20 November 2017

Two months after Germany’s federal elections, coalition talks broke down last night. Following the passing of two self-imposed deadlines for an agreement, the liberal Free Democrats (FDP) walked out of the negotiations and declared they would not form part of a government together with Angela Merkel’s conservative CDU, their Bavarian allies CSU, and the Green Party. Putting together a coalition of these four parties – known as ‘Jamaica coalition’ due to the parties’ colours – had been fraught with problems since the beginning. The parties share few positions and are heavily divided on key issues from migration to the environment to Europe. Since the Social Democrats’ (SPD) signalled immediately after the election their move into opposition,  the Jamaica coalition was the only viable option for a majority government and observers had assumed the pressure would be high enough to force the parties together. Ultimately, it didn’t.

Announcing his party’s exit from the talks, FDP leader Christian Lindner yesterday said, “It is better not to govern than to govern badly.” He criticised the failure of the talks to find real solutions, saying, “After weeks, today we still have a document with countless contradictions, open questions and conflicts over aims. Where there are agreements, they are often to be bought with a lot of money or pseudo-compromises.” On the lack of a joint vision, he said, “It has become apparent that the four dialogue partners have no shared vision for the modernisation of this country […] we were elected to change developments. This was not achievable in education policies, not in [lower tax burdens], not in the increasing flexibility of society, not in the strengthening of market economy – and until now not in an orderly immigration policy.” The FDP is still wary of joining another coalition. Following its last coalition with the CDU/CSU from 2009 to 2013 – during which the Free Democrats largely failed to push through its own agenda – the party was annihilated in the 2013 federal elections, and had to spend four years in extra-parliamentary opposition.

What happens next?

If the FDP’s exit from coalition talks is final, there are three options left on the table. Merkel could try to convince the Social Democrats of joining a coalition despite their steadfast opposition to it; she could opt for a minority government with the Green Party, the FDP, or alone; the Bundestag could be dissolved and new elections held early next year. None of them will come easy.

It is unlikely that the Social Democrats will move back into coalition with Merkel’s CDU and the CSU, even if this is the last possible option for a majority government. The SPD declared its move into opposition directly on election night – the party’s worst result in history – and has since stuck to that line. In late October, party chairman Martin Schulz stated that if a Jamaica coalition would not materialise, “there will need to be new elections […] we have made the decision to move into opposition in full awareness of its consequences.” SPD deputy chairman Ralf Stegner reiterated this position this morning, saying “There is no vote for a grand coalition [coalition between the CDU, the CSU and the SPD]”. It is unlikely the SPD would change their position even now.

A slightly more realistic scenario would be the forming of a minority government, which would see Merkel depend on flexible coalitions throughout the term. This would be unprecedented in German federal politics. She could either choose to do so with the Green Party (42 seats missing for a majority), the FDP (29 seats), or alone (109 seats). The FDP already announced this morning it would support a minority government from the opposition benches, effectively wielding power while avoiding much of the blame when things go wrong. Should a minority government emerge, expect Germany to become increasingly inactive both domestically and internationally.

The third option would be new elections. Contrary to the UK, the German parliament cannot dissolve itself. For new elections to take place, Merkel would first need to be officially proposed as Chancellor by German President Frank-Walter Steinmeier. If she then failed to receive an absolute majority in parliament, the President can then dissolve the parliament and call new elections. These would need to be held within 60 days.

Who would benefit from new elections?

The centrist parties fear that new elections would lead to a further strengthening of the far-right Alternative für Deutschland (AfD). The AfD, which already came in third in September’s elections, could profit from the absence of consensus among the liberal democratic parties – especially the failure of the negotiating parties to agree decisive action to limit immigration could play into their hands. At the same time, the public shock over the AfD’s strong showing in the last elections could boost turnout among leftist and centrist voters should new elections be called.

Inviting voters to the ballot once more would put the major parties under enormous pressure. Merkel’s position in the CDU is already weakened, and new elections would bring the question of leadership transition to the fore once more. There is little doubt that she would remain as lead candidate for them, but her standing would deteriorate further. Horst Seehofer, chairman of the conservative CSU, is already facing calls to resign before the upcoming elections in his party’s home state Bavaria – whether he could use new federal elections to rally his troops behind him one last time would remain to be seen. The Social Democrats, who have remained largely absent from the political debate over the last couple of weeks, would be unlikely to come out stronger from new elections – after all, their attempt at self-renewal in opposition has not yielded any significant results. While it could always get worse for them, it is unlikely that they will fall even further than in the last elections.

For the Free Democrats, much will depend on how public perception of their exit from coalition talks develops over the upcoming days. In the best case, the party can strengthen its image as new centre-right party and poach voters from the AfD, CDU and CSU. In the worst case, it loses centrist voters who would prefer a stable government based on compromises, and see the FDP’s action as self-serving and hypocritical. For the Green Party, new elections are likely to be beneficial. It appeared constructive in negotiations without selling out on the key points important to its electorate.

What are the wider implications?

For the time being, Merkel will continue to lead the acting government (a coalition of CDU, CSU and SPD) until a new one is formed. This leaves Berlin somewhat politically paralysed – the acting government will lack the legitimacy for committing Germany to any ambitious projects. For partners abroad that wait for Germany to lead the way on or at least support crucial reform proposal, this means they will have to wait another couple of months. Particularly for French President Emmanuel Macron, who even sent his Finance Minister to Berlin earlier this month to meet representatives of the negotiating parties, this means a further delay in his plans for EU and Eurozone reform. It also means that if Theresa May was banking on Merkel to act decisively to help unblock the Brexit negotiations, she may be disappointed.