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April 17, 2019


Why it is far from clear that the grand coalition will survive the year

This is our last briefing before the Easter break. The next briefing will appear on Tuesday, April 23.

After the Easter break the EU will quickly enter into a frantic period of unusually dense political activity. Apart from the European elections, there will be national elections in Spain, Belgium and several other member states. EU leaders will nominate the presidents of three important institutions - European Commission, Council and Central Bank. We fear that the much-deserved Brexit pause will end with a vengeance sooner than we like. The political and economic situation in Italy remains unstable, with the potential for a release after the European elections. And Donald Trump has yet to make his decision on whether to slap tariffs on European car imports. 

Yet, a potentially big issue very few people have on their radar screen right now is the future of the German grand coalition. We don't like to attach probabilities to future outcomes, but the survival chances of the coalition beyond the end of the year must be pretty close to a coin toss.

FAZ offers a very thorough analysis of it this morning. The authors note that Angela Merkel is not getting involved in the European election campaign at all - very much to the concern of the CDU. Is this a sign of fatigue? 

They argue that, in theory, the SPD was always considered most likely to pull the plug on the coalition during the mid-term review, scheduled to take place at a party conference in December. The SPD ministers, all eager to stay in their jobs, will defend their work. But there are forces in the party, not only on the left, who fear a repeat of what happened last time: the SPD got most of what it wanted in the first two years. Encouraged by its early successes the SPD decided to hang on, only to find that the CDU subsequently blocked everything, and won the next election.

However, the authors arrive at the interesting conclusion that the biggest risk factor for an end of the coalition is neither the SPD, nor the CDU or the CSU, but Merkel herself. Since the SPD said it would only stay in the coalition with Merkel personally, not with AKK, it is fairly clear that an early departure by Merkel - for whatever reason - would force a premature end of the coalition. AKK has also set her eyes on a coalition with the Greens and the FDP. Such a coalition could, in theory, come about without elections. There are no technical reasons why the Bundestag would need to be dissolved, as the three parties have a majority. But the mechanism is going to be different. If Merkel resigns, President Frank-Walter Steinmeier will propose AKK has her successor. If the Bundestag withholds support, elections become very probable. The Greens would certainly want to capitalise on their new popularity. And AKK may also want a mandate of her own. 

The article does not discuss in detail why Merkel would want to leave prematurely. Is she simply willing to hand over power as part of an orderly transition? Is she perhaps still angling for the European Council, as has been rumoured from time to time? She may have other plans. 

The one scenario where the SPD could pull the plug would be a disappointing result in the upcoming European elections. If the SPD does badly - say, 15% or less - its leadership may face calls to end the coalition immediately. In that case, we would also expect a debate about the party leadership to resurface.

Our other stories

We also have stories about how the Notre Dame fire has changed the political climate for Emmanuel Macron; on how eurozone firms respond to sagging profits; on what to expect from the Spanish general election; on the modern money theory debate coming in Europe in earnest; and on the Greek parliament debating German war reparations.

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Easter Break

Our briefing on Wednesday, April 17, will be the last one before the Easter break. The next briefing will appear on Tuesday, April 23.

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