Despite the resounding victory, Chancellor Merkel faces a politically risky decision that will have far-reaching consequences for the stability of her government and for the German and European economies.
On September 22, Angela Merkel and her Christian Democratic Union (CDU), along with their Bavarian sister party, the Christian Social Union, cemented their dominance in German politics. With 41.5 percent of the vote and 311 seats in the Bundestag (just 5 seats short of an overall majority), the incumbent chancellor led her party to its best electoral result since the reunification of Germany in 1991.
The Chancellor’s current coalition partners are the Free Democrats, a party that advocates free markets, low taxation, and low levels of economic regulation as its policy focuses. They are a natural partner for Merkel’s conservative Christian Democrats and the two parties have governed together since 2009. But the smaller party failed to distinguish themselves during their tenure and collapsed during this election, failing to reach the 5 percent of the overall vote threshold required to enter parliament. As a result of her party’s current complete domination of the right-wing of German politics, Merkel must now look to the left-leaning parties to push her over the 316 seat threshold needed to gain a parliamentary majority.
The primary candidate for coalition formation with Merkel and the CDU is the Social Democrat Party (SDP), the leading center-left party in the country. They previously governed in coalition with Merkel from 2005-2009, and remain the second-biggest party in Germany. Despite a past history of stable joint government, there are economic factors that complicate an easy coalition formation. During the campaign, the SDP advocated a policy of raising taxes on the higher income brackets, a policy which Merkel and her right-wing colleagues have flatly refused. Another bone of contention is the introduction of a national minimum wage, which the chancellor has also refused in favor of a local government approach. These stumbling blocks, combined with the fact that the SDP was largely overshadowed and later eclipsed electorally by Merkel’s popularity and success during their last power-sharing agreement, make the SDP a bit less likely to rush into a grand coalition than in times past.
Should she enter a coalition with the SDP, Angela Merkel would still likely dominate the direction of policy and would get her way the majority of the time. The SDP would likely only be able to temper her austerity-centered policy on European bailouts, push for more European economic integration, and influence some social policies.
The other, less likely option for Merkel’s third governing coalition would be the Greens. The German Greens are a much smaller party than the SDP, having won 68 seats to the SDP’s 192 seats, and would give Merkel a governing majority while having smaller influence on macroeconomic policy. However, the prospect of a CDU-Greens coalition is complicated by the fact that the two parties have sharp differences when it comes to economic and social policies. Their only areas of even subtle agreement are on environmental issues, with both parties supporting increased German use of green energy. Even with these disagreements, the prospect of being in government could entice the Greens to give in on some economic and social issues in order to enter a coalition and advance their environmental agenda. So, although it may be a less likely option due to the Greens’ unpopularity with the CDU membership base, a coalition with the Greens could prove to be the best route for Merkel to dominate the agenda, allowing her to control the economic sphere of government.
If Merkel seeks a coalition with her main rivals, the SDP, she will have to ease her policy of German-imposed fiscal discipline in Europe a bit and allow the SDP to control some minor ministerial positions. Alternatively, she could join with the Greens in an “odd couple” coalition and dominate most economic policymaking while advancing an environmental agenda. Either way Europe and the world will see a German government dominated by Angela Merkel and her distinctly Merkelian fiscally disciplined strategy. The question is, will it be an only slightly softened Merkel government or a green-Merkel government? Europe will be watching.
