The Uncertain Future of Germany's Grand Coalition

Posted in Europe | 19-Oct-05 | Author: Federico Bordonaro

A general view to the Germany's lower house of parliament Bundestag in Berlin October 18, 2005.

One month after the German general elections, the German parliament met for the first time on October 18. As expected, the Christian Democratic Union and Christian Social Union faction (C.D.U./C.S.U.) and the Social Democratic Party (S.P.D.) agreed to form a "Grand Coalition," even though during the election campaign both sides said repeatedly that they wanted to avoid such a scenario. Angela Merkel, who is the new chancellor, and her C.D.U./C.S.U. partners have appointed six ministers, while the S.P.D. will appoint eight.

However, many German and international specialists believe the negotiations could last another month, and -- which is more alarming -- there is widespread belief that such a Grand Coalition will not succeed in carrying out a coherent set of economic, industrial and foreign policies because of the inevitable inner battle between the two big parties. [See: "Angela Merkel's Forecasted Win and Germany's Foreign Policy"]

The Perception and Significance of the 2005 Election

The September 18 election had been frequently portrayed as a decisive one for post-reunification Germany. The elections raised such themes as liberal reforms versus welfare state "conservatism," pro-American foreign policy versus Franco-German and German-Russo combines, and "New Europe" and the renewal of the transatlantic partnership versus "Old Europe" and a pro-multipolarity turn.

That was, in synthesis, how the media perceived the political battle. Pro-business and liberal-conservative establishments (not only in Germany) suggested that former Chancellor Gerhard Schroeder of the S.P.D. had been incapable of any substantial economic reform, and that Merkel's pro-business neukurs could be the last chance for Berlin to regain its once secure role as Europe's economic leader. Various leftist voices called instead for the defense of the "German model" and the welfare state against the "ultra-liberalism" advocated by Merkel and her liberal allies.

Both sides of the mainstream political spectrum also perceived a draw between the two rivals to be the worst possible result for Germany due to the stalemate that would inevitably follow. Ironically, that is precisely what happened.

If what described above is the perception, the real significance of the 2005 German vote is more complicated. In order to understand it, it is imperative to step back from current social and political issues, and to look at geopolitics. Berlin's key position in Europe and the current configuration of its human geography are indispensable factors to correctly assess the present situation.

Germany's expected population growth rate for 2005 is zero. That means that Germany has the lowest growth rate among Europe's most populated countries. The median age in Germany is 42.16 years, which means Berlin has one of the oldest populations in Europe. France's median age is 38.85 years, Britain's is 38.99, and Italy's is 41.77. The total fertility rate in Germany is 1.39 percent for women in 2005, whereas it is 1.66 percent in Britain and 1.85 percent in France.

Germany is thus the "oldest" power in Europe. Its economy has been suffering for many years due to a number of reasons stemming from its reunification effort to high unemployment (over ten percent in 2004), and labor market rigidities not easy to keep at a time of rapid globalization. As can be expected, such demographic and economic conditions do not foster fast and dynamic changes. In very simple and general words, Germans fear losing their enviable standard of living more than they fear being lambasted because of their "conservatism." As a result, today's German society is "reluctant" to produce political changes more because of its demographic context than because of its alleged political stability.

Therefore, reforms are made slowly and cautiously. The S.P.D. government had, indeed, proposed reforms, but the result of their moderate character meant that big business quickly turned toward the neo-liberal factions of the C.D.U. and the Free Democratic Party, whereas the left-wing started to regard Schroeder as too liberal.

One of the reasons why Schroeder failed to be re-elected is that he lost control of the left factions inside the S.P.D. At the same time, he succeeded in emerging as the one who could carry on a mild reformist agenda while avoiding the destruction of the German welfare state.

Europe's Key Player

Germany remains Europe's key player and biggest power. Notwithstanding its economic malaise, Schroeder showed determination to carry out a diversified and increasingly independent foreign policy. He successfully established a strategic partnership with Moscow, trying to secure Berlin's access to Russian energy resources in exchange for technology. He continued to work together with Paris on a number of issues, and particularly on opposing Washington's intervention in Iraq and the Bush administration's "Greater Middle East" project.

Before the election, many forecasted a dramatic change in Berlin's foreign policy if Merkel was victorious. Apart from the complicated election's outcome, such predictions were incorrect. For one, Schroeder's foreign policy was the reflex of a structurally new German geopolitics. Germany is reunified, is no longer occupied, and is now the center of an enlarged Europe that has two designs. Those designs are the single currency and the inter-government cooperation of the E.U. Common Foreign and Security Policy.

This new context opens the way for a cautious yet more autonomous German foreign policy aimed at leadership in Europe. In 2004 and 2005, German diplomacy gained even more importance and influence in Brussels. In light of these changes in Germany's status, many German decision makers argue that a new balanced and multipolar transatlantic relationship is needed.

Additionally, German middle classes and powerbrokers have become alienated by Washington's unilateralism. They are not against improving ties with the U.S., but they only want to improve these ties under a more multilateral framework and approach to international crises. However, for the moment, this will not be easy to accomplish in light of the recent improvements in the Euro-American (e.g., Franco-American and German-American) relationship.

The main problem is that Washington and Berlin seem to have different views on international relations. Berlin's view has become much closer to that of Moscow and Paris (multipolarity) than that of Washington (unipolarity and strong U.S. leadership in the West). German elites think that their interests lie in a balanced multipolar world, and one in which Berlin can peacefully occupy its dominant role in Europe, enjoying good relations and promoting strategic cooperation in technology sharing, energy security and common defense with France, Russia, and the United Kingdom. [See: "In the Heart of Europe: Social Models and Geopolitics"]

This is true, at least in part, also within the German conservative landscape, and it is too often neglected that Angela Merkel is not the only influential decision-maker in the C.D.U./C.S.U. faction, although she has been the one on the rise in recent years. The C.D.U./C.S.U. is not a monolith, and Merkel's more pro-American views do not reflect those of key figures such as Karl Lamers, Wolfgang Schaeuble, and Edmund Stoiber.

In summation, an internally divided and ineffective ruling coalition could easily have the effect of prolonging the current German economic crisis, with possible consequences for the whole European economy due to Berlin's central role in the E.U. and the euro-zone.


The German political situation reflects the country's basic characteristics in the post-Cold War era. However, such characteristics can change, but its pace will probably be slow. With a Grand Coalition, better relations with the U.S. can be expected, but this will not necessarily mean that a structural change will occur, especially as the S.P.D. is set to maintain the Foreign Affairs minister.

On the economic front, Berlin needs to maintain its historical leadership in exporting high quality goods to the world, but also must guide the euro-zone by being a credible political and economic leader. In order to do so, some reforms are needed, but if the price to pay is the end of Germany's social agreement, national elites may accept a "trade off" between a diminished capitalist vitality and the preservation of its social model. Today's Grand Coalition may be seen precisely as the concrete political representation of these concerns.

The fundamental lesson of the Schroeder years has been that preserving the German social model is still decisive to gain and maintain consensus. Any dramatic change in the next two years looks far from likely. The real question is whether the Grand Coalition will prove viable and last for a significant period of time, and what political changes could result from possible collective failure of the "traditional" parties.

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