Newsletter German Politics - February 2024

Donnerstag, 8 Februar 2024

Dear friends, colleagues, customers, and clients,

I hope you all had a good start to the new year and feel well prepared for whatever 2024 holds in store.

Contrastingly, the current political situation in Germany is very heated. Important events in 2025, such as the re-election of the German Bundestag (German parliament), are already casting their shadows ahead. Even though the next general election is still over a year away, the ruling traffic-light coalition (SPD / Greens / FDP) is already facing a lot of headwinds for its policies. Constant disputes between members of the SPD, the Greens, and the FDP have cost the coalition a lot of trust among the German populace and their possible voters. Polling numbers for the three parties are currently catastrophic. According to a recent FORSA poll, the SPD would only get 15%, the Greens 14% and the FDP would no longer be represented in the Bundestag with only 4%, due to the 5% hurdle. Overall, the traffic light coalition currently only has 33%. In addition to unpopular political decisions, it seems that the poor interpersonal relations between the traffic light parties are responsible for disenchantment with the three parties. Almost every day, politicians from the governing coalition clash and argue in public, which costs trust among the population. Critical voices give the impression that Germany is currently not being governed at all. These uncertainties are leading to a worrying rise in right-wing populist politics.

The right-wing populist AfD currently stands at 18%. It benefits mostly from dissatisfaction with the parties in the governing coalition. But the largest opposition group, the CDU/CSU, is also benefiting from this, and is growing slowly but steadily, currently standing at 31%. Compared to the highest values achieved by the parliamentary group under former CDU chairwoman and chancellor Angela Merkel (2013: 41.5%), however, there is still some way to go for the conservatives. A first step for the CDU on their way to regain the chancellery will be answering of the question of who will lead the party into the next general election as chancellor candidate. CDU and parliamentary group leader Friedrich Merz is likely to be the parties choice. But with the three minister presidents Hendrik Wüst (NRW), Daniel Günther (SH) and Markus Söder (CSU party leader and Bavaria), he has some serious competitors. He still has many hurdles to overcome, especially as the CDU/CSU must first become the strongest force in order to build a viable government.

Until then, I believe that the question of whether a halved SPD or the heavily battered Greens would be prepared to join acoalition with the CDU/CSU as junior partners must be clarified. The upcoming elections to the European Parliament in June are seen as an indicator of the political mood in Germany. There are also three state elections in eastern German federal states this year. In Thüringen, Sachsen, and Mecklenburg-Vorpommern, where the polls see the AfD in front. And I'd rather not imagine what it would mean if the AfD would form a state government. We must start to expose this party and make good policies in the interests of the citizens.

There is also another party that could cause a sensation. The Sarah Wagenknecht Alliance, which was founded by the former MP from the Left Party Sarah Wagenknecht and former members of this party, is contesting in an election for the first time in the European election. The Sarah Wagenknecht Alliance is a hodgepodge of left and right-wing populists, who are said to have close ties to Russia. Among others the party wants that Germany takes neutral stand concerning the war of aggression of Russia against Ukraine, stops to send weapons and ammunition to support the military of Ukraine, and makes peace with Russia. It is to be expected that the party will receive votes from the dissolving Left Party and the radical right-wing AfD. The FORSA poll puts the party at 5%. From today's perspective, that would be enough to enter the Bundestag. Political scientists see a potential of 11% for the Sarah Wagenknecht Alliance. The European Parliament elections this summer will show how the new party is received by voters.

An important topic in recent times is the uprising of the centre of society against the threats to democracy from the far right outside of the political spectrum. The Federal Republic of Germany is currently experiencing the largest protests since its foundation. Millions of people are taking to the streets across the country to demonstrate for tolerance, diversity, and freedom and against right-wing extremism and the AfD. These demonstrations are a glimmer of hope in the fight for democracy in Germany. However, it will be even more important to mobilize non-voters and drive-up voter turnout to weaken and putt he AfD in its place.

Before the protests against right-wing extremism dominated the political landscape and the headlines, a ruling by the Federal Constitutional Court was the dominant topic for a long time. The federal government passed a budget that violated the constitution. This budget was then declared null and void by the court. The ruling came about because the CDU and CSU had filed a lawsuit against the budget. 60 billion euros that had already been budgeted were now missing. Expenditures that had already been decided were put to the test, because everything that was not absolutely necessarily had to be saved. The result was less investment in infrastructure and energy transition. Savings opportunities were sought everywhere, and important financial projects were suddenly at risk. This included e.g. the Northvolt battery factory in Heide in Schleswig-Holstein. In this case the fundings could be saved. Other money saving plans affected farmers. The aim was to abolish concessions on agricultural diesel and the motor vehicle tax exemption for agricultural vehicles. This should result in total savings of up to 920 million euros. As a consequence, farmers started to protest in public against the German government's plans to cut subsidies granted to them. The new draft budget 2024, which includes these measures, was adopted in the Bundestag on February 2. However, the federal states governed by the CDU have already announced that they will block it in the Bundesrat until the cuts for farmers are reversed.

In addition to the European elections, local elections will be held among others in Brandenburg, Thüringen, Sachsen, and Sachsen-Anhalt on June 9. It is possible that the SPD could experience a debacle there. In this case, I could imagine that there could be an eruption within the party. As a poor result could be seen as a reaction to the policies of the traffic light coalition, the chancellor would be forced to call a vote of confidence (With the vote of confidence in accordance with article 68 of the basic law, the federal chancellor can make sure that his policies are supported by the Bundestag, i.e. that he still has the approval of the majority of MPs.). After a loss of confidence, the federal chancellor would be obliged to dissolve the parliament within 21 days. This would inevitably lead to new elections. These could happen in autumn. A new coalition could then be built before Christmas 2024. In this case, the SPD could save itself again in a so-called grand coalition (CDU/CSU+SPD) led by the CDU and CSU. Inevitably, the opposition leader Friedrich Merz would become the CDU/CSU chancellor candidate and with highest probability the new federal chancellor. He would therefore be spared the question of a candidate, as outlined above. Everyone would be free to go.

As you can see, a lot of things are going differently in German politics at the moment than they actually should. Let us therefore hope that the coming months will turn everything around and that we can continue to count on Germany as a reliable partner in the future.

For now, I wish you all the best, good sailing at all times and always a handful of water under your keel.



Magnus Ehrenberg




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