Since the 1970s, all German chancellors have been re-elected at least once. Olaf Scholz is on course to become the first to be voted out of office after a single term. The three-party coalition between his Social Democrats (SPD), the Greens and the conservative-liberal FDP collapsed over disagreements on economic policy in November. Snap elections are scheduled for 23 February.
The SPD’s fate should be a cautionary tale for Labour and other centre-left parties in Europe. Scholz’s victory in 2021 had quite a few parallels with Keir Starmer’s electoral triumph. After the 16-year reign of Angela Merkel, the Germans wanted change. The SPD campaigned on a promise to increase public investment. Most of it went into renewable energy, but soon net-zero regulations started to weigh on companies and consumers. The first big backlash came with the domestic heating bill, which forced homeowners to replace gas heaters with expensive heat pumps. This led to falling house prices in parts of the country.
Scholz’s coalition was also one of the biggest supporters of the EU’s Green Deal, with its compulsory CO2 targets for car companies, a 2035 ban on the sale of new fuel-driven cars, a nature restoration law that forces farmers to set aside land and now a law that demands businesses prove the products they sell have no connection to deforested land. Along with legislation on corporate social responsibility, this has all led to a big increase in costs and bureaucracy for companies. The electoral pushback is the first popular revolt against net zero in Europe. It will not be the last.
Ongoing misjudgements in energy policy have played a big role in the German government’s collapse. During the first two decades of this century, Germany made itself reliant on Russian gas while starting to phase out nuclear power – a technology in which German scientists excelled, but the public distrusted. The loss of Russian gas and nuclear energy has left the economy under-powered in the age of AI. Only last year, Scholz predicted that investment in a green transition would lead to the growth rates Germany experienced during the economic miracle years of the 1950s and 1960s. They really believed the fairy tale of limitless cheap green energy; the economic reality could not be more different.
When Christian Lindner, finance minister and chairman of the FDP, demanded an economic policy U-turn earlier this autumn, the coalition was headed for the brink. To prevent Lindner from quitting, Scholz decided to fire him and end the coalition himself. But the timing was all wrong. It came on the day when Donald Trump was declared the winner of the US presidential election – not a great moment for a political crisis in the EU’s largest country.
Then it got worse. German newspapers ran a relentless campaign to push the SPD into replacing Scholz with Boris Pistorius, the popular defence minister, as its candidate for chancellor in the next elections. Former SPD leaders weighed in on the debate, some in favour of Scholz, some on the side of Pistorius. But just when a coup against Scholz appeared at least possible, Pistorius announced he would not run. The episode left Scholz a damaged candidate of a damaged party.
It’s not over yet. Scholz was a poor chancellor, but I would not underestimate him as a campaigner. His caution on weapons deliveries for Ukraine resonates with many voters; he flatly rejects the delivery of German-made Taurus cruise missiles, the one missile system that would have given Ukraine an opportunity to regain the upper hand in the war if they had been delivered much earlier. If Trump were to achieve a peace deal between Russia and Ukraine, I would expect Scholz to claim some of the credit.
Trump’s inauguration a month before the German elections adds an element of unpredictability. But for Scholz to swing this around would be a comeback on a scale larger than what Gerhard Schröder managed in 2005. Yet, Schröder still lost the elections that year by a narrow margin. Of all conceivable outcomes, a moderate-to-strong rebound is the best the SPD can realistically hope for. But it could also go the other way.
The SPD may end up in government as a junior coalition partner, just as it did under Merkel. It is a story of the complex arithmetic in an electoral system of proportional representation. Since all of Germany’s centrist parties have erected political firewalls against a resurgent far-right Alternative for Germany, they have left themselves in a position where they can only govern in coalitions with each other. Based on present polling, Friedrich Merz, the CDU leader, is most likely to become the next chancellor. But to govern he would need to form a coalition, most likely with either the SPD or the Greens. I am not sure the SPD is playing for victory – it looks like they’re playing for second place.
And then what? A grand coalition would be no easier to manage than the one that just collapsed. Merz would face similar problems to Scholz. In the meantime, the decline of German industry continues. Week after week, we hear reports of redundancies and factory closures in the car industry and its suppliers. This is what happens when a country with an outdated technology hits the net-zero economy amid geopolitical conflict.
The German-British sociologist Ralf Dahrendorf called the 20th century the social-democratic century. It did not end with the Cold War. In Germany, it went into extra time – but that is ending now.
[See also: The dark reality of Putin’s nuclear rhetoric]
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