With the fall of the government led by Olaf Scholz, Germany finds itself in a very complex situation and the prospect is that of a government – composite – and probably with difficultly compatible political souls. The outgoing chancellor also pays for the wrong choices made by Merkel, in particular regarding excessive dependence on Putin for gas supplies. Interview with Ispi’s vice president of research, Antonio Villafranca
17/12/2024
The date is not yet certain. In all likelihood, however, after the fall of the government led by Olaf Scholz Germany will go to the polls on February 23rd. As transpired from the outgoing chancellor’s words to the Bundestag, the situation is rather complex. For the country and – perhaps even more – on a political level. Because, as he explains to Formiche.net Antonio Villafranca vice president of research at ISPI, “the only possible solution to form a government is that of one big coalition with political entities that are difficult to be compatible with each other”.
Let’s take a step back to the origins of this government crisis. The traffic light coalition has never been particularly stable.
No, on the contrary she has always been very quarrelsome. On the other hand, the programmatic platforms of socialists, liberals and greens are very different. In particular, there are major differences between liberals and greens which, ultimately, have proven irreconcilable.
Which, above all, turned out to be the truly insurmountable obstacle?
The ratio between debt and GDP. The socialists, together with the Greens, would have liked to derogate from the limit that sets the parameter at 60% while for the liberals it is something insurmountable. In addition to the profound disagreements that have taken place on the times and methods of the ecological transition.
Without an executive, what will the approach to the Budget be?
It is very likely that the provisional financial year will now open and that the situation will therefore “freeze”: there will be no strategic choices, particularly regarding investments. No real policy decisions in terms of economic policy.
This is a problem not only for Germany.
Exactly. This situation of “stalemate” and lack of economic perspective is also a problem for our national production chains. Just think about what is happening in the automotive sector. The prospect of Germany remaining in this situation of economic stagnation is not at all positive for Europe.
What are the most relevant passages of Scholz’s speech in parliament?
Beyond the aspects more linked to the dynamics of internal political conflict, the chancellor has repeatedly highlighted the need for investments for Germany. Hence the need to overcome – from his perspective – the 60% threshold in the debt-to-GDP ratio. The references to investing skills, in my opinion, are the most relevant. It must be said, however, that Germany’s problems do not depend solely on Scholz.
A legacy from previous governments?
Quite significant strategic errors were committed by previous executives which led to a long wave that overwhelmed Germany and brought it to the current situation. I am referring in particular to two themes. The first is linked to the German choice of having opted to depend almost exclusively on Russia for gas supplies. Moreover, Merkel signed the agreement for the doubling of the Nord Stream gas pipeline in 2015. That is, the year following the aggression of Crimea by Putin. Therefore, there were already less than reassuring signs on this plan.
And the other mistake?
It is that of having set the growth of the German economy in a completely unbalanced manner towards exports. An error of evaluation, however strongly interconnected with the first, which worked in a geopolitical context of stability but which showed all its limits in an international context in great turmoil such as the one in which we have found ourselves for several months now.
At this point, what political solutions are on the horizon?
It depends on a series of factors, starting from the electoral campaigns that will be conducted. This being the case, the CDU is estimated at around 30%, the SPD at 14%, the Liberals at more or less 4% (with the risk of not exceeding the threshold), the Greens more or less on a par with the socialists and AfD around 20%. Given that Merz he has always said that at a federal level he would never make agreements with Afd, the only possible prospect is that of a broad coalition between Christian Democrats and Social Democrats. Although, according to the numbers, it may not be enough. At that point, the field should be broadened further.
And wide shots don’t always work.
The hypothesis of expanding the coalition towards liberating them could make the Social Democrats alter. On the other hand, an outstretched hand to the Greens could create quite a bit of friction among the Christian Democrats. In short, the situation is very complex indeed.
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