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Feb 17, 2017 | 12:17 GMT

Germany: Fault Lines Deepen in the Ruling Coalition

With an eye on Germany's general elections in September, members of the country's ruling coalition are starting to show divergent points of view on key foreign policy issues. In recent weeks, friction between Chancellor Angela Merkel's center-right Christian Democratic Union (CDU) and its center-left partner, the Social Democratic Party (SPD), has become visible on sensitive issues such as military spending and Greece's bailout program. 
 
On Feb. 15, U.S. Defense Secretary Jim Mattis said Washington may "moderate its commitment to the alliance" if NATO members do not spend more on defense. In response, German Defense Minister Ursula Von der Leyen, a member of the CDU, said Berlin should boost its military spending closer to NATO's target of 2 percent of GDP. (Germany currently spends roughly 1.2 percent of its GDP on defense.) But Rainer Arnold, a SPD lawmaker, said the country is already spending enough on defense. From his point of view, German military expenditures have risen sufficiently in absolute terms; the increase is just not reflected in relation to gross domestic product because the German economy is also growing. 
 
Greece's bailout program is also exposing divides within the German government. When Athens and its lenders reached an agreement on Greece's bailout in mid-2015, Berlin promised lawmakers at the Bundestag that the International Monetary Fund would participate in the program. But the IMF has so far refused to participate in the bailout, criticizing its fiscal targets and arguing that Athens should be granted debt relief. This is a non-starter for most German conservatives, who refuse to discuss debt reduction with Athens during an electoral year.
 
German Finance Minister Wolfgang Schaueble (a CDU member) recently said that without IMF participation, Greece's program should be declared null. But SPD officials criticized Schaueble's threats and asked the government to take a less confrontational course with Greece. On Feb. 12, the SPD's Martin Schulz, a candidate for chancellor, warned against speculation of a Greek exit from the eurozone. And on Feb. 16, Labor Minister Andrea Nahles, also from the SPD, said that a so-called Grexit would be "absolutely negligent." At the height of the Greek crisis in 2015, Schaueble suggested Greece could be expelled from the eurozone.
 
The Greek bailout is also generating divisions among the conservatives. On Feb. 15, Manfred Weber, a prominent member of the Christian Social Union (the CDU's sister party in Bavaria) said that IMF participation in the Greek bailout is not crucial. According to Weber, since the IMF wants to grant Greece debt relief, it should not be involved in the bailout. Several CDU members reacted to Weber's statement by insisting that the IMF has to remain involved. Notably, on Feb. 17, Germany's Die Welt newspaper reported that Merkel recently spoke with the IMF Managing Director Christine Lagarde about ways to keep the institution involved.
 
Should the German government abandon its request for IMF participation in the Greek bailout, a short-term agreement with Athens to release the next tranche of rescue funds would become more likely. But without IMF involvement, Greece's prospects of obtaining debt relief would diminish considerably. This would open the door for a political crisis in the country, because the Greek government is using the promise of debt relief to justify the imposition of controversial austerity measures.
 
These divides add an broader layer of intrigue to the German elections. As the vote grows near and as the country's main political parties increasingly try to differentiate from one another in the eyes of voters, the implications may be felt far beyond German borders.
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Germany: Fault Lines Deepen in the Ruling Coalition
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