Thoughts of Magnus Ehrenberg, Founder & President of
EHRENBERG SØRENSEN Kommunikation about German Politics

An exhausted and bitter coalition

Dear friends, colleagues, customers, and clients,

I hope this newsletter finds you well. In the world of German politics, the current “traffic light coalition” is facing some significant challenges. The coalition, which consists of the Social Democratic Party (SPD), the Green Party, and the Free Democratic Party (FDP), has been in power since December 2021. In the beginning, the coalition called itself a “progress-coalition”, but after the start of Russia’s war in Ukraine, the “traffic light coalition” had to deal with multiple crises non-stop. Due to that tensions have been rising in the coalition in recent months, especially between the Green Party and the FDP on several key issues.

Ever since the start of its governing term, the coalition has been under constant stress, mainly due to Russia’s war on Ukraine and its consequences and the Corona pandemic. This has prevented the government from going ahead with a number of policies the three parties had set out to implement in their coalition treaty that would address important issues such as climate change. Now, in an effort to tackle those problems and make up some of the left behind plans, the government is debating new steps, but finds itself in a state of indecisiveness.
 
One of the main areas of disagreement is climate policy. The Green Party is pushing for more aggressive action on climate change, including stricter emissions targets, cheaper public transport and a faster transition to renewable energy sources. However, the FDP, which has had a string of bad state election results, is blocking most of these plans as it is concerned about the economic costs of such measures and the necessity of them as they believe that the market will solve most problems. The Liberals want to remain “open to all technologies” and for example allow the usage of “e-fuels” for combustion engines, while the Greens want to push forward on climate neutral technologies that are reliable and scalable now. Many experts see the usage of e-fuels for cars as inefficient and too expensive in comparison to electric cars, but the FDP stipulates that e-fuels are needed to turn existing cars that use combustion engines into climate neutral modes of transportation. This disagreement has led to some heated debates within the coalition.

There has also been disagreement in a related field, the transport sector. In this area, the FDP, once again referencing their “technology-openness”, want to build both new rail tracks and new highways. The latter is basically a no-go for the green party as they aim to reduce emissions drastically in the next years.
 
Another area of contention is economic policy. The FDP wants to cut taxes for both individuals and businesses and is against taking on new debt, while the Green Party is more focused on increasing taxes on the wealthy to fund social programs and environmental initiatives. This disagreement has led to some gridlock in the coalition, as neither side is willing to budge on their position. With the proposal and vote for the 2024 budget drawing closer, a compromise remains to be seen, as the Green Minister of Economics and Climate Action Robert Habeck and the Liberal Minister of Finance Christian Lindner exchange heated letters over the budget.
 
An aspect where the Greens and Liberals are united is the defense area. Both parties have expressed vocal support for Ukraine in its fight against Russia. Here, both parties are often pushing the hesitant SPD to supply more, as can be seen with the recent debates over tank deliveries. Furthermore, the “Zeitenwende”, the planned renewal of the German military, announced by chancellor Scholz a year ago, seems to have gotten stuck among inner coalition debates. In a speech to the Bundestag on the second of March, Scholz underlined his and his governments support for Ukraine, defended the supply of weapons and announced support for Germanys defence industry. A concrete plan to speed up the “Zeitenwende” was not announced , which might become into another point of contention among the coalition partners in the future.
 
These several disagreements have led to some concerns about the stability of the coalition. Some analysts are predicting that the coalition could fall apart if the Green Party and the FDP cannot find a way to compromise on these key issues. However, the current state of world politics seems to keep the coalition together. All individuals involved are aware of the fact that a government crisis in Germany would be incredibly dangerous and irresponsible in times of war. Still, there can be no doubt that, if there were no war in Europe, the “traffic light coalition” might already be history.
 
Overall, the situation in German politics is complex and fluid. It remains to be seen how the “traffic light coalition” will navigate the countless challenges facing Germany and whether they will be able to continue governing effectively.

For now I wish you a sunny amnd warm spring.

Yours,

Magnus Ehrenberg