How Merkel’s Ex-Partners May Get Her Out of Limbo: - Bloomberg

How Merkel’s Ex-Partners May Get Her Out of Limbo:

By Rainer Buergin

November 28, 2017

Germany has been an oasis of political stability in a fractious Europe since Angela Merkel became chancellor in 2005. Her failure to form a coalition government, after a month of talks, raised concerns in Germany and throughout the European Union, which is already grappling with risks posed by Brexit. Now that the Social Democrats have opened the door for a “grand coalition” -- the term for a German government formed by the two parties with the most seats in parliament -- chances have increased that a long stretch of uncertainty can be avoided.

1. How did Merkel get into this pickle in the first place?

The surge of the anti-immigration Alternative for Germany party, which became the third-largest force in the Bundestag after winning 12.6 percent of the vote in September’s election, narrowed Merkel’s options to form a government. (Because of Germany’s parliamentary system, it’s next to impossible for one party to win an absolute majority, so coalitions are the norm.) Merkel’s conservative bloc -- which comprises the Christian Democratic Union and its Bavarian ally, the Christian Social Union -- held exploratory talks with the pro-business Free Democrats and the environmentalist Greens. Those talks broke down on Nov. 19, when the Free Democrats pulled out over disagreements on immigration, tax cuts and EU policy. Even Merkel, once dubbed “the queen of the backrooms,” couldn’t bridge them.

2. Where does that leave Merkel?

While she could still head a minority government or hold out for new elections, she wants a coalition with a majority in the Bundestag. That pushes her into the arms of the Social Democrats, or SPD, her preferred coalition partner from the get-go and a party she shared power with during eight of her 12 years as chancellor. But the left-leaning SPD just endured its worst election result since World War II, prompting leader Martin Schulz to rule out a re-run of that grand coalition. Under pressure to secure a stable government, Schulz is now indicating he could change his mind. He’s agreed to a meeting with Merkel that will be hosted by President Frank-Walter Steinmeier. Merkel’s challenge will be allowing Schulz a face-saving U-turn on his pledge while at the same time safeguarding the interests of her Christian Democrat-led bloc.

3. Could there be another grand coalition?

That’s the way things are looking. A majority government would provide the political stability to tackle a myriad of issues facing the country and its European allies. But the Social Democratic Party, or SPD, is split between conservatives arguing for another grand coalition and left-leaning members who want to be in the opposition. While SPD leaders are no longer ruling out a grand coalition, Merkel would have to offer something -- possibly in the area of social policy and support for Europe -- that could win over the party’s skeptical rank-and-file. Merkel also needs to convince the SPD that the alternative to a coalition deal could be even worse: New elections might lead to poorer results, while a minority government could mean the Social Democrats end up supporting the policies of Merkel’s bloc without having much say in the process.

4. What if the Social Democrats turn Merkel down?

She could decide to go it alone. That would mean filling all ministerial posts with members of her bloc and relying on shifting alliances with other parties to get bills through. She could also try to partner with the Greens, but that would still be a minority government which would need support from the SPD or the Free Democrats to pass legislation. The problem for all German parties is that, unlike elsewhere in Europe, this has never been tested. And the current environment doesn’t lend itself to trial and error.

5. Can she do anything else?

Not really. Reviving efforts to form an alliance with the Free Democrats and the Greens looks doomed after Free Democrat leader Christian Lindner cited a lack of trust, and not just disagreement over policies, as a major reason why the talks broke down. There’s also no incentive for Merkel to consider a Social Democrat fringe proposal to bring the Greens into a super-sized coalition. A strong left-leaning counterweight to Merkel’s bloc within a ruling coalition isn’t anything the conservatives in her party would support.

6. What happens next?

Steinmeier, a Social Democrat who has urged all parties to rethink their positions to avoid new elections, will meet Merkel and Schulz for talks on Thursday to sound out chances for an alliance. But Schulz isn’t going to be wooed easily after calling for the SPD to take an opposition role. He wants members to sign off on any proposals, so won’t commit to anything before a Dec. 7-9 SPD party convention at the earliest and could take until early 2018 before a new government is formed.

7. Could there be new elections?

It would be up to Steinmeier to call them once all attempts to form a majority government have failed and if the alternative of a minority-led government is deemed too unstable. Most recent polls suggest growing support for Merkel’s bloc and the SPD as voters increasingly favor a re-run of the grand coalition. Failure to agree could reverse those gains and lead to losses in any new elections, which would probably happen next spring. Merkel would govern as a caretaker until then.

8. Would that be the end for Merkel?

The former East German physicist, whose rise to the top began with the fall of the Berlin Wall 28 years ago, has made a career of defying expectations and making surprise shifts, including Germany’s exit from nuclear power after the Fukushima reactor disaster in Japan. But the strong showing of Alternative for Germany, which drew many voters from Merkel’s conservative bloc and could benefit from the other parties’ inability to form a government, has clearly diminished her standing as the country’s quietly dominating political force.