Germany’s elections – what are the implications?

Civitas, 30 September 2009

A victory for the conservative-liberal alliance’ is what you could call it. The Christian Democratic Party in alliance with the Free Democratic Party – having campaigned for tax cuts and a return to nuclear energy – ended four years of an awkward co-operation between the CDU and its rival Social Democratic Party.

The change of government could herald a more confrontational phase in German politics as a stronger left-of-centre opposition links up with reinvigorated trade unions against the centre-right coalition. The results were a slap in the face for the country’s two largest parties. The CDU obtained its lowest score since the first post-war election of 1949 while the SPD  lost 11.3 points to reach a post-war low. Some commentators have been suggesting that this election represents the end of an era for German politics as well as signs of things to come for Europe as a whole.  The vote will draw cheers from business, with a centre-right government coming to power for the first time since Helmut Kohl, CDU chancellor, lost out to Gerhard Schröder, his SPD successor, in 1998. The new “black-yellow” government is a reincarnation of a coalition that governed Germany from 1983 to 1998 but with the FDP now in a considerably stronger position. The FDP is a pro-business party that champions reforms of social security, civil liberties, and above all lower and simpler taxes. It strongly opposes many of the policies that Ms Merkel adopted during the grand coalition to placate her SPD partners, such as minimum wages and give-aways to pensioners. The course of government over the next four years will largely depend on how tensions relating to such policies are resolved.

Although this election may represent the death-knell of social-democratic forces in Germany, one should be weary of exaggerating the implications of Sunday’s result. The systemic constraints that Merkel faces are considerable. Firstly, Ms Merkel has already ruled out implementing some of the FDP’s more radical ideas, such as loosening regulations that protect workers from dismissal. Tax reform of some sort will have to occur. The FDP’s leader, Guido Westerwelle, says he will sign no coalition agreement without it. The CDU’s Bavarian sister party, the Christian Social Union (CSU), has been pushing for a 100-day package of tax-relief measures. But with a record federal budget deficit expected for next year and a commitment to reduce structural deficits nearly to zero by 2016, it is hard to see how the government can offer generous tax cuts. The outgoing finance minister, Peer Steinbrück, said they had “no chance”. His successor will face similar constraints but will find it hard to speak so bluntly.

This new liberal-conservative alliance may be the beginning of the end for the social democrats in Germany, yet one should not be too optimistic about the prospects of this new alliance. The CDU-FDU alliance has an amorphous quality, lacking the social reformism of the SPD.  Nevertheless, the result does represent a realignment of sorts for the Bundestag. A return to a more traditional form of politics is to be expected with the two big parties in opposition to each other and a clear distinction between right and left. The SPD will now have to reinvent itself just like the Labour Party in Britain had to in the 1990s.

Ahmed Mehdi