africa, and Central and South Asia benefit from loans and infrastructure investment under Beijing’s Belt and Road Initiative but also rely on the US for security guarantees and aid. Since Beijing expanded its Belt and Road Initiative to Latin America in 2017, the US has tried to warn that it is a Trojan Horse aimed at increasing China’s regional clout, but Argentina, Chile, Ecuador, and others have still tried to play both sides.
For now, this approach seems to be working, but if tensions over Taiwan ratchet up, it could get harder for US allies to continue fence-sitting.