Germany is back – but is it for real?

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05 March 2018

By Alexander Frank, Senior Consultant at Cambre’s Healthcare Practice

Germany is finally about to have a new government. It will have taken 161 days for Angela Merkel to form a coalition since the 2017 elections – a new record. These 161 days may have changed Germany as we know it: Angela Merkel’s Germany that was for a long time perceived as an anchor of stability and (sometimes exaggerated) political rationalism in Europe. This is our perspective of what will change with the new coalition of CDU, CSU and SPD; who are the new leaders in the government to watch; and what this means for Europe.

It may not seem as if much has changed since the German elections in September 2017. The Social democrats voted on Sunday March 4 in favour of a new Grand Coalition with the CDU – already the third in the past 13 years. Angela Merkel is still Chancellor, competing with Helmut Kohl for the longest term of Chancellorship in German history. And last week, the German Federal Employment Agency announced unemployment rates that continue to be on a record low since the country’s reunification. Many in Brussels even fear the Germanification of EU politics since the nomination of Martin Selmayr as Secretary-General of the European Commission. From the outside, it looks like business as usual.

But don’t get blinded by the lights. Much has changed since September. We have seen the beginning of the end of the seamlessly eternal Merkel-era, the awakening of her potential successors, and the continued decline of the SPD. The elections have been nothing less than an earthquake for the German party system and leadership, and will very likely have an impact on EU policymaking. Old certainties (and stabilities) start to vanish.

The CDU and the dawn of Angela Merkel

Angela Merkel’s fourth term as Chancellor will very likely be her last one. And for many, its end cannot come early enough. While her anaesthetic governing style was admired by many for a long time, her stoic rationalism became a symptom of her approaching dawn with the disappointing results of the 2017 elections. The public absence of Angela Merkel during the chaotic coalition negotiations further nourished the power vacuum in her party. For many, the tip of the iceberg was reached when the CDU found itself without the prestigious Ministry of Finance in the coalition contract.

But contrary to many political leaders who missed their chance of leaving the political stage at the right time, Merkel managed to stage her long-term retirement and appease both loyal followers and opponents. The past weeks thus gave rise to two politicians who are likely to dominate the debate around Merkel’s potential successorship.

The first name political observers should get used to very quickly is Annegret Kramp-Karrenbauer – popular Prime Minister of the small state of Saarland, well-known favourite of Merkel, and since last week new Secretary General of the CDU, elected in a Merkel-style suit with an all-time record of 98.9%.

In another smart move, Angela Merkel designated one of her most popular opponents, Jens Spahn, as new Minister of Health. Spahn is the new hope of the CDU’s conservative wing. But contrary to Kramp-Karrenbauer, the young Minister lacks political experience. With his ambitious health agenda – focusing on tackling medical deserts in rural areas, the lack of nursing staff, and an improvement of public health insurance – his new position can quickly become a pitfall. He probably should ask Ursula von der Leyen for advice, the once all-time favourite for the Merkel successorship and now rather unlucky Minister of Defence.

SPD who?

Of course it takes two to dance, and with the March 4 vote it was the SPD basis who gave the final approval of the coalition contract. But although the SPD was over-proportionately successful during the negotiations, the party will have to fight for political survival. The success of Kevin Kühnert, head of the ‘Jusos’ (short for ‘Young Socialists’), and his no-Grand-Coalition movement laid bare the deep insecurity of the old-established party. The chaotic manoeuvring of Martin Schulz and the SPD’s leadership since the September elections further fed public perception of an unprincipled party, choosing political power over defending socialist values. After Martin Schulz’ demission, the party is left with six Ministries, including the powerful Ministries of Finance and Foreign Affairs, and a deep distrust towards its leadership. Andrea Nahles, who will most probably win the race for head of party in April, and Olaf Scholz, successful mayor of the City of Hamburg and most likely in the seat of the powerful Ministry of Finance, will be the party’s last chance to rise back to its old 1990s grandeur.

German navel-gazing or European leadership?

So what do these internal turbulences at CDU and SPD mean for the EU? In Brussels, it seems as if the Commission couldn’t wait for Germany being back at the negotiation table. Pierre Moscovici, European Commissioner for Economic and Financial Affairs, is already heading to Hamburg on Tuesday to talk to Olaf Scholz.

The Grand Coalition may indeed be the option many in Brussels had hoped for. And those seeking hope for German leadership in Europe may find optimism at first sight when reading the approved coalition contract between CDU, CSU and SPD. The 179-page document starts with a pledge for ‘A new beginning for Europe’, including commitments to Franco-German leadership and a strengthened Permanent Structured Cooperation. It even mentions the potential prospect of a future Eurozone budget, calls for a stronger role of the European Parliament, and the development of a European Monetary Fund.

Coalition contracts are vague by nature though, and observers should rather follow German discussions around important EU policy files the next weeks. For example in an interview published today in the ‘Deutsche Apotheker Zeitung’, the CDU’s spokesperson for health policy, Karin Maag, already announced that Germany thinks of tabling a reasoned opinion on subsidiarity against the Commission’s HTA proposal. She went further, warning the EU to get more involved in Member States’ health policies under the pretence of strengthening the internal market. EU enthusiasm in Berlin clearly continues to have its limits.

The insecurity of both ‘people’s parties’ could also mean something no one in Europe really needs: uncertainty. CDU and SPD will not only face euro-scepticism among almost all opposition parties (apart from the Greens). With the CSU as a coalition partner, CDU and SPD can prepare for tough debates around EU migration and monetary policies. The new designated Prime Minister of Bavaria and CSU heavy-weight, Markus Soeder, already announced that he wants to win back conservative voters from the right-wing AfD during the regional elections in October. With this in mind, the German stability we got used to may vanish. As for this year, we risk witnessing the centre of Europe being occupied with itself, at a time where Brexit is inevitably approaching, and forward-looking visions for the future of Europe are needed.

In the end, all may come down again to Angela Merkel whom we learned to never write off. After most likely 16 years of reign, Merkel will certainly want to leave a positive legacy for the history books. For Helmut Kohl, this was the introduction of the Euro under his chancellorship. What will it be for ‘Kohl’s Mädchen’?

Yes, Germany is back. But let’s hope it is for real.

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