Germany's elections concluded Sept. 27 with incumbent Chancellor Angela Merkel's Christian Democratic Union (CDU) — in partnership with the Bavarian-based Christian Social Union (CSU) — winning 33.8 percent of the votes. Her likely coalition partner, the Free Democratic Party (FDP), received 14.6 percent of the votes, giving the potential center-right coalition 332 seats out of a total 622 in Germany's lower house, the Bundestag. Merkel's four-year "Grand Coalition" partner, the center-left Social Democratic Party (SPD), received only 23 percent of the vote, which will result in 146 seats, a 76-seat loss from the 2005 election. While Merkel received her wish of having the chance to form a government coalition with the free-market FDP, the strong performance by the FDP will make coalition talks more difficult and demanding than Merkel had hoped. The FDP has indicated that talks will be challenging; its leader Guido Westerwelle said, "Be assured that we want to push through, step by step, everything that we promised voters." Merkel's CDU did not perform as expected, picking up only 13 additional seats compared to the last electoral performance (judging from preliminary results). In fact, both the CDU and the SPD (Germany's traditional two main parties) performed poorly as voters punished the performance of the "Grand Coalition" (the CDU/CSU-SPD government) amid the economic crisis and dissatisfaction with German participation in the war in Afghanistan. The SPD and CDU fielded their worst results in the last 50 years, while all the minor parties boosted their seat counts, with the FDP recording its best-ever electoral result and with Die Linke taking left-wing votes from the SPD to receive 11.9 percent of the vote and 76 seats.
Now the task is for Merkel's CDU and Westerwelle's FDP to sit down and try to hash out a coalition agreement that would rule Germany for the next four years. German coalition building always takes time because coalition partners need to establish policies that will govern the coalition before forming the government. To hash out their previous government following September 2005 elections
, the CDU and SPD took a month simply to agree to form a coalition
and then only officially concluded the agreement in November 2005
after over two months of hard-nosed negotiations. However, once the coalition sets its policy priorities, the subsequent agreement allowed the "Grand Coalition" of two ideologically opposed parties to last its full term — an impressive feat. The FDP has been in various German coalition governments for 42 of the last 60 years. Before the emergence of the Green Party as a serious partner (which allowed SPD's Gerhard Schroeder to rule in a SPD-Green coalition between 1998 and 2005), the two main parties in Germany always had a choice of either forming a Grand Coalition with each other (as during a stretch in 1966-1969 and the latest 2005-2009 period), which was always the last option, or forming a coalition with the FDP. This means that FDP has a long track record of being in government and is not going to be satisfied with just returning to the Cabinet. Despite its absence from government for the last 11 years, it will be encouraged by its best electoral showing to hold out for the best deal possible. This time around, the strong performance by the FDP makes them a demanding coalition partner. The FDP will demand the inclusion of its electoral promises and platform in the government program. This means that the FDP's emphasis on simplifying the tax code as well as cutting taxes will be not something the party will easily compromise. The FDP has said that it is in no hurry to conclude the coalition negotiations and that it will push the CDU as seriously as the SPD did in the last round of coalition talks — and, according to some party officials, the FDP could push the CDU even further. In fact, the FDP could make the same argument, as Schroeder did in 2005, that because of the CDU/CSU partnership, the FDP's contribution to the coalition should take precedent over that of the CSU. And considering the CSU's latest disastrous performance in Bavaria
(where it does not face competition from conservative ally CDU), the FDP's case is strong. Merkel, however, has already said that she will not accommodate all of the FDP's demands, stating that she will be a "chancellor of all Germans." For Merkel, significant tax cuts are a difficult proposition because it will mean cutting government spending across the board in the midst of the recession. With the economic crisis threatening to linger through 2010, especially as government stimulus programs expire, Berlin may need to expand spending well into next year, and that would mean either more deficit spending or more taxes — issues anathema to the FDP. Furthermore, both Merkel's CDU and the SPD have courted pensioners throughout the elections, and so Merkel is unlikely to look for serious spending cuts in social programs. Additionally, it is not clear how the FDP and the CDU/CSU will work together on curbing the financial crisis. Merkel has steered the CDU toward intervention in the economy and away from the purely free-market model of economic leadership — in sharp contrast to the free-market-oriented FDP. Her auto-scrapping scheme that encouraged demand for new automobiles cost the government $7.4 billion, but was so successful in stimulating demand that the United States, the United Kingdom and France later copied it. Furthermore, the reduced shift program managed to prevent unemployment from getting out of hand in Germany by using government subsidies to pay workers whose hours were cut by employers trying to reduce labor costs. The FDP is likely to be somewhat flexible on government spending in light of the economic crisis. However, it will give the CDU/CSU a push on lavish spending that the SPD actively encouraged. The FDP's performance gives them a strong negotiating position, particularly because it can argue that it is precisely the Grand Coalition's performance on economic issues that has given them an electoral boost. For the FDP, another four years in opposition while the two main parties lose their core supporters due to Grand Coalition compromises would not necessarily be a bad strategy. But there is another question as well. Traditionally, the FDP has been concerned only with economic issues: It is a single-issue party whose pro-business platform is highly palatable in Germany (which is why it is so easy for the SPD and CDU to form coalitions with it). Considering the small party's strong showing relative to its historical performance, however, Westerwelle may be looking to cast a wider net. This will put Merkel under pressure to compromise on more than just her domestic politics and economics.