Kuhhandel Is Go!

Probably best to start with the broccoli. Manager magazine reckons the fix is in, and the circle between FDP spießigkeit and Green ambitions is to be squared by hugely increasing the scope of the German government’s development bank KfW’s balance sheet. This organization is owned by the government but is arms-length enough to be “Maastrichtkonform”, although its quite explicit state guarantee means it can raise funds at a hair over bund rates. Of course if you’re genuinely opposed to public debts or state intervention in the economy, this sort of deal-structure trick shouldn’t make any difference, but as it turns out, the letter of the Stability and Growth Pact accounting framework is what the FDP chooses to take its stand on. In that light, this comment of Christian Lindner’s is positively hilarious:

“Dafür braucht man nicht einen Euro höhere Schulden, nicht einen Euro höhere Steuern, sondern es ist nur ein unternehmerisches Agieren des Staates, um Dinge möglich zu machen.”

Not a euro more debt, not a euro more tax, but an enterpreneurial intervention by the state to make things happen. Suddenly the FDP chief sounds like Mariana Mazzucatto has taken over his brain. What are they putting in that delicious fudge? Manager goes on to note that the finance ministry under Scholz has been quietly working on plans to make much more use of the KfW’s balance sheet for some time, and that although the Greens would prefer to amend the constitution and get rid of the balanced budget clause (so-called “debt brake”) they’re also cool with the KfW solution. In fact, their party foundation wonks have done the full Blue Peter “Here’s one I made earlier!”, pulling a proposal they previously worked up out of the oven. And the SPD, for its part, got none other than Jens Sudekum to take a look – for it is he.

Annalena Baerbock makes an excellent fist of selling the plan here, saying that any business would borrow money to replace a failing machine tool, while the Green parliamentary leader notes that the KfW is not the only arms-length capital budget available – there’s also Deutsche Bahn’s own budget and, rather oddly for a Green unless he’s thinking of some truly spicy financial trickery, the Autobahn company. 22 coalition working groups are in place and I note that Kevin Kühnert has been catapulted into real power, as he is chairing the one on construction projects and housing.

Bada bing, bada boom, even if Adam Tooze points out that rather as with German unity, there are both internal and external aspects to the problem. The KfW might be able to deliver enough fudge to fix the internal ones, but a FDP finance minister is still a worrying proposition for the rest of Europe via his role in ECOFIN and the Eurogroup.

Whether it happens like that or not comes down to the horse-trading – or cattle-dealing, to use the German simile – over jobs in the coalition. With a financial fix in place, this can now get going in deadly earnest.

Albert Funk says that there are certain stylized facts about German coalitions. For example, the Finance and Economic Affairs portfolios don’t usually end up in the hands of the same party – this policy area is too big and too important for a coalition partner to accept being shut out completely, so it has to be split up. On the other hand, the party that gets the Chancellor’s office usually also takes the keys of state power, Interior and Defence, while the other party usually gets Foreign Affairs, although the International Development job is often traded back. When the CDU/CSU is in government, this often means that it goes to the CSU as a way of giving them a share of the diplomatic limelight. Crucially, though, there’s no way of splitting up Finance itself. He argues that if the FDP and the Greens both want to make Finance a veto issue, the SPD could pull its own veto, keep it, and give the Greens an Environment++ super-ministry, with the FDP getting a souped up Economic Affairs++ with special responsibility for the digital agenda, while the Greens also get Foreign Affairs and the FDP – interestingly – Interior, which they might like both for civil libertarian reasons and because it has a lot of power over the civil service.

It’s an idea, but so far the really spicy cattle-dealing has been over the dignified parts of the constitution rather than the executive ministries, things like the speaker of parliament and the federal presidency.

The current president, the SPD’s Frank-Walter Steinmeier, would like to be elected for another term. Meanwhile, his party would also like to elect one of its own as speaker to replace Wolfgang Schäuble. It’s important to note here that the speakership has power over what happens in parliament while the presidency doesn’t really, so the SPD will care more about the speaker than the president, even though it obviously likes owning the formally highest office in the state. The SPD has a candidate, too, its parliamentary leader Rolf Mützenich, but if he was to get the speakership the three highest offices would all be held by men. But there’s a problem – the FDP wants to re-elect Steinmeier, and if the presidency became open, the Greens wouldn’t mind having a crack at it, as they are well aware that they’re the only respectable party never to hold it, that their colleagues in Austria got Alexander van der Bellen elected, and it wasn’t that long ago that they weren’t considered respectable. Also, they have a surplus of dignitaries for the likely availability of coalition ministries that they need to get rid of.

After various thuds and screams from the parliamentary offices, the SPD faction chose a woman instead, Bärbel Bas, which would make it possible for Steinmeier to run again, but this has knock-on effects as the Greens are still, somewhat uncharacteristically, in the cattle market, Mützenich now needs to be placed, and so on and so forth. Meanwhile, the CDU is struggling to place its sudden glut of hasbeens in suitably dignified jobs, as it’s now been reduced to filling jobs like deputy speaker.

It’s all a bit gamey but, on the other hand, it’s an absolute model of democracy compared to yet another round of byzantine intrigue, gross corruption, and authoritarian scheming in Austria. The two political cultures are different worlds.

This entry was posted in A Fistful Of Euros, Germany by Alex Harrowell. Bookmark the permalink.

About Alex Harrowell

Alex Harrowell is a research analyst for a really large consulting firm on AI and semiconductors. His age is immaterial, especially as he can't be bothered to update this bio regularly. He's from Yorkshire, now an economic migrant in London. His specialist subjects are military history, Germany, the telecommunications industry, and networks of all kinds. He would like to point out that it's nothing personal. Writes the Yorkshire Ranter.