The announcement on 24 November of the successful conclusion of the German negotiations to form a “traffic light” coalition government (named after the parties’ respective colours: red for Social Democrats, green for Greens and yellow for liberal Free Democrats) brings the promise of a new dynamism in politics, not just for Germany but for the EU as a whole.
Provided the deal is approved by the individual parties, the new government should be in a position to take office early next month. Following the elections of 26 September, the talks have been relatively cordial and expeditious compared to previous coalition negotiations, which, hopefully, bodes well for the future government. The announcement is timely, as the new administration faces a resurgence of the pandemic at home and Putin-inspired tensions on the European Union’s eastern border, abroad.
The new Chancellor, Olaf Scholz, former vice-chancellor and finance minister, is generally seen as a “safe pair of hands” within the EU. He is credited with having driven the proposal for a 800bn euro post-pandemic recovery fund, under which the bloc agreed to take on large amounts of debt to finance grants and loans to European economies hit by the pandemic. He saw this as “about making Europe stronger and working on better sovereignty of our European Union”; in other words, about strengthening the EU, not just recovery of national economies.
Scholz also played on important role in supporting the deal steered by the OECD, signed by 136 countries at the beginning of November, on a minimum effective corporate tax rate. He described this as a “colossal step forward towards more tax justice”.
Accelerating the transition to a green economy
The 177-page coalition agreement Scholz has reached with the Greens and the Liberals (FDP) aims to accelerate the transition to a green economy; to promote greater digitalisation, where Germany lags behind its main competitors and to improve workers’ rights, while maintaining fiscal discipline (a priority for the pro-business liberal FDP).
In recognition of the threat of dangerous climate change, the Greens’ radical agenda comes out clearly, with a plan to reach net-zero emissions by 2045 at the latest (slightly ahead of the COP26 goal of 2050). They aim to make the expansion of renewable energies a central plank of their programme. Sticking to Germany’s plan to phase out nuclear power (seen by many as an error, as it increased coal burning) they also aim to accelerate the exit from coal. “Ideally, this should be achieved by 2030,” the coalition agreement said, again a target slightly ahead of the COP26 goal. In a massively ambitious expansion of renewables, they commit to reserving some 2 per cent of German territory for wind turbines. There are additional targets for 15 million electric cars and an increase in rail transport of 25%, also by 2030.
Whilst the election campaign was largely focussed on domestic issues, the parties have renewed their commitment to NATO and the transatlantic relationship and also pledge to maintain a leading role in the European Union, that protects and stands by its values and the rule of law “both internally and externally”. A values-based foreign policy is therefore indicated in the potentially tougher approach, to “seek cooperation with China wherever possible, on the basis of human rights and international law” and to “take into account different threat perceptions and focus on a common and coherent EU policy towards Russia.”
In a concession to the fiscally conservative FDP, the commitments to public investment in building a green economy and accelerating digitalisation are balanced by an intention to return to strict debt limits from 2023 onwards.
Although individual appointments have not been announced formally, the Greens’ co-leader Annalena Baerbock is expected to become the country’s first female foreign minister in what Scholz hopes will be a “gender equal” government. She has promised a “return to an active European foreign policy”, one that is based on diplomacy and dialogue and “driven by values and human rights”. However, Scholz will have to balance the Greens’ calls for a tougher line on Russia and China with the risk of a confrontation with the two countries over issues such as Taiwan and Ukraine.
Sound public finances
FDP leader Christian Lindner, who is popular with young voters, is set to take over the finance ministry – which in view of the fiscal conservatism advocated by the FDP, might have wider implications for the EU. He stressed the new government would be an “advocate of sound [public] finances — this is important in view of the concerns a lot of people have right now about inflation”.
The Greens’ co-leader Robert Habeck, is expected to become vice-chancellor and to take on a newly expanded economy and climate change ministry. On the plans for massive public investment, he has claimed the coalition partners “know exactly how we’ll pay for it”.
On domestic issues, underscoring its socially liberal bent, the coalition agreed to allow multiple citizenship and legalize the sale of cannabis for recreational use at licensed shops, as well as reducing the voting age to sixteen.
So what are the implications of the new government for the UK? Following Brexit, this country has ceased to be one of Germany’s top 10 trading partners. As the government refuses to have sensible relations with the EU institutions, bilateral relationships with EU member states, and in particular Germany, are even more important.
However, the Johnson regime needs to pay attention to what the “traffic light” coalition agreement says about its future relationship with the UK. It commits Berlin to “a common European policy towards the United Kingdom” and to “seek close bilateral cooperation within this framework”. But it adds: “We insist on full compliance with the agreements that have been concluded, in particular with regard to the Northern Ireland Protocol and the Good Friday Agreement.” “In the event of non-compliance with the agreed standards and procedures, we are committed to the consistent application of all agreed measures and countermeasures.”
In other words, the new German coalition government is threatening retaliation if the UK Cabinet decides to back-track on the Northern Ireland Protocol – a vital part, as the EU sees it, of the UK/EU Trade and Cooperation agreement signed by Johnson in December, 2020.
The UK government seems unable to understand that the international community expects it to abide by the treaties it signs. It does not like being treated as a “third country” (i.e. a non-EU state) by the EU. The Brexiteers such as Lord Frost consider that the UK deserves privileged treatment. But that is not how the EU works. The new German coalition has other things on its mind, rather than accommodating a UK government it regards as untrustworthy. It will support the EU in conducting that relationship.
As Philip Stephens has pointed out in the Financial Times, the main threat to the UK from Germany in future, is likely to be indifference.
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