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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.
KYIV, UKRAINE - DECEMBER 9, 2024 - Head of the Office of the President of Ukraine Andriy Yermak, President of Ukraine Volodymyr Zelenskyy and Deputy Head of the Office of the President of Ukraine Ihor Zhovkva (L to R) attend a meeting with German Chancellor candidate, leader of the Christian Democratic Union Friedrich Merz, Kyiv, capital of Ukraine.
Zelensky preps for hard bargaining
President-elect Donald Trump has pledged to end Russia’s war with Ukraine. That would require Ukraine’s President Volodymyr Zelensky and Russia’s President Vladimir Putin to open negotiations – and to find enough common ground to agree at least to a ceasefire. Putin and Zelensky are now trying to strengthen their respective bargaining positions before talks can begin.
On Monday, Zelenskysaid via social media that he’s open to the possibility of Western governments posting troops on Ukrainian territory to guarantee his country’s territorial integrity, an idea firstsuggested publicly by France’s President Emmanuel Macron in February. “But before that, we must have a clear understanding of when Ukraine will be in the European Union and when Ukraine will be in NATO,” Zelensky wrote.
The EU and NATO remain unlikely to commit to precise membership timetables until it becomes clear what Ukraine’s future borders will be, and many Western leaders remain opposed to deploying troops into a warzone that could involve them directly in a war with Russia. For now, Zelensky continues to work with the outgoing Joe Biden administration to bolster his weapons stockpiles and to win more freedom to use Western weapons against his targets inside Russia.
There’s another political transition that Zelensky is watching carefully: Germany will hold national elections in February, and current Chancellor Olaf Scholz will likely lose his job to Friedrich Merz, the head of the center-right Christian Democratic Union. Merz is more publicly hawkish on helping Ukraine repel Russian invaders. That prospect gives Zelensky some hope that European backing for Ukraine will remain even if Trump dials back US support.FILE PHOTO: A man wearing an IG Metall (Industrial Union of Metalworkers) scarf holds a banner with the Volkswagen logo, as workers gather to strike against planned cuts to wages and possible factory closures, in Hanover, Germany, December 2, 2024. Picture taken with long exposure.
Hard Numbers: VW goes on strike, Guinean soccer violence turns deadly, Scholz pledges Ukraine aid, US breaks travel record
$19 billion: Tens of thousands of German Volkswagen workers launched strikes at multiple car plants on Monday, protesting €18 billion ($19 billion) in company budget cuts that resulted in three plant closures and pension cuts. Volkswagen is grappling with a 64% drop in third-quarter profits and declining market demand in China.
56: Fifty-six people, including many children, died in southeast Guinea after a disagreement over a refereeing decision turned violent at a soccer match held to honor military leader Mamady Doumbouya. Opposition group National Alliance for Change and Democracy blamed the ruling junta for failing to keep people safe while organizing tournaments to bolster political support for their leader in advance of a promised presidential election, which they say violates election law.
680 million: German Chancellor Olaf Scholzpledged $680 million in aid to Ukraine during his visit to Kyiv on Monday, his first trip to the city in over two years. New German military equipment is scheduled to be delivered this month amid questions about the long-term viability of Western support for Ukraine with the incoming administration in Washington.
3 million: US airport security cleared a record 3 million travelers on Sunday after the Thanksgiving holiday that traditionally sees families reuniting from far and wide. So, pretty smooth at security, but plenty of travelers faced frustration from there: Airlines canceled 120 flights and delayed over 6,800.Germany’s political crisis, explained
While the United States was still busy counting votes, Germany’s ruling coalition led by Chancellor Olaf Scholz suddenly fell apart last Wednesday, plunging Europe’s largest economy into chaos. Now, Germans are set to head to the polls on Feb. 23 – seven months earlier than originally planned – to elect a new government at a particularly challenging time for their country, the EU, and the world.
What happened?
After less than three years in power, the so-called “traffic light” coalition of Scholz’s center-left Social Democrats, the environmentalist Greens, and the pro-business Free Democrats collapsed on Nov. 6 when the chancellor unceremoniously fired his finance minister and the Free Democrat leader, Christian Lindner.
The move followed months of bitter negotiations over how to plug a roughly €10-billion hole in next year’s federal budget. The coalition’s progressive partners favored taking on more debt to boost spending on infrastructure, defense, and aid to Kyiv (Germany is the second-largest contributor of military aid to Ukraine after the US). The fiscally conservative FDP opposed any new borrowing despite Germany’s low debt-to-GDP ratio, instead pushing for tax and spending cuts that would reduce welfare transfers, aggravate Germany’s malaise, and curtail support for Kyiv.
The standoff came to a head because Germany has a strict constitutional debt limit the government is not allowed to exceed outside of exceptional circumstances like the COVID-19 pandemic. When Scholz asked his finance minister to suspend the “debt brake,” citing the exceptional impact of the war in Ukraine, Lindner refused to budge, and the traffic light broke.
This was the conclusion of an uneasy marriage of convenience riven by ultimately irreconcilable differences about how to kickstart Germany’s long-stagnant economy and execute the foreign and security policy Zeitenwende (or “turning point”) that Scholz proclaimed when he replaced Angela Merkel as chancellor in 2021. One Russian invasion of Ukraine and three years of gridlock, high energy costs, and flat growth later, Germans have soured on their government. A recent poll found that only 14% of voters were satisfied with the ruling coalition, with 54% wanting early elections.
What now?
Scholz’s Social Democrats and Friedrich Merz, who succeeded Merkel as leader of the opposition conservative Christian Democratic Union, have agreed to hold a vote of confidence to trigger the dissolution of parliament on Dec. 16. Provided Scholz loses it – as is widely expected – early elections will then be held on Feb. 23.
In the meantime, Germany will be in a limbo of sorts. The chancellor and his remaining Green coalition partner will remain in office until a new coalition is elected, but as the head of a minority government, he now has to secure support from opposition parties on a case-by-case basis to get any laws passed. In particular, Scholz needs votes from Merz’s conservatives to pass an all-important 2025 compromise budget. But that’s a very tall order, requiring not only painful concessions from the CDU – especially on the suspension of the debt brake – but also that the SPD give up core elements of its legislative agenda in return.
If no budget is passed by year-end, as looks likely, Germany will enter into “provisional budget management” – a state of limited government operations and funding based on 2024 numbers. While this won’t lead to a government shutdown like it would in the United States, no new obligations or programs could be passed before a new government finally approves a 2025 budget, potentially not until the second or third quarter of next year. This would restrain Berlin from active policymaking during the critical early days of Donald Trump's presidency, at a time when Europe is more rudderless than ever and Russia continues to threaten Ukraine and NATO.
The road ahead
The opposition CDU/Christian Social Union center-right alliance leads the national polls with 34%. Of the “traffic light” coalition parties, Scholz’s SPD is polling at around 16%, while the Greens hover at 11%. Lindner’s Free Democrats, meanwhile, are currently below the 5% threshold required to get into parliament.
The far-right Alternative for Germany is the second-most popular national party, with 17% support, but all other parties continue to explicitly rule out the possibility of entering into a coalition with it. The newer pro-Russian, anti-immigration, left-wing Sahra Wagenknecht Alliance, which made large gains in September’s state elections, is somewhat less domestically toxic than AfD and polling at 6%.
Of course, there are still more than three months to go until the election, and these numbers will change, especially in the wake of the government’s collapse. But barring any major surprises, the CDU’s Merz is all but certain to become the 10th German chancellor since 1949. Assuming the conservatives’ most natural partner, the FDP, is unable to clear 5%, the only open question is whether the next government will be a grand coalition of the CDU/CSU and the SPD or another three-way coalition including them plus the Greens.
Grand coalitions have a long history in Germany and are popular with voters for their track record of delivering moderation and stability. Three-way coalitions, by contrast, are an unwieldy, unstable last resort for mainstream parties to form majority governments in Germany’s increasingly fragmented party landscape – a challenge that is only going to accelerate as the anti-establishment AfD and BSW continue to grow in popularity.
Whatever it looks like, the next government will have to contend with the big challenges that the current administration failed to address. Germany faces deep structural problems, including chronically low productivity and investment, high energy and labor costs, unfavorable demographics, a fragile export-dependent growth model, and an overly rigid debt limit rule.
But Berlin’s biggest challenges aren’t economic – they’re existential. At a time when Russia is testing NATO's resolve, China is challenging the Western-led international order, and America's commitment to Europe is in question, Germany must decide what kind of power it wants to be.
Will Europe’s economic engine finally step up as a geopolitical leader, or will it continue to punch below its weight? For Germany’s next government, there may be no more kicking this can down the road.
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 Finance Minister Christian Lindner, Economic Affairs and Climate Action Minister Robert Habeck, and Chancellor Olaf Scholz attend the 2024 budget debate session of the German lower house of parliament, the Bundestag, in Berlin, Germany, earlier this year.
Will Germany’s ruling coalition survive the winter?
An uncomfortable dynamic: Scholz held a summit on Tuesday to discuss Germany’s economic woes but didn’t even invite his finance minister, Christian Lindner of the Free Democrats, who decided to schedule a competing economic summit the same day.
“The three-party coalition is plagued by a lack of internal discipline, weak leadership by Chancellor Olaf Scholz, record-low approval ratings, and deteriorating trust between its leading figures,” says Jan Techau, a Berlin-based Europe expert at Eurasia Group.
Beyond the economic crisis, issues ranging from the rise of the far-right AfD to growing geopolitical pressures brought on by the war in Ukraine and a more assertive China have placed the German government in “a perfect storm situation,” says Techau.
Germany’s GDP grew in the third quarter, helping it avoid a recession, which Economy Minister Robert Habeck on Wednesday said offers a “ray of hope.”
But there are still concerns that the coalition could soon collapse, which would pave the way for snap elections in the spring. While the probability of an early vote has gone up, Techau says it’s still more likely that the government will complete its full term.
The coalition is held together by the “weakness” of the ruling parties and the fact that “early elections are likely to produce disastrous results for all three of them,” adds Techau.
The next general elections aren’t scheduled until Sept. 2025. We’ll be watching to see whether the German government can keep it together in the meantime.
What does Russia give in exchange for North Korean troops?
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 are the global consequences of North Korean soldiers now appearing on the frontlines in Ukraine?
Well, I think first, it's a reflection of the fact that Russia President Putin, does have difficulties getting the manpower to man the front lines. He has difficulty recruiting in Russia itself. He's dependent upon soldiers, and evidently, he's now dependent upon North Korea to supply the front lines. I mean, that's a sign of at least long-term weakness in terms of Russia. Then the question is, of course, what has he given in return to the sort of dictator in Pyongyang? In all probability, high-tech and different sorts of military equipment. And that, of course, has serious implications or potential serious implications for stability on the Korean Peninsula. So there are consequences on the frontlines in Russia and on the Korean Peninsula.
What’s the nature of the agreements that German Chancellor Scholz concluded during his recent visit to Delhi?
Well, apart from bilateral German-Indian things, he was putting an amount of pressure on the Indians to move forward on the negotiations ongoing for a free trade agreement between the European Union and India. That's been negotiations that have been going on for quite some time. It's been a valley of tears because of slightly different approaches from the European and the Indian side. But it's clearly very much in the mutual interest to have such an agreement concluded, particularly since we don't know what's going to happen in the US. And more choppy waters when it comes to global trade. So let's see if there is any progress coming out of the visit. It remains to be seen.