“A New Departure for Europe”:
Germany’s Coalition Deal

“A New Departure for Europe” is the coalition deal made on February 7th between Angela Merkel’s Christian Democratic alliance party (CDU/CSU) and the Social Democrats (SPD). Much of the agreement is concerned with the European Union, steering German EU policies away from previous austerity measures. Before the agreement can take effect, however, it needs to be ratified by the SPD party base.

After the collapse of the “Jamaica” talks, Martin Schulz promised his party base they would conduct a vote before the SPD entered any coalition. However, this ballot could now be Schulz’ undoing. There are many critics of the grand coalition among the party base, so the ballot outcome is uncertain. The postal vote will be held from February 20 through March 2, with a final decision to be announced on March 4.

If the majority of votes are against the agreement, the coalition talks will have to restart from the beginning, including all parties as possible coalition partners. In that case, new elections would be very likely – but those could not be held until autumn 2018, leaving Germany without a permanent government for an entire year.

Key Ministries Go to SPD

Despite having won only 20.5% of the vote, the SPD has been given important ministries in the coalition government. Six ministries will be assumed by the SPD, six by the CDU, and three by the CDU’s Bavarian sister party CSU. The chancellor will come from the CDU/CSU, and the vice chancellor from the SPD.

The coalition deal gives the foreign ministry, the ministry of labour and social affairs, and the finance ministry to the SPD. Many members of the CDU/CSU have criticized giving up the the powerful finance ministry: Parliamentarian Christian von Stetten called the allocation of ministries a “political mistake,” and Roland Heintze of the Hamburg department of the CDU said in an interview: “I would have liked the finance ministry to stay with us.”

Martin Schulz, who initially spoke out against forming another grand coalition, announced last week that he would be serving as foreign minister in the new cabinet. However, after criticism from his own party base, he resigned from the position.

The New Government Deal: Strengthening the EU

Although many critics say that the coalition agreement does not contain important reforms such as pension reform and extensive tax reforms and details on the climate target are lacking, the SPD managed to steer the program in a social-democratic direction.

EU reforms have also been proposed. While the EU was low on the priority list in the last coalition deal, it is the first chapter in the present written agreement. An increase in the EU budget and cooperation in the defense and migration sectors are among the most important propositions. Additionally, the new government supports strengthening the European Parliament and establishing the European Monetary Fund – a fund intended to financially support European countries in crisis situations.

The coalition emphasizes solidarity with other European member states. This will most likely end many of the austerity measures that were supported and enforced by the former German finance minister Wolfgang Schäuble. “Certainly, the fact that Wolfgang Schäuble is not finance minister will be greeted with enormous relief,” Mark Leonard, director of the European Council on Foreign Relations in Berlin, told the New York Times.

French President Emmanuel Macron has also been promoting an end to the austerity measures. Together with the new German coalition, it will be possible to realise, at least in part, his plans for reform. In addition to Macron, many other international leaders – such as Obama – have been saying the German austerity policies stifle economic growth.

German Businesses Criticize Coalition Agreement

German businesses, however, have claimed that the new left-wing policies will harm German competitiveness. “In general, the German industry is not satisfied with the coalition deal,” Dieter Kempf, president of the Federation of German Industries said, referring to the focus of the government deal on redistribution. Critics say that tax reductions for businesses, along with  promotion of research and development, are all missing in the program.

by Alina Birkel  (Vienna, Austria)

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