Germany’s parties reach grand coalition deal

by | February 7, 2018 4:54 pm

Germany’s Social Democrats will take the finance and foreign ministries in the new “grand coalition” government, giving the left-of-centre party a critical role in shaping Berlin’s policy on Europe over the next four years.

It won the posts as part of a coalition deal with Angela Merkel’s conservative bloc that signals an end to the political limbo Germany has languished in since inconclusive elections last September.

The appointments signal the extraordinary lengths Ms Merkel had to go to win over the SPD, many of whose members dread the thought of another grand coalition with her Christian Democrats and the CSU.

The enhanced status of a party that has called for the creation of a so-called United States of Europe by 2025 could also herald a greater openness to proposals from Emmanuel Macron, French president, for reforming the EU and deepening eurozone integration.

Olaf Scholz, the current SPD mayor of Hamburg, will become Germany’s finance minister, while Martin Schulz, the party leader and former president of the European Parliament, will take over the foreign ministry.

The appointments are a coup for the SPD, which in September scored its worst election result in Germany’s postwar history. It had been expected to win either the foreign or the finance ministry, but not both.

Already, voices within Ms Merkel’s CDU are saying the chancellor made too many concessions to stay in power. “Phew! At least we still have the chancellery,” tweeted one CDU MP, Olav Gutting.

Ms Merkel has long been seen as the main driver of German policy on Europe. But with the SPD now in charge of two such crucial ministries it is likely she will have to give the party a greater say in EU matters.

“Merkel can now no longer do Europe policy the way she has over the past eight years, where she basically decided everything herself,” said Josef Janning, senior policy fellow at the European Council on Foreign Relations.

The German finance ministry was previously a Christian Democrat bastion, and is synonymous in many people’s minds with Wolfgang Schäuble, a close Merkel ally and fiscal hawk who ran it from 2009 until last year and in that role delivered four consecutive balanced budgets.

But Ms Merkel was under enormous pressure to win the Social Democrats round, after the breakdown of her earlier attempt to form a coalition with the greens and liberals. A revival of the grand coalition was her only chance of staying in power for a fourth term as chancellor, short of running a minority government — an option she repeatedly ruled out.

However, there remains one big hurdle on the road to a new government. The coalition deal must now be put to the SPD’s 460,000 members, many of whom are fiercely opposed to propping up Ms Merkel for another four years.

There is also deep distrust of Mr Schulz, who vehemently rejected the idea of a grand coalition in the immediate aftermath of the election but then changed his mind.

In a sign of his waning popularity in the SPD, Mr Schulz on Wednesday relinquished his chairmanship of the party to Andrea Nahles, the current head of the SPD group in the Bundestag.

Talks between the SPD and CDU/CSU were dogged for weeks by disagreements over health and labour policy, with the SPD insisting on measures to restrict short-term workers’ contracts and wide-ranging reform of Germany’s health system. It did, however, back away from an earlier demand to effectively phase out private health insurance.

The CSU, the Bavarian sister party of Ms Merkel’s CDU, did well out of the coalition deal. Horst Seehofer, its leader, will head an expanded interior ministry, which will also take responsibility for construction and “homeland affairs”.

The CSU will also continue to run the transport ministry, which will be expanded to include digital affairs, as well as the international development ministry.

In addition to the foreign, finance and labour ministries, the SPD was also granted the family, justice and environment ministries. The CDU was awarded the defence, economy, health, education and agriculture ministries.

Ursula von der Leyen will retain her post as defence minister, while Peter Altmaier, the current acting finance minister, will head the economics ministry, according to the DPA news agency. It said it was so far unclear who would run the agriculture and health ministries.