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Nov 20, 2017 | 19:51 GMT

6 mins read

When a Pillar of European Stability Crumbles

Germany's role as the beacon of political stability and predictability in Europe is now in doubt. Negotiations to form a government collapsed Nov. 19 after the pro-business Free Democratic Party (FDP) left the coalition talks, opening a period of prolonged political uncertainty in the process.
(ODD ANDERSEN/AFP/Getty Images)
Highlights

  • Negotiations to form a German government collapsed Nov. 19, opening a period of political uncertainty as leaders try to form a minority government or even seek new general elections.
  • Prolonged political uncertainty in Germany will complicate France's plans for eurozone reforms and delay discussions about financial and institutional reforms for months.
  • The situation in Germany could also delay negotiations about the United Kingdom’s future ties with the European Union.

Germany's role as the beacon of political stability and predictability in Europe is now in doubt. Negotiations to form a government collapsed Nov. 19 after the pro-business Free Democratic Party (FDP) left coalition talks, opening a period of prolonged political uncertainty. For weeks, the FDP, German Chancellor Angela Merkel's conservative Christian Democratic Union (CDU), its Bavarian sister party the Christian Social Union (CSU) and the environmentalist Green party have negotiated over controversial issues such as migration, the environment, and taxes to avoid this scenario. Now, German parties and German President Frank-Walter Steinmeier must decide what to do next. The rest of Europe will be watching as well, waiting for a new government to be appointed in Berlin before it can resume talks about the future of the European Union.

Germany Is Divided

Germany's political melee is a consequence of inconclusive Sept. 24 general elections, which produced a fragmented parliament. Germany's biggest parties, the CDU and the center-left Social Democratic Party (SDP), lost support to smaller parties, including the FDP, the Greens, the anti-immigration Alternative for Germany (AfD) party and the far-left The Left. Weaker support for the CDU and the SPD, which had ruled Germany in a grand coalition for years, can be partly attributed to voter exhaustion, but the refugee crisis factored as well. Merkel's decision to open Germany's borders to hundreds of thousands of Syrian asylum seekers in 2015 caused concern among some of the German electorate. It helped spur the AfD's strong election performance, and it was one of the reasons coalition talks collapsed: The parties simply could not agree on Germany's future refugee policy. The CSU and the FDP wanted to introduce an annual cap on asylum seekers and make family reunification harder for refugees to prevent additional migrants from entering the country. The Greens and some of the CDU opposed the proposal. Even though the number of refugees entering Europe has since declined, the topic continues to shape German politics.

In the coming days, three scenarios are possible. First, the CDU could seek another alliance with the SPD. The SPD rejected that option on Nov. 20, because it wants to spend some time in the opposition to become more attractive for voters in the future. Still, the prospect of prolonged political uncertainty could make the party change its mind, though it seems unlikely.

The second scenario would involve the formation of a minority government. Merkel's administration would require support from opposition parties on a case-by-case basis to pass legislation. But Germany has never had a minority government before, and Merkel said on Nov. 20 that this is not her preferred option. Notably, it would open the door for potential parliamentary cooperation with far-right lawmakers from the AfD to pass legislation.

The third scenario would be for the German president to dissolve the lower chamber of parliament, the Bundestag, and hold new elections. But before the Bundestag could be dissolved, lawmakers would have to try to appoint a new chancellor, a process that would take up to three weeks. Afterward, Steinmeier would be able to call new elections to take place within 60 days, meaning snap elections could not be held before early March. The problem is that opinion polls show that new elections would produce a similarly fragmented Bundestag, once again leading to multi-party coalition talks. On Nov. 20, Steinmeier spoke against new elections and said that in the coming days he would hold talks with all parties in the German parliament to find a possible government.

Europe Is Watching

The rest of Europe was waiting for a new German government to coalesce before making crucial decisions. The collapse of coalition talks will extend that wait. EU member states were expected to discuss issues such as eurozone reform and immigration at the EU summit on Dec. 14-15, but with Germany under a caretaker government, the summit won't be as decisive as originally thought.

It's a particularly disappointing situation for France. In recent weeks, the French government made several proposals to reform the eurozone, including to create a separate budget for the currency area and to complete the banking union. A German minority government would hurt Paris' agenda because Berlin would have to negotiate every French proposal with the opposition. In some cases, Berlin could even use the situation as an excuse to oppose French ideas altogether. If early elections are called, Germany will refuse to commit itself to any meaningful reforms to the eurozone until after the vote. And even then, lengthy coalition talks would delay the beginning of negotiations with France until at least mid-2018. This next government in Berlin could include the CDU, the SPD or the Greens, which would support EU integration. But a new administration including the FDP would be more Euroskeptical. Moreover, if Merkel isn't the candidate for the chancellery in the elections, the CDU could also move toward more Euroskeptical positions, further complicating France's plans. Another risk facing Paris is that, as German coalition talks linger, momentum for reform at the EU level could be lost.

But France has an opportunity as well. With Berlin focusing on domestic issues, the French government could intensify its lobbying efforts in Europe to gain support for its reform proposals. Though Paris could try to fill the power vacuum in Europe left by Germany, a French diplomatic push probably won't be enough to appease Northern Europe about eurozone reforms.

To a lesser extent, Germany's domestic troubles could affect the Brexit process, too. A special team appointed by the European Union is conducting much of the Brexit talks. These negotiations will continue regardless of what happens in Berlin. But when it becomes decision time, Germany's uncertain political situation could delay an EU decision, such as whether to start negotiations about the United Kingdom's future ties with the bloc. After all, it would be months before a new German government is appointed, and the United Kingdom has to leave the European Union in March 2019. Timing will be crucial.

Germany's general election in September exposed an increasingly divided electorate. The country's largest parties gave ground to emerging forces on the left and right. Germany could join the United Kingdom in being led by a fragile minority government, or emulate Spain and hold two general elections within a year. Either way, one of the pillars of European stability is not looking so stable anymore.

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