After a stunning victory, Angela Merkel needs to pick a partner for government. She should look to the Greens
Since the financial crisis erupted five years ago, the leaders of most big European countries—Britain, France, Italy, Spain—have been unceremoniously dumped by their voters. Yet on September 22nd Germany’s chancellor, Angela Merkel, won a landslide victory, boosting her Christian Democrats’ share of the vote to its highest since unification in 1990. Such a remarkable win after eight years in office during such a rocky period makes her the undisputed leader not just of Germany but of Europe.
However, her triumph was tarnished because her coalition partner, the Free Democrats, fell short of the 5% threshold needed to get into the Bundestag, for the first time since 1949. That is a shame, since the party is the only voice in German politics to support the economic liberalism—freer markets, supply-side reforms and tax cuts—that this newspaper favours. Sadly, the party’s leaders, including Guido Westerwelle as foreign minister and Philipp Rösler as economics minister, were ineffective in government. It is to be hoped that, under new management, the Free Democrats will reinvent themselves as more convincing proponents of liberalism.
Since Mrs Merkel’s party did not win an absolute majority, she needs to find a new coalition partner in one of the two centre-left parties (see article). The haggling could take many weeks, frustrating those in Europe who yearn for a new impetus from Germany. Her first choice, as when she became chancellor in 2005, will be a grand coalition with the Social Democrats. This is what the voters and most of her party want. Since the centre-left already controls the upper-house Bundesrat, such a deal could produce a strong government.
But the Social Democrats feel they have been burned by Mrs Merkel before. In 2009, after four years of coalition with her, they got their lowest share of the vote since the war. Their price for joining her again will be a high one—including some of the worst bits of their programme, such as a high minimum wage, new taxes on the rich and a rejection of most reforms. Some in the party may yet be tempted to jump ship and join the Greens and the extreme left in a “red-red-green” coalition.
Towards more verdant pastures
Partly to forestall this, Mrs Merkel should try to tempt more sensible figures in the Green party, who are eager for power after eight years in opposition, into a coalition. She has sound tactical reasons to talk to them, as this is the best way both to get the Social Democrats to jettison their barmier policies and to head off any risk of a red-red-green coalition.
A “black-green” coalition would be tricky. When tried in small states such as Hamburg and Saarland, it has not been a success—partly because the Greens’ members and leaders have shifted to the left even of the Social Democrats. But the left-leaning leadership has now resigned, and its replacement is likely to come from the Greens’ Realo wing. Mrs Merkel’s abrupt abandonment of nuclear power has also brought the two parties’ environmental policies closer.
None of this will change Germany’s relations with the rest of Europe. Mrs Merkel will doubtless want to keep Wolfgang Schäuble as finance minister, and she is unlikely to become any less insistent on fiscal discipline and greater competitiveness in the euro zone. Any form of debt mutualisation will remain taboo, even though some Social Democrats and Greens have backed the idea. Mrs Merkel will be keener than ever to protect German taxpayers not just because the voters support it but also because a new anti-euro party, Alternative for Germany, came tantalisingly close to getting into the Bundestag and is likely to do well in next year’s European elections.
But her choice of partner could make a real difference for Germany itself. A grand coalition would not only be scratchy and quarrelsome but also risk boosting support for the extremes. As a government of lowest common denominator, it is likely to lead to policy stasis. This is a worrying prospect. The outlook for economic growth is dismal. Germany’s last bout of reform was ten years ago. It needs to do more to deregulate labour and product markets, to boost competition in services and energy and to raise investment in infrastructure. On balance, Mrs Merkel might get more of that shopping list through with the Greens. It will be the first of many difficult choices that Europe’s de facto leader needs to make.