Germany’s new government: Chancellor Olaf Scholz has progressive plans

The Angela Merkel era is officially over. Germany’s new coalition government takes power Wednesday, a break with 16 years of conservative-led rule under Merkel.

Maybe not too dramatic a break. German politics are built on stability and consensus-building. This new government, a three-party coalition forged through compromise, is a prime example of that.

But the new chancellor Olaf Scholz, a center-left Social Democrat (SPD), will lead a coalition government of the SPD, Greens, and the pro-business Free Democrats that has a more modern vision and set of policy priorities. It looks as if it will replace Merkel’s piecemeal approach to governing — pulling the country along slowly, slowly, to avoid any controversy — with a government that is a bit more progressive and a bit more future-oriented.

“After 16 years of very little progress, I think Germany is in for a bit of a modernization shock,” said Christian Odendahl, the Berlin-based chief economist for the Centre for European Reform.

The coalition is embracing policies like lowering the voting age to 16, expanding citizenship rights, investing in affordable housing, legalizing marijuana, and accelerating some of the country’s climate commitments.

This isn’t a revolution. But modest change is still change — if the coalition can deliver on its proposals. This is still an odd political marriage, and the compromise that brought the government to power will be tested early on. Scholz will take over as Germany is facing a dangerous coronavirus wave, and how this government handles it may hint at how cohesive, effective, and stable it really is. And stability, maybe more than anything else, may be the measure of political success.

Scholz has already pulled off a victory by getting the coalition together

Olaf Scholz and the center-left Social Democrats (SPD) narrowly won the September federal 2021 elections. He previously served as the vice chancellor and finance minister in Merkel’s government, and the campaign framed him as a competent and stable leader — the next best thing to the still very popular Merkel.

It worked, just enough. The SPD didn’t win enough seats in the Bundestag (the German parliament) to govern on its own, but neither did any other party, which meant some combination of parties would need to get together to form a governing coalition. This is the norm in German politics.

Neither of the two big parties, the SPD or the Christian Democratic Union, wanted to form a grand coalition (which had existed for 12 of Merkel’s 16 years as chancellor), which meant three parties would need to join up, a pretty rare phenomenon at the federal level that hasn’t happened since 1949. But the vote was close enough that the pro-business Free Democrats and the left-leaning, pro-environment Greens could choose who they wanted to work with, the SPD or the CDU. That gave them a lot of leverage, as they could basically anoint the next chancellor. Ultimately, the SPD, the Greens, and the Free Democrats agreed to go into talks.

It was still a bit awkward. This “traffic light” coalition — named for the respective party colors of red (SPD), yellow (FDP), and green (well, Greens) — isn’t exactly a natural ideological fit. The SPD and the Greens exist on the left side of the political spectrum, so they’re more in sync. But the Free Democrats are very pro-free market, and supports lower tax, which doesn’t always mix well with an ambitious social agenda.

Given these gaps, it seemed Merkel would be caretaker chancellor for many months more. Tense, long-drawn out negotiations, potentially lasting into 2022, were predicted. Instead, the negotiations happened with little public squabbling and few leaks. The three parties finalized a coalition deal in just about two months, outlined in a fairly detailed 177-page document. The consensus meant Merkel would come a few weeks shy of the record for longest-serving chancellor.

The coalition found ways to fit together everyone’s big priorities. Each got some, if not all, of what they wanted, which allowed them to sell this agreement to their respective bases.

The SPD, of course, gets the chancellery, along with important ministries like interior (think homeland security), which will allow them to beef up their security credentials, and housing and labor, core to their constituencies and reflective of the party’s platform on wages and housing.

The Greens scored the foreign ministry, to be led by party co-leader Annalena Baerbock, who has embraced a more human rights-centric foreign policy, especially when it comes to Russia and China, which is reflected to a degree in the document outlining the coalition’s vision. The Greens co-leader Robert Habeck will also lead a new economy and climate ministry, which will give the Greens the chance to work with Germany’s all-important industrial sector as it transitions to more climate-friendly policies.

The Free Democrats, for their part, won the very coveted finance ministry, to be headed by party leader Christian Lindner. This will give them power of the purse strings, potentially keeping any too-ambitious spending plans in check. The coalition agreement right now uses some interesting accounting, but has broadly agreed not to increase taxes to pay for programs on its agenda.

As far as compromises go, it’s not too bad.

From left, Foreign Minister Annalena Baerbock, co-leader of the Greens, and SPD leader Saskia Esken sign the coalition agreement of the SPD, the Greens, and the FDP to form a federal government in Berlin on December 7. Behind them are Robert Habeck, co-leader of the Greens, Chancellor Olaf Scholz of the SPD, and Christian Lindner, FDP leader.
Bernd Von Jutrczenka/picture alliance via Getty Images

But how stable this government will be once it takes over is the big question. Even before the coalition government was formally announced, the SPD, FDP, and the Greens started finding ways to work together. In November, the three parties worked together on possible new Covid-19 measures, and are planning to introduce new vaccine mandates. At the same time, the Bundestag let federal emergency orders expire in November, which Merkel’s government had used to help coordinate the country’s pandemic response over the past year. The FDP was largely opposed to those orders. Compromise, in action.

It’s just one data point, but there are some other hopeful signs. Sudha David-Wilp, a Berlin-based senior transatlantic fellow at the German Marshall Fund, said this coalition was really a choice — the parties wanted to do this, and work it out, and all had something to gain from doing it. It wasn’t, as in the past, a government of last resort. As Scholz himself said, negotiations happened in a “friendly but intense atmosphere, an atmosphere full of trust.”

If anything, self-interest could help keep the coalition intact. “All three parties agree that they are running this coalition with an eye on the 2025 election,” Odendahl said. “They want to make sure that this is not just a one-off, but that all three parties can gain from this and do reasonably and equally well in the next election.”

And despite the differences, the three parties are unified around some big things. All three are fairly socially progressive, for example, on things like LGBT rights, and the coalition has proposed an agenda including greater protections for trans people and ending restrictions on blood donations from gay men. The parties, too, may have different ideas of what progress means, but they are coalescing around the idea that Germany has to move a bit forward, and faster, to tackle challenges like climate change.

Scholz called the coalition “united by the will to make this country better.” Baerbock called it “a new start for more progress.” Lindner said: “It is our remit to modernize this country together.”

Supporters of both the Greens and the Free Democrats are some of Germany’s youngest voters, and so this orientation made sense — especially, again, if this is as much about holding power now as it is about holding power four years from now.

The coalition wants to lower the voting age in Germany to 16. It wants to legalize weed, an issue Merkel never really got behind. Climate change was a big issue among all parties during the 2021 elections, and this agreement speeds up the timeline for Germany to abandon coal, from 2038 to 2030. The plan also calls for social investments, like building 400,000 affordable housing units and raising the minimum wage to 12 euro an hour.

As big as some of these ambitions are, it’s worth remembering that the chancellor himself, Scholz, is still a 60-something guy who served as Merkel’s finance minister and ran with the campaign slogan “Kompetenz.”

“Olaf Scholz, who has the disposition, has the temperament, has even some of the affections of the outgoing chancellor who is admittedly rather legendary, so they’re getting almost more of the same in terms of the type of leadership,” said Eric Langenbacher, an expert on German and European politics and a professor at Georgetown University.

“But on the other hand,” Langenbacher added, “when you actually look at the details, this [coalition] document has the potential to be an incredibly progressive document.”

Big changes might come in domestic politics, but Germany may have a little different foreign policy too

From the outside, Merkel’s absence from the world stage feels like the major transformation.

Merkel asserted Germany’s role globally, and as she did so, her own profile grew, which also elevated the importance of Germany. “It was a hand-in-hand phenomenon,” David-Wilp said. “When she first entered office in 2005, it’s not like she thought that one day we were going to call her leader of the free world.”

Merkel leaves this legacy to the next German government. And on paper, at least, the major contours of German foreign policy remain intact. “It’s more about continuity than change,” said Markus Kaim, international security senior fellow at the German Institute for International and Security Affairs.

Kaim said the coalition agreement repeats a lot of the same themes as past coalition deals, including the importance of the trans-Atlantic relationship and the importance of the European Union.

Still, there are some shifts, especially when it comes to relations with China. There are specific mentions of issues like Taiwan, Xinjiang, and human rights violations, among others. The tone of the rhetoric in the coalition agreement is much more hawkish, which experts said has a lot to do with the Chinese government’s actions, and Germany’s perception of those policies, in the last four years. “It’s not just vague rhetoric, there’s actual mention of change,” said Tyson Barker, head of the technology and global affairs program for the German Council on Foreign Relations.

This may also tie into a subtler shift to a more values-driven foreign policy. The Greens, especially, have pushed to confront Russia and China on human rights abuses, and to elevate those concerns over financial ties with those powers. Merkel also espoused these values, she was also a pragmatist when it came to international politics.

Of course, no one is exactly sure what this might look like in practice, or if it is practiced at all. Merkel centralized foreign policy in the chancellery; she dealt with Europe, and China, and Russia, and the United States. Most experts believed the chancellery, and Scholz, would continue to define and guide foreign and EU policy, but his worldview is not really well understood. Another big question is how much influence the Greens will have, and whether any power will devolve back to the foreign ministry, giving Baerbock a larger international profile.

At the very least, experts said, it will likely help elevate climate change as an international issue even more. “When Baerbock goes into a meeting with another foreign minister, be it from Russia, China, Saudi Arabia, the United States, whereas in the old talking points or order of issues, climate change might have been sixth, or tenth, it’s going to be two or three,” Barker said.

Foreign policy or EU policy didn’t really factor very much into the election, but Scholz may quickly be tested on diplomatic skills, especially with the brewing crisis in Ukraine. At the same time, the new German government likely wants to focus much closer to home, especially on the pandemic, the recovery, and its social and economic policy agenda.

“Most people, I think, recognize that there needs to be this kind of greater domestic focus, and that will also renew, and perhaps empower Germany, so that it can continue this global role abroad,” Langenbacher said.

Jinggo B Danuarta

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