The juicy bits of German politics have been playing out behind the curtains at Berlin party headquarters these days.
That is where the Christian Democrats (CDU/CSU) and the Social Democrats (SPD) have been holed up negotiating a coalition agreement, with the national press lying in wait outside. TV channels have been stuck to broadcasting shots of the city’s questionable 1990s architecture, while newspaper reporters have resorted to trading in unfounded rumours.
Unfortunately, the few substantiated bits raise the spectre that Germany’s two largest centrist parties will settle for a cosy, split-the-difference arrangement rather than risking the kind of disruption that might help the country shake off its all-encompassing malaise.
A fallback to the CDU-SPD Grand Coalitions (shortened to ‘GroKo’ in Germany) during the Merkel years is looming large, when managerialism trumped much-needed reforms.
There is, for one, the speed of the negotiations.
The man expected to become the next chancellor, the CDU’s Friedrich Merz, initially wanted a blitz agreement, promising to form a government by Easter. The coalition parties now look likely to blow that deadline, with the new target date reportedly being 7 May.
There’s fears they might blow the content of the deal, too.
Granted, the one-hundred-plus pages of early drafts leaked so far are preliminary, but they indicate that the final product will be a patchwork of measures, short on tangible goals and missing broader visions for serious reforms.
The most glaring failure is the apparent total refusal to tackle one of Germany’s most incapacitating problems: the growing pension bill.
Already Germany’s largest budget item, at nearly a quarter of spending, pension costs are set to balloon as the country ages and the tax-paying labour force shrinks. But not even the remote possibility of an ambitious reform – like a Sweden-style stock-market pension – is contemplated in the draft agreement. Instead, it gets bogged down in tax rebates for moonlighting pensioners and subsidies for retired stay-at-home mothers.
The same can-kicking approach is taken on pressing issues like the net-zero transformation of the economy, the revitalisation of private business, and the reform of Germany’s dysfunctional asylum system.
Now that Merz managed to free up budget space for wider investment by zapping Germany’s strict debt rules, the solution for every tricky problem seems to be throwing gobs of cash at it – even if it’s not clear where it will land.
The agreement abounds with subsidies alongside vague promises of more of all the good stuff (housing, AI, punctual trains, a competent military). Most radical proposals remain caught in bickering between the parties.
That unsatisfactory status quo hasn’t stopped party brass from divvying up cabinet posts. SPD chairman Lars Klingbeil is reportedly eyeing the powerful Finance Ministry, while Merz’s key allies Alexander Dobrindt and Johann Wadephul could take the reins at the interior and foreign ministries.
German business associations have found the provisional outcome of the talks so alarming that 100 of them published a statement on Wednesday in which they decried the lack of ambition in the face of generational challenges, including Trump’s tariff binge and a lingering recession.
Meanwhile, the lead in the polls for Merz’s Christian Democrats ahead of the far-right Alternative for Germany (AfD) has shrunk to just a single point, according to some polls this week. Conservatives are notably disgruntled over Merz’s decision to ditch fiscal restraint and make several concessions to the left.
Merz will now have to show that all that serves a greater good – and that he can tip the balance in favour of actual change when resolving the remaining conflicts with the SPD.
Nothing is set in stone, as the party brass have only just started hammering out the final deal.
But everything hangs in the balance.
Roundup
Tariffs, tariffs, tariffs – European leaders were quick to condemn Donald Trump’s imposition of 20% duties on all EU exports to the US on Thursday but reiterated their plea to reach a negotiated deal with Washington just days before big new tariffs are slated to hit.
Tech – Silicon Valley might feel Europe’s wrath over the tariffs, at least if Paris gets its way. The French government pitched hitting back against digitial services – a key export for the US, the global home of Big Tech – as part of the EU’s retaliation.
Defence – US Secretary of State Marco Rubio put on a brave face at NATO headquarters in Brussels and tried to tamp down European concern that his boss, Donald Trump, might pull out of the alliance, dismissing such fears as “hysteria and hyperbole”.
Minerals – EU officials journeyed down the Silk Roads for a summit in Samarkand in hopes of unlocking some of Central Asia’s resource riches for trade and development at a two-day summit with leaders from the strategically and economically important Central Asian republics.
Across Europe
Hungary – Shortly after Israeli Prime Minister Benjamin Netanyahu’s jet touched down in Budapest, despite an International Criminal Court (ICC) arrest warrant, the Hungarian government moved to become the first EU country to pull out of the ICC.
Ukraine – Kyiv has been lobbying the European Commission hard to extend Ukraine’s temporary trade benefits with the EU, which are set to expire in June. But agricultural products have proved a major sticking point in the talks.
Slovakia – A controversial draft law to crack down on NGOs over alleged political influence and “lobbying” was approved by Prime Minister Robert Fico’s governing coalition on Thursday.
Germany – After Trump’s past suggestions that European LNG customers might buy their way out of tariffs failed to materialise, some in Berlin are debating whether to keep investing further in American LNG as an energy replacement for Russian gas.
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