When The Red Light Turns Green

The so-called soundings between the SPD, Greens, and FDP have been a success and the three parties are ready to start formal coalition talks, subject to a Green elected officials’ conference today and an FDP executive committee meeting tomorrow. They will kick off from a heads-of-agreement paper that Der Tagesspiegel published here.

The content of this twelve-point plan is not particularly surprising especially in the light of this Handelsblatt op-ed, published the day after the election, by economist Jens Sudekum. Sudekum argued first of all that a traffic light coalition was unavoidable because neither the Greens or the SPD nor really anyone else would agree to a government led by Armin Laschet or Friedrich Merz, and given that, the only remaining option with a majority was the traffic light.

The major barrier to it, something everyone has been talking about for months, is the FDP’s insistence on keeping the kinda-sorta balanced budget amendment and no new taxes, and having the finance ministry to make sure they get it. This is both difficult for the SPD’s social policy goals, and maybe even more difficult for the Greens, whose very purpose requires far-reaching changes that must be expressed in terms of infrastructure. The wider, global shift of emphasis in climate policy from cap-and-trade or tax-and-rebate options to infrastructure-based change makes this conflict even more jarring. Further, sheer personal power is at stake – implementing the Greens’ vision would require a powerful ministry with a large discretionary budget to push the projects through, and giving that to the Greens implies that the FDP must get something comparable.

Sudekum pointed out that there was a potential fix. The FDP likes the idea of the pension system investing in assets, like a sovereign wealth fund. This implies capitalizing the fund up-front, and hence the government borrowing money. The party squares the circle by excluding this from the deficit target on the grounds that the state is acquiring an equivalent amount of assets, ones that could be expected to grow, and therefore its net indebtedness hasn’t increased. As sauce for the goose could be sauce for the gander, perhaps the capital programme could be treated the same way? Further, although the FDP had been promising tax cuts all round for businesses, they had also shown willingness to accept more generous capital allowances instead of basic rate cuts.

Yesterday’s document looks a lot like the fix is in. The fund is in there, as are the capital allowances. So is the return to budget balance, although pushed off another year into the future under the emergency pandemic exemption. The Green, or green, investment programme is there, as is a big slug of public housing investment, the €12/hour minimum wage, and sweeping changes to the welfare state. As everyone has already noticed, this pretty much requires a lot of fudge in the financing, with things like new income under the global minimum tax regime, unspecified involvement of private investors, cuts to subsidies, and a crackdown on fraud and error (now there’s an old classic), as well as the expected post-pandemic revival of growth all chipping in.

This piece points out that the document promises to guarantee the necessary investments in climate policy, digital, education, research, and infrastructure, within the framework of the balanced budget amendment, and that this would cover anything from an investment carve-out, providing the lawyers could come up with a form of words to deal with the predictable appeal to Karlsruhe, or just using the whole of the emergency authorisation for 2022-2023 to pre-fund the programme, something which in itself could go as high as €100bn.

Robert Habeck, interestingly, gave an interview in which he said that the talks were more advanced on the financing issue in private than the heads-of-agreement reflected, perhaps a signal that he has a surprise up his sleeve. Perhaps the proposed sovereign wealth fund could even invest in the projects itself?

Irish election resources

The exit poll is out. The widely reported 3 way tie — in first preference votes — between Fianna Fáil (main opposition), Fine Gael (minority government) and Sinn Féin (the ostensible surprise packet in the election).

The next indication of results will be the famous “tally” — an estimate of first preference votes, constituency by constituency, based on skilled observers of the ballots as they are sorted. These people are clearly needed in Iowa (or could have lucrative careers in Las Vegas). Check the website of national broadcaster RTE (and no, that’s not Erdogan’s twitter account) later on Sunday morning for these numbers.

But more than any recent election in Irish history, the action is going to be way down in the count — as lower preference votes are allocated, and the big 3 parties walk a tightrope between too many candidates per constituency and thus splitting votes, and too few to pick up vote reallocations.

At this stage it looks like a pattern seen in other countries — of a quiet late surge back to the governing party (e.g. Austria, Australia) is being replicated in Ireland. On the other hand, much hyped features of last year’s European Parliament election (such as the “green wave”) have gone into remission.

Finally for now, since the main interest overseas will be in the SF surge, here is their manifesto. It has some interesting points of emphasis, and omission.

Merkel’s Diagonal Politics and the Green Revival

The CSU’s horrible autumn goes on. The party is now down to 33% in the polls, and its leaders are deep into the blame game. Bavarian minister-president Markus Söder is blaming “Berlin”, when he is not pretending to be Buzz Lightyear, and when he says it he means party leader and federal interior minister Horst Seehofer, who for his part announced that he is satisfied with his work in the job.

The beneficiary, though, looks to be the Greens. They are now on 18 per cent in Bavaria, overtaking the SPD. In Hessen, where they are in government and where elections are coming up this month, their co-leader and deputy minister-president, Tarek Al-Wazir, has the best personal rating of any politician. Der Tagesspiegel‘s Cordula Eubel puts forward five reasons for this.

The first is quite simply that they are the absolute opposite of the AfD. This is an important and interesting point. Since 2016, I have the impression that the only politicians who have successfully opposed populism are the ones who have chosen full-throated confrontation rather than compromise. Unlike the CDU, CSU, SPD, or the Left party, the Greens have never tried to compromise on migration or Europe.

A while ago I wrote this piece for POLITICO about Merkel’s choice to draw a new dividing line between globalists or Europeans on one side and nationalists or provincial particularists on the other and how it had both disoriented her opponents and put the Greens in the centre of politics. I wanted to situate this in a history of so-called diagonal politics going back to Bismarck, but oddly, the Pol editors chose to keep the modern dance references and cut the ones to Fritz Stern’s Gold and Iron. (The raw version is here.)

Defining the party landscape around this new organizing division has had interesting consequences for the Greens in particular. Where they were once undeniably part of the Left, competing with the SPD, they are now part of the broader European camp and as a result they can now compete with all the parties whose voters they would actually want. This is expressed in practice by the Greens’ willingness to operate in a wide variety of coalitions. Even though the 2017 federal elections were a poor showing, the party is represented in no fewer than nine state governments. An uncharitable reading of this would be that they would sign up with nearly anyone to get into office, but a more positive one would be that one of today’s most important divides is between the wonks and the trolls, and one side of that divide deeply values the willingness to take on responsibility and the capacity to exercise it.

Part of the story here is that the Liberals have vacated the centre and morphed into a populist movement for rich people. This isn’t going too well for them; at the federal level they are around 10 per cent, but in Bavaria and Hessen they are only just scraping over the 5% mark to get any representation at all. Richel, Stauss sums up the problem: the FDP core electorate is in many ways even more conservative than the conservatives, but it’s a tiny and shrinking group, and the party’s efforts to appeal to its conservatism are crassly incoherent with its tragic efforts to seem hip.

But there’s more here than mere centrism. Rather, successful centrism requires an awareness of where the centre actually is, rather than just behaving like either big party with 50% of the intensity. Historically, the party has been contained by a cultural barrier to its right and an economic barrier to its left. The cultural one was defined by its social policy and even more so by its style and tone. A major part of its 1968 heritage was its critique of bourgeois ways in general, while the CDU often seemed to be a positive temple of all things bougie. The problem for the CDU here is first of all that the Greens won the culture wars. Everyone who can afford to lives roughly like that, even if they consume media that endlessly mocks them for doing so. The FDP’s lame efforts at hipstership are a comic homage to this. Tellingly, this is not much different anywhere in the developed world.

The second problem for the CDU and CSU, which arises out of this, is that a lot of critics of the Greens always said their critique of the bourgeoisie was itself rather bourgeois. Wanting a less materialist, more culture-bearing way of life, respectful of children, concerned for the development of personal integrity and full citizenship, seeking a better relationship between women and men – all these things were themes of German intellectual, bildungsbürgerlich culture since the Romantic Era. Like a lot of things people denounce as terribly middle-class, there are good reasons why anyone who can afford to adopts them. The turn-of-the-century life-reform movements would have agreed in spades, and they deeply informed the American counterculture the Greens mined for inspiration. Ironically, in as far as this detracts from their radical pretensions it also lets them speak to values that resonate with a lot of middle-class Germans and especially with the Church.

The economic one was quite simply that it didn’t have much of an offer to workers as such, and occasionally it seemed to think they should be happy if their wages fell because they’d have to sing round the piano rather than buy stuff. Another important point Eubel picks up is that neither of the Green co-leaders has become involved in internal faction fighting. Although they both originate from the so-called realist tendency, they have avoided defining themselves by the fundamentalist side’s hostility, and in fact they have sought unity by adopting a more redistributionist economic and social policy. If this sticks it could be very threatening indeed to the rest of German politics.

Ironically, rather than creating a new docile junior partner for the CDU, Merkel’s redrawing of the lines may have unleashed a powerful competitor to both of the big parties – at least in the West. The next coalition might well be a black/green one, but its terms will be very different than anyone imagined in 2016.

On The Brinkhaus

There is a habit in English-speaking media of trying to force all political developments in Germany into the frame of whether this is the long promised end of Angela Merkel and the rise of the populists, or not. As with anything Merkel, “not” is the way to bet. This week’s election of Ralph Brinkhaus as the CDU and CSU’s joint parliamentary leader, though, is a significant moment.

The parliamentary group leaders – Fraktionsführer – are an important institution in German politics, in British terms combining the roles of chief whip and leader or shadow-leader of the House. As such they are crucial in managing the daily business of politics, organizing the work of the Bundestag, and representing parliament and the chancellorship to each other. It is no accident that they tend to be major personalities. On the conservative side, the office has been held by Helmut Kohl, Wolfgang Schäuble, and of course Angela Merkel. On the side of social democracy you could count Kurt Schumacher and Helmut Schmidt. Spilling one, as the Aussies say, is a big deal.

Volker Kauder, the incumbent, looked like to join that list, having held the job since 2005 as one of Merkel’s closest associates. As ARD reports here as part of a useful profile, it was a considerable surprise that anyone even ran. Not even Brinkhaus’ own regional party would support him openly. Yet he won, by 125 to 112, earning a classically Merkel-ish remark that “in democracy, sometimes you lose, and there’s no point trying to pretty that up”.

It would be traditional here to start talking about refugees, the EU, and the like. It would also be hopelessly wrong. Brinkhaus’ triumph is interesting precisely for what he is not.

He is not a candidate of the Bavarian CSU or an intimate of Horst Seehofer. In fact, Seehofer and the CSU campaigned for Kauder’s election, so it is as much a slap in the face for the CSU leadership as it is for anyone. He is not a southerner, an ex-East German, or a Saxon. Instead he represents his home town, Gütersloh, up in the north-west. He is an economist, a Bosch executive turned tax-adviser, and came to politics through the Roman Catholic youth movement after serving in the cold war Bundeswehr as an anti-tank gunner. This is as perfectly standard a CDU career as it is possible to imagine. He is not a Eurosceptic or a Russophile. His previous political office was as chair of the Bundestag budget committee, in which he had an important role in coping with the Eurozone crisis. Even his Twitter feed, when I last looked, showed him with representatives of the German Chamber of Commerce and the Federation of German Industries, saying that he understood their case for lower taxes but it was in the good times that a budget gets ruined. If you want to feel the sheer spießbürgerlichkeit for yourself, his parliamentary dance card is here and here is a Der Tagesspiegel profile.

One conclusion you could draw here is that this is a non-event. One perfectly normal Christian Democrat is replaced by another. However, the interesting bit is precisely that the challenge came from the perfectly normal, EU-and-NATO Christian Democrats of northern and western Germany, Angela Merkel’s bedrock support. Had it come from ultra-conservatism, Saxony, or Bavaria, you would expect this classical CDU to rally round Merkel, just as it did unanimously against Horst Seehofer back in June. This time, the call is coming from inside the Ludwig-Erhard Haus. This is a bigger threat and one different in kind.

A twist, interestingly, is that journalists at the count reported the CSU members seemed delighted to spill Kauder. This should remind us, again, that Kauder was the candidate of party leader Seehofer, Bavarian minister-president Markus Söder, and the head of the Bavarian caucus in parliament, Alexander Dobrindt. You cannot therefore understand this as a Bavarian rebellion against Merkel. Instead, Brinkhaus seems to have appealed as much to CSU members at odds with Seehofer, watching their poll numbers deteriorate steadily ahead of October 14th’s state election. Not so long ago they were on 50%, but the latest survey puts them down to 35%. As Seehofer is now defined by his failed effort to topple Merkel, you could make a case that Brinkhaus has won partly on the back of outrage at Seehofer’s disloyalty. This Der Tagesspiegel piece makes the interesting point that a week before the vote, Hessen’s Christian Democrats voted out their chief partly because of a clumsy effort he made to support Kauder, and replaced him with a human rights campaigner and vigorous supporter of #refugeeswelcome. The spill was possible precisely because the replacement, Michael Brand, stood for continuity rather than change.

That said, everyone in German politics is now talking succession. The Hessen issue is important, as the state elections there are coming up on the 28th October while Bavaria consumes most of the attention. This excellent blog post points out that state-level elections commonly show dramatic late swings, as most voters only turn their attention to regional politics late in the day. As a result, the conservative-green coalition there might be in trouble, and losing a showpiece statehouse might trigger all sorts of things. By then, though, the CSU might have lost power in Bavaria, an October revolution that would put anything in Hessen into the shade.

Arrr!

Remember the Pirate Party?

Back in September 2011, they boarded the Berlin city-state legislature, winning 8.9 percent of the vote. That put five parties in the legislature and complicated the coalition math. They highlighted the Greens’ generational challenges, put digital issues on leaders’ radar screens, and showed that discontent among Berlin voters was not limited to the eastern parts of the city.

After that breakthrough, they won seats in the state legislatures of Saarland (in March 2012), in Schleswig-Holstein (in May 2012), and in North Rhine-Wesphalia, Germany’s most populous state (also in May 2012). Looking forward to national elections in the fall of 2013, they polled as much as 13%. A fleet of black and orange sails was visible on the horizon.

Then what happened?

Scandals, splits, sinking. They were chronically short on money, early leaders proved unable to grow or govern the organization (sometimes the leaders were unable even to govern themselves), and then some things just got weird. They also had problems with rightist extremists in their ranks.

After their rise in 2012, in 2013 the Pirates just barely cleared 2 percent in Lower Saxony (January), fell below that in Bavaria (July) and hovered near that figure in the national elections in September. In the years that followed, the Pirates sailed away from the state legislatures they had so brazenly boarded in the heady days that followed their Berlin success.

In the national election in September 2017, they polled less than one half of 1 percent.

The tale of the Pirates is unlikely to be instructive for AfD, its leaders, or its voters. It should be. It is very similar to the tale of the Republikaner, which won seats in Baden-Württemburg, Berlin and Bremen. It is similar to the tale of the “Schill Party,” which won nearly 20 percent of the vote in Hamburg in 2001 and entered the legislature as the third strongest party. The NPD and DVU had similar trajectories with lower peaks.

The AfD has done what no party since the Greens has done: win enough votes in a national election to enter the Bundestag. And yet, at their first press conference after the election, one of their most prominent members, Frauke Petry, announced that she would not be part of the party caucus and walked out on live television. It’s unlikely to be the last division.

Dead parties tell their tales, even if no one in the latest sensation is inclined to listen.

Well then.

Looking back at posts from January 2009, I see a mix of hope and serious concern. Country after country was following the US into what has since become known as the Great Recession. It is reckoned by some as the largest global contraction since the 1930s; I’ve only been following such things for about 20 years, so I don’t know for sure (the Asian currency crisis of 1997 might give it a run for its money in terms of the number of people harmed), and Edward, who would likely have known off the top of his head, is no longer with us.

Still, for all that massive economic dislocation was bearing down on the developed world, new leadership in America gave cause for hope. Republican ideas had been tried, and had failed in the sands of Iraq and in the money markets on Wall Street that had turned into casinos where gains were privatized and sufficiently large losses offloaded onto the general public. With the Bush restoration in 2000, that party had claimed that the grown-ups were back in charge. But it was Democrats who did all of the adult things of putting America back together after the economic carnage of 2008, and they even managed to extend America’s promise to people who had been excluded, to take some of the fear out of American health economics, and to give regular folks more of a chance against plutocracy. In foreign policy, Obama’s most famous adage — “Don’t do stupid shit” — illustrates the low bar set by his predecessor, one unlikely to be cleared by his successor.

Here at the outset, the Trump administration (I still can’t believe I have to write that) looks set to do some very stupid shit indeed. Statements from the transition have not been particularly coherent, but they indicate that the incoming administration does not care whether NATO and the European Union continue to exist, and may in fact prefer it if they didn’t. This is foreign policy malpractice on the greatest scale imaginable. NATO and the EU are human institutions, and therefore imperfect, but blithely talking about doing without them indicates that the Trump people have not asked the third great policy question: “Compared to what?”

We’ve seen what Europe is like without institutions, in which Putin-style land grabs and subversion of neighboring governments are the order of the day. Every few months construction crews in Berlin dig up another unexploded bomb that’s a relic of the last time that kind of Europe was in vogue. Let’s just not.

Given that European policy and politics with Trump in the White House are likely to be a Gish gallop of ridiculous idiocy, it will be worth it to me to concentrate on a few things, in the hope that other people will pick up other threads. At the moment, I’m most interested in Kremlin subversion of the upcoming German election, further signs that Putin’s circle is testing Europe’s institutions, conflicts in the Caucasus, and some aspects of Brexit. In my working life, I have been doing a lot of things related to pharma and biotech in recent years, and so at a micro level I am interested in whether the European Medicines Agency stays in London (seems unlikely, post-Brexit) and if not, who will win the competition to host the agency. I’m sure other stuff will attract my attention, but that’s what I know I will be looking at.

Thanks, Obama. I hope we see your like again before too much time has passed.

Pay no attention to the social democrat behind the curtain.

Perhaps we’ve been watching the wrong German politician throughout the whole Greece/Eurogroup drama. Usually, the Vice-Chancellor of Germany is one of those posts that comes with a lot more dignity than it does power, like the US vice-presidency in the pre-Cheney days when it wasn’t worth a pitcher of warm spit. It tends to be given out as a decorative title to a junior coalition partner, rather in the way Nick Clegg was given the title of Deputy Prime Minister, something which has even less basis in British constitutional practice.

But Bernd Hüttemann reminded me of something important on Twitter yesterday, as follows.

Sigmar Gabriel, for it is he, is not just vice-chancellor and SPD leader, but also federal minister of economic affairs, and the minister responsible for government-wide coordination of European policy. The ministry gives details of its role here.

It has to ensure that the German government has a common line-to-take towards the European institutions, to keep the Bundestag informed, and to give directions to the German representatives in COREPER 1. That’s the boring-but-important stuff such as Competition, Energy, Agriculture, etc. It also gives directions jointly with the ministry of foreign affairs to German representatives in the more politically glamorous COREPER 2, including the General Affairs council, Justice & Home, and crucially, ECOFIN. It is the government’s authority on European law. Its officials chair most committees on European issues within the German federal government, including the permanent secretaries’ committee on European affairs, which they lead jointly with the foreign ministry.

The foreign minister is, of course, Gabriel’s fellow Social Democrat, Frank-Walter Steinmeier. This gives him a lot of agenda-setting power and a lot of access to Angela Merkel. He probably has more executive power than Joschka Fischer did as vice-chancellor and foreign minister. Having a bigger gang behind him, and also a European crisis, means he also has more than FDP leaders Westerwelle or Rösler although they had the same ministry.

This is important. In a sense, even decades after reunification, we still see two Germanies. People on the Left tend to swing between admiration for its social democracy, long tenancies, environmental commitment, demonstrative feminism, cycleways, safe-standing terraces at the football, and the like, and utter exasperation with its commitment to European monetarism, bourgeoisity, inflation dread, and tolerance of Bild Zeitung‘s ravings at the Greeks. People on the Right tend to wish they could have a budget surplus, a Bundesbanky monetary policy, and more public churchiness, except when they’re convinced Germany is a terrible warning of the inevitable doom of the welfare state. It wasn’t that long ago.

Wolfgang Schäuble, of course, personifies the hard-money version of Germany. But Germany doesn’t only have a finance ministry. It also has a ministry of economic affairs that has an eye to industrial priorities and real institutional strength, rather like the brief Department of Economic Affairs Harold Wilson set up in the UK back in the 1960s was meant to be. The DEA was intended pretty much as an anti-Treasury, and I think we can read Gabriel’s role at the moment as something similar – a growth-oriented lobby that would structurally lean towards a lower exchange rate, because it represents mostly export-heavy manufacturers and industrial workers.

In practice, a lower effective exchange rate for Germany means keeping the Euro show on the road, complete with Greece. Either leaving the euro, or kicking out the south, would surely cause the rate to rocket upwards with ruinous consequences for Gabriel’s clients. It’s therefore very significant that the export lobby in German politics has managed to get more influence over Germany’s interface with the European institutions. And here’s the man himself:

This might explain an important feature of the agreement the Eurogroup eventually reached. Greece is said to have “capitulated” by accepting the “November 2012 targets”. However, the agreement specifically doesn’t set any fiscal target for the year 2015, and proposes that we meet again in June to negotiate a new program replacing that of November 2012. Therefore, the targets don’t exist for this year, and those for future years are by the by. Perhaps they will influence the talks in June, but this strikes me as a concession without much substance. A bit like making the FDP leader vice-chancellor. And the talks will be heavily influenced by the boring technical stuff Gabriel’s ministry has most power over.

This might also explain why Schäuble seems quite so grumpy these days. Much of the content of policy reaches German officials in Brussels and elsewhere via Gabriel and Steinmeier’s staffs. In a real sense, he only has full and undivided control when ECOFIN (or the Eurogroup, which isn’t explicitly evoked by the ministry’s text) is meeting at ministerial level, and he is physically present. Which puts an interesting light on the whole row about that nonpaper that was supposedly issued after he left the building…

When he isn’t, his main means of influence is either shouting the odds in the media, or else going via Angela Merkel, who is of course free to support him or not. Merkel’s interests are well served by this. She keeps the options open, and avoids having to explicitly back either lobby. At the same time, it rules out either the two social democrats, or else Schäuble plus one of them, ganging up on her to commit Germany to some policy of their own. I would therefore cautiously discount some of Schäuble’s bluster in front of journalists.

Hamburg

It’s probably worth keeping an eye on German elections at the moment. Hamburg voted today, and the results below will update as more results come in, via Der Tagesspiegel. Basically, the SPD won big but will need a coalition partner, probably the Greens, the FDP and the Left had a respectable showing, the AfD version of the far-Right just, just scraped into a western German parliament for the first time, and the CDU had a nightmare, literally their worst result ever.

Click on “Gewinn/Verlust” for the changes in % terms – the CDU lost 5.9%, the AfD picked up 5.8%. Ouch. But most of all, the Non-Voter Party had a great night, picking up 44.5% of the vote.

On that score, I expect the main effect to be “That’s over with now” rather than “Chase the AfD”.

Their Eyes Were Watching Vlad

Occasionally, representatives of Germany’s Left party (Die Linke) will complain about being tagged as the successors to East Germany’s communist party. Well.

As part of the German parliament’s debate about the budget and foreign police, Gregor Gysi, parliamentary leader of Die Linke, spoke out forcefully against further sanctions against Russia. He called them “absolutely counterproductive.” He added that they provoked Russian countermeasures and hurt the economy. Rational policy, in his view, would be to lift the sanctions immediately.

Not to be outdone, Sara Wagenknecht, Gysi’s first deputy, said that economic warfare with Russia was damaging and “playing with fire.” She added that NATO maneuvers and EU sanctions were making the implementation of a ceasefire in Ukraine difficult.

Russia and the Russian government are, of course, utterly blameless in all of these events.

Not coincidentally, the party’s history as recounted on its English-language web site begins in 2007. If I had their background as the unreformed heirs to the Kremlin’s stooges, I’d keep it off the web site, too.

It’s not like this was a surprise

Or, why reading David Remnick is nearly always a good idea:

I spoke with Georgy Kasianov, the head of the Academy of Science’s department of contemporary Ukrainian history and politics, in Kiev. “It’s a war,” he said. “The Russian troops are quite openly out on the streets [in Crimea], capturing public buildings and military outposts. And it’s likely all a part of a larger plan for other places: Odessa, Nikolayev, Kherson. And they’ll use the same technique. Some Russian-speaking citizens will appear, put up a Russian flag, and make appeals that they want help and referendums, and so on.” This is already happening in Donetsk and Kharkov.

“They are doing this like it is a commonplace,” Kasianov went on. “I can’t speak for four million people, but clearly everyone in Kiev is against this. But the Ukrainian leadership is absolutely helpless. The Army is not ready for this. And, after the violence in Kiev, the special forces are disoriented.”

That’s from March 1.