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13 February 2024

Fall and decline of Olaf Scholz 

When Olaf Scholz was elected German chancellor in 2021, the most dire consequences of Angela Merkel's policies were not yet apparent: Germany's geopolitical alliance with Russia and its dependence on Russia gas; a complacent industrial policy; and a woeful under-investments in defence. All these problem at once blew up shortly Scholz took over. 

After a little more than two years in office, the German public appears to have concluded that Scholz in particular is not up to the task. His popularity ratings are the lowest ever recorded by a German chancellor. The three parties of his coalition - the Social Democrats, the Greens, and the liberal FDP - are together polling 32 percent, down 20 points from the elections. With the usual caveat that you should not extrapolate a poll to an election that is still 18 months away, a second term for Scholz looks improbable. 

What has gone wrong? 

For starters, Scholz does not like to talk much, and when he does, he appears to be saying one thing and doing another. The expression of scholzing came up when Scholz' office frustrated weapons deliveries to Ukraine, even though Scholz had committed to them. 

Scholzing backfired. His government spends more money on aid to Ukraine than any other in Europe. Yet, they do not get the credit. What happened is that Scholz was reluctant to provide weapons that could penetrate into Russian territory. Like Scholz, the Germans, are also conflicted over this war. He could have played this straight. People knew when they elected him that he was not a man of charisma and of big ideas. They did not know his aversion to communication. Now, they no longer trust him. 

His unfortunate tendency to squint his eyes and wear a wide grin accentuates that impression. Friedrich Merz, the opposition leader, once talked about a smurf-like grin. The scholzing, the lack of communication, the grinning all add up to an unflattering picture. Frankfurter Allgemeine once summed up this general feeling when it showed a picture with a grinning Scholz in front of a tank: "Would you buy a second-hand tank from this man?" 

They would not have done that to Helmut Schmidt, the chancellor from 1974-1982 on which Scholz seems to model himself. Schmidt also governed at a time of global upheaval, but had qualities Scholz lacks. He was a brilliant orator. People trusted and respected him, including voters that supported the opposition.

We should remember that Scholz won the 2021 campaign not because of anything he did or said, but because his two opponents collapsed. Neither of them ever held high-profile jobs in government. Having started as the candidate least likely to succeed, he ended up as the candidate left standing. His success in 2021 is also why his SPD has not been panicking. Scholz managed to win against the odds in 2021. He may do it again. 

But his party is getting nervous. What will be different next time is that voters have formed an opinion about him, and that he will be up against Merz, chairman of the CDU, and a political heavyweight. 

Bild, Germany's influential tabloid, is running a campaign to replace Scholz with Boris Pistorius, the popular SPD defence minister. A potential moment for an insurrection is September, when three state elections will be held in eastern Germany. But it is far from clear that a change of leader would fix the SPD's problem. Pistorius is popular right now for the same reason Scholz was popular in 2021. People do not know him much. He has only been in national politics for a year. 

Behind the criticism of Scholz' leadership lie deeper problems that are more important the personal qualities of the chancellor: a general disorientation in Germany that accompanies the geopolitical and social change; unhappiness about the coalition's economic policies; and a revolt against all things Green. 

The faltering economy is probably the single worst part. It is not only about the growth numbers. Everybody can see that de-industrialisation is happening. There are, in principle, two ways for a government to address this problem. To reverse de-industrialisation, as the US has been trying. Or to prepare the country for a post-industrial strategy. They are doing neither. They want to cling on to the old industrial model, but dress it up as "green industry". Voters are not that stupid.

Perhaps the single biggest setback for Scholz was the ruling by the German constitutional court last November, declaring the coalition's budget practice in violation of Germany's ultra-strict fiscal rules. In Germany, this is the political equivalent of being caught with your fingers in the till. To circumvent the debt rules, the coalition had shifted funds into an off-budget vehicle, and the court said this was not lawful.

This is not just reputational damage. The ruling had direct effects. It forced the government to adopt an austerity budget in the middle of a recession. The measures included the withdrawal of subsidies for electric cars and agricultural diesel fuels, causing more unhappiness. One unhappy group are the farmers who have to the streets in protest. 

This is Germany's winter of discontent. Scholz' hope is that the next election will come after the next winter. And that things will get better. 

But even if the economy were to recover, I doubt that Scholz and his coalition partners will get the credit. What voters are seeing is the three parties lack a shared consensus on the future direction of the economy. As we are approaching the next elections, those differences will come out in the open much more clearly. 

Herein lies the deeper problem: it is not really Scholz. It is that Germany has become a lot harder to run.

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