On the day Donald Trump was elected, the German coalition government collapsed, a decision that condemns the country to a political vacuum that could last for eight or nine months. If you want to know how Europe reacts to Trump, this is your answer: no statesmanship, no coordination, and pettiness. Annalena Baerbock, the German foreign minister, summed it up when she said that 6 November was a bad day for Europe. She was not referring to Donald Trump, but to the small-mindedness of a German political system interested only in itself.
On 6 November, Olaf Scholz fired Christian Lindner as finance minister. The decision marks the formal end of the three-party coalition – between the Social Democrats (SDP), Greens and Free Democratic Party (FDP), the latter of which Lindner leads. Hr was fired after refusing to accept Scholz’s order to declare a state of fiscal emergency that would allow the government to bypass the rules of the debt brake, which limits the government’s ability to borrow money. Scholz went on national TV to declare that he wants to set aside money to support Ukraine, and for an increase in defence spending that has now become necessary after the victory of Trump. He also said he would not accept a trade-off of taking funds earmarked for social policies. This will be the theme of the election campaign – and the new dividing line in German politics.
The decision means that Germany will not have a 2025 budget unless Friedrich Merz, the opposition leader of the Christian Democrats (CDU/CSU), changes his mind. The FDP insisted that the increase in defence spending should be funded from the social budget. That was a red line for the SPD and the Greens. This is also the dividing line in Germany, the line around which the next election will be fought. How do we fund the increase in defence spending? The only two ways to fund higher defence spending is either inside the budget or outside. The SPD will not accept a redirection of social money to defence. Germany is a high-tax country. There is not much scope for tax increases either. The social budget is the ultimate red line around Scholz’s support for Ukraine and for his commitments inside Nato. The CDU and the FDP continue to place their red lines around the debt brake itself. Since neither SPD/Greens nor CDU/CSU/FDP are large enough to form a government between each other, they would have to form a coalition. A grand coalition between CDU/CSU and SPD would face the same unsolved dilemmas as the current one.
Scholz is a mostly absent communicator, but on the evening of 6 November he gave a feisty speech, a taster of what the next election campaign will be like. It will flush out policy positions that are not openly discussed. German politics is caught in a trilemma of social spending, defence spending, and the fiscal rules. The political fight will be about what to sacrifice. This could be one of those campaigns like 2002, 2005 and 2021, with the potential to upend all early forecasts because big political themes intrude.
Scholz has one procedural trump card up his sleeve. He can determine the timing for the next election – and he is pushing it back. He said the priority now is to pass the budget. He is daring the CDU to veto a rise in defence spending, and a rise in financial support for Ukraine. He will then call for a confidence vote on 15 January to pave the way for elections in mid-to-late March. This would be six months before the envisaged date. He would stay in power after the elections until a new government is formed, which could take months, depending on the result. The shortest time frame would be June or July for a new government to be in place, but this process might drag out all the way into next autumn.
The bottom line is that even when faced with a US president who has promised to reduce his commitment to Nato and to impose a 20 per cent tariff on European manufactured goods, European politics remains stuck in petty discourse. The euro crisis disproved the theory that if only the threat is sufficiently large, Europe will unite. We have not seen anything since to suggest otherwise.
[See more: How the far right mobilised the new Germany]
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