September 13, 2021

Europe

GERMANY: Two risks to a Scholz chancellorship

BY Carsten Nickel

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( 3 mins)

Yesterday’s (12 September) main debate of the three chancellor candidates was watched by more than 10mn people and produced few surprises. Finance Minister Olaf Scholz from the Social Democrats (SPD) won the debate in the eyes of 41% the viewers surveyed afterwards, followed by Christian alliance (CDU/CSU) candidate Armin Laschet at 27% and Greens’ contender Annalena Baerbock at 25%. Despite a recent raid at the finance ministry, Scholz neither won nor lost any further support, as 43% of respondents maintain that they would elect him if they could in a direct vote. After Laschet put in a combative performance on Sunday, his respective rating rose from 19% to 24%.

Against this backdrop, and with less than two weeks to go until the elections, a Scholz chancellorship becomes more and more plausible. However, there are two main risks to consider, one looming over the short term and one over the longer term.

In the short term, the biggest danger for Scholz remains that he fails to cobble together a viable coalition. Now that the Greens are no longer leading in the polls, Annalena Baerbock’s party appears to have distanced itself from previous aspirations for a coalition with CDU/CSU. Instead, the TV debate highlighted programmatic commonalities with Scholz and the SPD. But the biggest risk continues to emanate from the center-right Liberals (FDP). The FDP will likely be required as third partner for Scholz to form a government. Programmatically, however, the party would be natural coalition partners for Laschet and his CDU/CSU.

Which factors could tilt the balance? Scholz may bet on the Greens. As junior partners, they may prefer cooperation with the SPD over CDU/CSU, but it is at least questionable whether they would really insist on an SPD chancellor at all cost. Another key factor to watch is the reputational damage FDP leader Christian Lindner might fear if he insists on a coalition with CDU/CSU and the Greens even if Scholz and his SPD clearly beat Laschet by several percentage points on 26 September. On the other hand, an SPD win smaller than the currently predicted 5 percentage points could potentially be used as a justification by Lindner. However, if the Greens were to agree to a coalition with a second-placed CDU/CSU and the FDP, they would likely insist on considerable concessions. In any scenario, the FDP will be central and face challenging trade-offs. Government formation could take some time.

The second risk for Scholz might play out over the medium to longer term, once he has managed to form a government. Scholz has skillfully positioned himself as the continuity candidate to outgoing Chancellor Angela Merkel, but his coalition would likely exclude CDU/CSU. This is a substantial difference with Merkel who was, for most of her 16 years at the chancellery, in the much more comfortable position of leading a grand coalition: Germany’s other major party, the SPD, served as her weakened and loyal coalition partners, rather than attacking from the opposition benches. The latter part, however, may just be the role played by CDU/CSU after the election, perhaps even amid attempts to renew the party’s appeal among more conservative voters. Scholz may have to fight much harder than Merkel to prove his centrist pragmatism to voters. In this endeavor, overall fiscal moderation could be a key element.

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