Germany: Will a Green-Liberal Kleine Koalition Crown Olaf Scholz?
Lorenzo Monfregola 11 October 2021

Exploratory talks for an Ampelkoalition (three-way coalition) have started in Berlin between the SPD, the Greens, and the Liberals of the FDP. After preliminary discussions between the environmentalist party and the liberals, the opportunity for becoming the next Chancellor is now open to Olaf Scholz, the man who won these elections, albeit only by 1.6 percentage points.

Since the evening of September 26th, it had become clear how the Grünen (the Greens) and the FDP, third and fourth in terms of votes acquired, would be the real kingmakers of the first post-Merkel government. The two political parties have a chance of becoming a tactical kleine Koalition (small coalition) and choose their own majority partner. It is well-known that the Greens have always been more inclined towards a coalition led by the social democrats, while the FDP has always repeated until just recently that it preferred a Jamaika coalition led by the CDU. Everything depends on how and if the two minor parties will reach an agreement, meeting in the center, in a neo-productivist synthesis between accelerating the ecological shift and protecting Germany’s economic realpolitik. It is a synthesis for which the SPD now appears to be ready and willing to act as the primary adhesive and pragmatic leader (minus its own disagreements between internal currents).


Decisive differences in social policies

The Greens and the FDP are political parties that are very distinct from one another and yet also very close. During the election campaign the two candidates, the Greens’ leader Baerbock and the FDP’s Lindner, did not hold back with their ideological attacks. Points of conflict and therefore obstacles to the formation of an Ampelkoalition, are in a way typical of the differences between a party more oriented towards social-democracy (Greens) and the other more liberal-liberalist and business oriented.

While the Greens envisage investments amounting to 50 billion over the next ten years to accelerate an ecological shift, the FDP demands an immediate return to Schuldenbremse, or a slowing down of German debt (which must never be more than 60% of GDP). This restriction was suspended in response to the Covid crisis precisely by Olaf Scholz, the current Finance Minister. To change the dogma of establishing a balanced budget as set out in the Constitution, it is however necessary to obtain two-thirds of the votes in the Bundestag and an agreement within the Ampelkoalition could be reached to find a way of relaunching ecological investments excluding them from restrictive calculations and spreading long-term infrastructural investments over a number of years.

At the same time, while the Greens and the SPD are requesting financing for a new season of state investments that would increase tax for higher income earners (including property tax), the FDP is strongly and absolutely opposed to this. While the SPD and the Greens agree that the minimum wage should be raised to €12 an hour, the FDP classically believes that it is the market that should establish salaries. From a neo-workfare perspective, the FDP is, however, open to a reform of the welfare system as requested by the SPD and it is here, for example, that elements of compromise could be found.



The European crux

Differences concerning the financing of social policies also affects EU policies. Both the Greens and the FDP declare that they are strongly Europeanist parties, with the difference being that the Greens wish to increase European integration by sharing financial destinies (and therefore debt too), while the FDP envisages an integration that goes all the way to a United States of Europe, but one that homogenizes the rules of financial rigor and eventually and potentially leads to a creation of a two-speed EU. If one therefore addresses the future of an instrument such as the Next Generation EU fund, the Greens are prepared to transform it into a common fund for an ecological turning point, while the FDP (as well as the CDU-CSU) considers it a one-off emergency instrument to be abandoned as soon as possible.

In this green/yellow dialectic it is important observe how the SPD would be significantly in line with the Greens as far as internal German reforms (welfare, labor, and taxation) are concerned, but is instead far more ambiguous as regards the subject of Europe. This is a subject on which Scholz, although one of the architects of the 2020 Next Generation EU, has always avoided assuming excessively clear positions.

Consequently, an agreement within the Ampelkoalition could have a more Left-wing profile regarding domestic social policies, satisfying the SPD and the Greens, and a more cautious attitude on the European financial front satisfying not only the FDP, but the entire German world of finance that is traditionally more reluctant as far as forms of financial solidarity are concerned, when not strictly necessary for keeping the Union together. In this case, the new German government would not differ greatly from previous ones led by Angela Merkel as far as EU issues are concerned. Overall, Germany would thereby continue to act geopolitically by reacting rather than making active choices (notwithstanding external stimuli on Berlin that will continue to increase progressively).


Climate and productivity

Then there is the subject of climate change. The Greens dream of a Germany that becomes the flagship of a European Green Deal and the global model for a new ecologically oriented productivism. The second part, that of a green industry, could successfully be integrated with the FDP’s business-oriented perspective, but the speed requested by the Greens in this ecological shift is (for the moment) a problem for the Liberals. The SPD, on the other hand, is oriented towards accepting this acceleration of the ecological shift, albeit here too showing greater caution, for example regarding decelerations requested by trade unions as far as labor is concerned. The SPD is requesting, for example, that climate neutrality should be achieved in Germany by 2045, as envisaged by the current Merkel government, while the FDP instead would set the limit at 2050. The Greens, however, wish to move faster reaching climate neutrality over the next twenty years.

They are also asking for coal energy to be totally abolished by 2030, while the FDP considers the currently established date of 2038 already difficult for companies, and the SPD, once again, maintains a tactical middle path. The Greens and the FDP also have different positions on a carbon tax, which according to the environmentalist party should be defined at a national level, while according to the Liberals it must be established at an international level so as not to become anti-competitive in global markets. Finally, should the Greens request that only electric cars be registered by 2030, the FDP’s resistance could become very determined on this point. However, the electrification of the automobile industry is also a process that the Liberals will certainly not wish to obstruct over the medium or long term, considering that large German automotive groups themselves are investing immense amounts of money and with total conviction for the great shift to e-mobility.


Points shared by the Greens and the FDP

As one can see, the issues up for negotiation for an Ampelkoalition are certainly not easy, but neither are they impossible to address. To govern, the Greens seem ready to complete their repositioning – which has been underway for some time – towards the liberal center, even if this were to lose them consensus on the Left. The FDP instead is aware that it must assume governing responsibilities if it wishes to become a credible interlocutor for the social-economic sectors of reference.

On the other hand, one must consider to what extent the FDP and the Greens are close on several other issues. As far as civil rights are concerned, the two parties are closely in agreement both as to gender equality and LGBTQI+ rights. Agreements could also be found on the defense of privacy, an issue very dear to the FDP. The same applies to digitalization and de-bureaucratization, another of the Liberals’ pièce de resistance that could be added to the ecological policies backed by the Greens.

The Greens and the FDP are aligned on the great issues concerning international policy. As far as China and Russia are concerned, both parties are far more openly critical and hostile than the SPD and the CDU. In this sense the Greens are now Germany’s most neo-Atlanticist party, while the FDP is traditionally bound to the transatlantic axis (albeit always within the context of Germany’s economic realpolitik).

Finally, the two parties also share a particular responsibility: they are the two political parties most voted for by young German generations. While on the one hand this is the expression of a young electorate with at times opposing positions, on the other it also indicates a transversal demand for change compared to the traditional bipolarity.


Nothing has yet been decided, but the Ampelkoalition is currently considered the option with the most chances. Should it fail due to a lack of agreement between the FDP and the Greens, the option of a Jamaika coalition between the Greens, the FDP and the CDU-CSU would on the other hand also be far more difficult. At that point, having used up the potential of a decisive kleine Koalition between the smaller parties, the formula that nobody currently appears to want may well reemerge: the umpteenth Große Koalition.


Cover Photo: Climate activists wearing masks of (L-R) FDP party Christian Lindner, the co-leader of Germany’s Greens Annalena Baerbock, and German Finance Minister, Vice-Chancellor and the Social Democratic SPD Party’s candidate for chancellor Olaf Scholz demonstrate in front of the venue where coalition negotiations are being held Berlin, Germany – October 11, 2021 (Christof Stache / AFP)



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