Chancellor Merkel ended up where most analysts expected after yesterday’s German federal elections: likely to lead a Grand Coalition, but in a surprising way that could have real costs for her. (See my thoughts from last week for the expectations prior to the election and the likely impact on Europe.)
The results combine a great personal triumph with a political dilemma. Her party dominated the election, but she lost her favored coalition partner and will be forced to work with one of the left-wing parties. She would have been much better off if a few of her voters had switched to her former coalition partner, the Free Democratic Party, and brought them up from 4.8% of the vote to the 5.0% minimum required to have any seats in parliament. Instead, this natural right-wing ally of Merkel’s has fallen out of parliament for the first time since the establishment of the Federal Republic.
We are now in for weeks of difficult coalition negotiations with her two potential left-wing partners. The resulting coalition agreement will strongly influence government policy for the next several years, including in regard to the euro crisis. Yet it is difficult to know what will be agreed upon, although it is unlikely there will be any major deviation from existing policy on Europe.
Merkel’s Christian Democratic Union and its Bavarian counterpart, the Christian Social Union, won almost 42% of the vote, far higher than the next biggest party, the Social Democratic Party, at 26%. This is a major personal triumph for Merkel and puts her in line with the fabled Konrad Adenauer and with the redoubtable Helmut Kohl as the only chancellors to serve three terms in the Federal Republic. There is little doubt from polls that this was a particularly personal vote of confidence in Chancellor Merkel that went well beyond support for her party. She is seen as a very deft leader who also shares the voters’ values.
But the interplay of Germany’s fragmented party politics and its constitutional rules creates a peculiar position. Parties of the right gained a majority of the vote in the elections, but two of them fell just short of the 5% threshold to enter parliament, so parties of the left will have the majority of the seats. (In addition to the Free Democrats, the new anti-euro Alternative for Germany also fell just short of 5%. There is also a rather odd left-wing party, the Pirates, which came in under 3%, as well as some much smaller parties, but a large majority of excluded voters are from the right.)
Merkel will almost certainly remain as chancellor, but will need to ally with either the Social Democrats or the Greens. Both parties, however, have seen how badly voters have treated her previous coalition parties. The Social Democrats lost heavily from their initial Grand Coalition with her and the Free Democrats, for their part, just lost two-thirds of their votes after being in coalition with Merkel. Being in coalition with the popular and adept Merkel means gaining partial responsibility for whatever goes wrong, without garnering much of the benefit from what goes right. Further, it requires giving up important party positions and alienating core supporters. All of this will be even more clearly true in the next coalition, given Merkel’s major victory.
Former Brookings Expert
Partner - Oliver Wyman
Yet the Social Democrats will likely end up accepting the poisoned chalice because German voters highly value stability and are unlikely to be happy if the other major party in Germany refuse to participate to form a government. For Germans, having to go back to the polls is the kind of thing that happens in unstable democracies, not to them. The Greens could join the government instead, but they have chosen to position themselves in this election to the left of the Social Democrats for the most part, making it harder to compromise with Merkel. However, the Greens are a bit of an odd mix of a party, and joining the coalition is not out of the question. The other party in parliament, The Left, is much too left wing to be in government with Merkel.
In theory, the three left-wing parties could form a government without Merkel, but this is highly improbable. It would seem a repudiation of Germany’s strong vote for her and of the majority of the voters who choose right-wing parties. Further, The Left is viewed as extremist by many and there is a large ideological gap with the other parties that would make a coalition agreement very difficult to reach and any resulting government very unstable.
So, we have an odd situation and a range of possible results. In particular, a Grand Coalition between the two big parties could be noticeably more left-wing than the prior government because Merkel needs to work very hard to persuade the Social Democrats to join and has to give them key positions in the cabinet. Or, it could plausibly end up essentially being Merkel’s government, with very little input in practice from her coalition partners despite any coalition agreement, given her strong popularity and how close her faction came to an absolute majority on its own. Once the Social Democrats are in government, it will be hard for them to pull out, given German voters’ emphasis on stability. A party that brings down the government could suffer badly in subsequent elections and the German constitution strongly discourages it by including a requirement for a “positive vote of no confidence” meaning that you cannot just destroy a government, you have to name a new one at the same time, although this has been worked around in one exceptional circumstance.
The new coalition government may be somewhat more flexible in responding to pressures from other countries in Europe arising from the euro crisis, since the Social Democrats and Greens are both more amenable to changes in this regard. However, the relative triumph of the new anti-euro party, the Alternative for Germany, in almost entering parliament by crossing the 5% threshold, will create pressure for moves in the other direction.
These are interesting times indeed and it will be intriguing to see how Merkel and the leaders of the other parties maneuver in the weeks ahead.