October 27, 2019
German political centre is melting
There are two connected stories that have been playing out in Germany over the weekend. The first are the elections in the east German state of Thuringia. Something happened there that we feared would happen at some point: for the first time, the extreme parties on the left and the right managed to get a majority between them. Without wishing to over-stretch the parallels, we note this is how the Weimar Republic ended.
Thuringia is the only state in Germany where the Left Party heads a government. It managed to increase its share of the vote to 31%. The AfD, with 23.4%, was the other big winner. What is particularly galling is that the AfD's leader in the state is Bernd Hocke, a man on the far right of the party who has taken part in neo-Nazi marches.
We predicted some time ago that eventually the only way for the German centrist parties - CDU/CSU, SPD, FDP and Greens - to form a government would be through a mega-coalition between all them.
Since the 2017 elections, polls are registering declining vote shares for both CDU/CSU and SPD. They would longer have a majority nationwide. In Thuringia the situation went even further. If you add the seats of CDU, SPD, FDP and Greens, they are short of a majority together. The most likely scenario in Thuringia is for Bodo Ramelow of the Left Party, the current state premier, to form a minority government.
The over-arching story is the continuing meltdown of the political centre. The SPD has a chance to halt this trend. Over the weekend it completed the first round of its own leadership election, with two victorious pairs of candidates, one from the right of the party and one from the Left. The candidates from the right are Olaf Scholz and Klara Geywitz For the SPD. Scholz wants to stick with the grand coalition to its bitter end, and obviously supports his own fiscal policies.
If the members go for the other couple - Saskia Esken und Norbert Walter-Borjans - we would expect the grand coalition to end and the SPD to support fiscal expansion. The SPD membership will have a separate poll on the future of the grand coalition in December as part of a previously-agreed mid-term review. But the two decisions are obviously linked. We would expect to see a swing in one direction or the other.
The outcome is hard to predict. Our hunch is that the SPD's ageing voters tend to favour the status quo. They are not a rebellious lot.
If they surprise us and choose Esken and Walter-Borjans, we would expect to see a consolidation on the Left. This is the only German political scenario we see where a government does not include a CDU chancellor.
And finally, here is a story that encapsulates the SPD's problem more than anything else: the former SPD leader Sigmar Gabriel is about to be appointed chief lobbyist for the car industry. With Gerhard Schröder lobbying for Russian gas the SPD is now clearly the party supporting the industries of the past. The declining car industry and the declining SPD are perfect mirror images.