By Sarah Marsh and Andreas Rinke
BERLIN (Reuters) – Germany’s first three-way coalition in decades was forged in a crisis last year when unity was paramount. Now, as it faces major structural challenges, deep differences between the parties are re-emerging, delaying critical decisions at both national and European levels.
Russia’s invasion of Ukraine and the resulting energy crisis forced Chancellor Olaf Scholz’s Social Democrats (SPD), the Greens and pro-business Free Democrats (FDP) last year to cross traditional red lines and make tough compromises on nuclear power, coal and defense agree.
Now, however, as the urgency to act collectively fades, they remain stuck in their political affairs, which they see as a “payback period,” as one senior government official put it.
The Greens in particular, but also the SPD, want to invest more in the transition to a low-carbon economy. The FDP, on the other hand, is striving for a return to solid public finances after approving special spending of several hundred billion euros in the pandemic and energy crisis.
These divisions prompted FDP leader and finance minister Christian Lindner, who has ruled out tax increases, to postpone the presentation of the 2024 budget last week.
There is a risk such cracks could delay projects needed to modernize Europe’s largest economy, analysts including Carsten Brzeski, chief economist at ING Germany, said.
Around 30 government initiatives are now being held up by the coalition itself, be it speeding up the construction of public infrastructure, reducing bureaucracy in renewable energy projects or banning new oil and gas heating systems.
Julia Reuschenbach, a political scientist at the Freie Universität Berlin, said that the FDP in particular is acting as an “internal opposition to its own government” in order to sharpen its profile after a series of bitter election defeats at regional level.
The German coalition dispute is also affecting the politics of the European Union and is causing irritation among the partners.
The bloc has been forced to postpone a vote originally planned last week on a landmark law to end sales of new CO2-emitting cars in 2035 after last-minute transport minister Volker Wissing of the FDP made a last-minute objection to what appeared to be a long-agreed move.
Germany’s reluctance to send heavy weapons to Ukraine has also angered European and NATO allies over the past year.
Brzeski said that while German governments have learned to deal with the crisis, “they don’t have a good track record of dealing with structural change – and that’s where we are now.”
In response to this criticism, a government spokesman said that Berlin is already grappling with numerous challenges associated with the transition to a carbon-neutral economy.
“These are processes that take time. But the government has already made many decisions in the first year and a half to push the transformation forward. And she will keep doing it.”
FDP IN THE FIGHT FOR LIFE
The German political system that was installed after the Nazi era ensures that power is shared and restricted much more than in peers like Great Britain or France, said Philipp Koeker, a political scientist at the University of Hanover.
For example, proportional representation means that coalition governments are the norm, which can slow down decision-making.
But while some bickering between the partners is hardly uncommon, analysts and government insiders say this coalition’s lack of experience, electoral pressure and diversity contributed to the stalemate.
“Too many issues are just being passed up,” said another senior government source.
In an unusual exchange of letters last month, Lindner and Green Party economics minister Robert Habeck had fallen out over the budget plans, with the latter expressing concern that funds for environmental projects would not be sufficient.
Unlike Habeck or Scholz, Lindner is also party chairman, which puts him in a particularly difficult position as the person responsible for government policy, but also as an appeal to voters. That can require uncomfortable compromises, especially since the FDP is now fighting to survive. She is just 5% in polls, about half of what she won in the 2021 general election and on the cusp of what it takes to enter parliament.
There are also disagreements between the SPD and the Greens – the government, for example, recently decided to shelve plans for a National Security Council because the SPD chancellery and the Green foreign ministry could not agree on who should head it, according to the two government sources.
Scholz, who is often criticized for being too cautious, could theoretically use his right to issue binding guidelines to tell ministers what to do, said Köker from the University of Hanover.
However, highlighting just one minister could result in that minister’s party dropping out of the coalition, he said.
Instead, Scholz chose to downplay differences and ensure each party feels well represented, said Gero Neugebauer, a political scientist at Freie Universität Berlin.
“Above all, he wants to keep the traffic light coalition together, even if the decision-making process takes longer,” he said, using the coalition’s usual designation after the party colors red, green and yellow. “That’s the price.”
(Reporting by Sarah Marsh and Andreas Rinke; Additional reporting by Holger Hansen, Christian Kraemer and Alexander Ratz; Editing by Tomasz Janowski)
