Two months after Germany’s federal election, and as expected, the three parties which form the “traffic light” coalition agreed upon the terms of their cooperation. The Greens, Liberals and Social Democrats, branded green, yellow and red, respectively, will form the next federal administration, headed by Olaf Scholz, team red’s candidate for Chancellor. While there are few surprises in the allocation of ministries, some significant changes are coming down the track. What this means for policy shifts in the main departments of the administration is explored below.
Olaf Scholz’s centre-left SPD won 206 of the 735 seats up for grabs in September’s election, making them the strongest party, with 25.7% of the vote. This came alongside a woeful performance from their main rivals on the centre-right (CDU), the continued ascendance of the Greens, and bounce-back of the FDP (Liberals). Scholz converted his interim position as Chancellor-elect become Europe’s most powerful politician on December 8 when MPs in the Bundestag approved his coalition government, ending 16 years of Merkel rule.
Early signs of changes in policy direction can be found in the coalition contract – the legalisation of recreational cannabis, lowering the voting age to 16, an 80% share of renewables in electricity production by the end of the decade, and the relaxation of citizenship laws stand out. The continued but redoubled effort to digitise Germany’s bureaucracy and education system also form part of the headline plans. And in a country where regional representation is seen as important, this is also the first post-war cabinet without a ministry for a politician from the large and economically significant southern state of Bavaria.
However, there is also plenty of broader continuity: In foreign policy, Scholz stands behind the EU and other western alliances like NATO. Despite beginning his political career further on the left of the political spectrum, he is deemed business friendly, having presided over the radical labour market reforms of the Schröder government two decades ago. His cabinet has been confirmed and three noteworthy figures are analysed below.
Robert Habeck
Set to lead a new ‘super ministry’, whose remit is to implement policies relating to climate change and economic transformation, Habeck is well-known in Germany as co-leader of the Green Party alongside Annalena Baerbock (who ran against Scholz in the general election). Initially gunning for the coveted position of finance minister, he will likely seek more expenditure to realise ambitious climate targets than is palatable for Christian Lindner.
Christian Lindner
As previously addressed, Lindner, leader of the FDP, is traditionally a fiscal conservative. He heads a department previously run by Scholz (who is situated on the centre-left of the spectrum). During coalition negotiations the FDP were able to include the reinstatement of the ‘debt brake’ from 2023, which had previously been abandoned to allow for pandemic-related stimulus. As such, a change in direction is to be expected, but nothing too hair-raising as the institution itself has great influence. As Lindner has said himself, he will be finance minister of Germany, rather than of the FDP.
Annalena Baerbock
Heading a ministry renowned for its relentless racking up of airmiles and press-facing appearances, Baerbock will need to reconcile her views on China and Russia with Germany’s economic and energy security. Having endorsed a tougher stance on ‘adversaries’ who happen to be an integral trading partner and major gas supplier, it remains to be seen what will materialise in terms of policy change. This has implications for Germany’s economic outlook and the supply of energy to the wider EU. The Biden administration has previously signalled its opposition to the controversial Nord Stream 2 pipeline, but now sees its mothballing as a potential threat in a deterrence package of measures in the defence of Ukrainian sovereignty, should Russian troops ever officially cross the border.
The Cabinet’s Conflict Zones
Despite the broader continuity in foreign relations, it is clear that Baerbock’s position vis-à-vis China and Russia holds the potential for some difficult conversations. Important foreign affairs were increasingly handled by Merkel during her chancellorship, and this will not change under Scholz, as leaders such as Xi and Putin will continue to want to speak with the man at the top. This is exemplified by the absence of Germany in the group of countries diplomatically boycotting the Chinese Winter Olympics, and Scholz urging “caution” before drastic action is taken.
In terms of EU fiscal policy, the coalition represents both change and continuity, with the FDP endorsing a predictably more frugal position in terms of debt. This puts Lindner’s party at odds with the Greens’ manifesto pledge to realise ambitious European climate targets, which need financing. It is the southern European states, such as Italy, which will bear the brunt of any stricter adherence to the Stability and Growth Pact.
But with the most recent wave of coronavirus infections sweeping through the republic, the new Chancellor will have to demonstrate his aptitude at crisis management. Branded as a safe pair of hands by many analysts, his ability to bridge the divides in his coalition government will nevertheless be put to the test once the dust settles.
