Germany's Political Crisis Is No Tragedy

All the options facing Angela Merkel are uncomfortable, but every path leads to an acceptable compromise.

Still, the best option to lead.

Photographer: Sean Gallup/Getty Images

The failure of German coalition talks on Sunday is a blow to Chancellor Angela Merkel and to Germany's image as a bastion of stability in Europe. It is, however, also a strong sign that Germany is a well-functioning democracy with a robust policy debate, in which content takes precedence to political expediency.

What's Next For Merkel?

Christian Lindner, the charismatic leader of the liberal Free Democratic Party, turned out to be the weakest link after a month of exploratory negotiations with Merkel's conservatives and the left-leaning Greens. Around midnight on Sunday, a visibly exhausted Lindner walked out of the talks, saying the compromises under discussion made it impossible for the FDP to fulfill its electoral mandate for change: lower taxes, a more flexible workforce, an "orderly" immigration policy, which is a euphemism for more controls. "It's better not to govern than to govern falsely," Lindner announced. This is probably about policy rather than political advantage-seeking. Lindner could only benefit from the breakup of talks if Merkel begged him to come back to the table, an unlikely scenario. None of the other options is potentially beneficial for the FDP -- or, for that matter, for anyone else. 

Three scenarios are being discussed -- a last-minute "grand coalition" made up of Merkel's bloc and the Social Democrats, who were junior partners in the last government; a new election; and a minority government led by Merkel. According to a poll published on Sunday, a new grand coalition would be the choice of a plurality of Germans -- 49 percent. But SPD leader Martin Schulz and his team have been dead set against it, claiming the party's worst-ever election result in September was a sign the voters no longer wanted such a link-up.

The Social Democrats now have a good opportunity to change their mind in the name of responsibility and the party's European agenda. The only way Germany can help President Emmanuel Macron's France to bring the European Union closer together is by forming a government that shares Macron's zeal, and it's impossible without the SPD. But another four years of working under Merkel could completely erase the party's identity and lead to even worse defeats in the future.

If Schulz sticks to his guns, the constitutional sequence of events is as follows. The parliament must elect a chancellor. If on the first two attempts made within two weeks a candidate fails to gain a majority of votes, a plurality suffices on the third attempt. That makes Merkel, whose bloc has the biggest faction, certain to be elected. Then German President Frank-Walter Steinmeier -- who has opposed a new election, calling on coalition negotiators to show more responsibility -- has a choice: He can disband the parliament, sending voters to the polls again, or he can hand Merkel a mandate for a minority government. 

A new vote is not a desirable outcome for any of the parties that did well in the September election. Polls -- which were accurate before that ballot -- show the parties performing almost exactly as they did two months ago. Even the AfD, the xenophobic populist party that scared some with it 13 percent result in September, would likely gain nothing from the instability since voters understand no mainstream party is willing to work with it.

The FDP could either benefit from or suffer for its role as coalition spoiler in an election, but any gains or losses would be tiny, since the number of voters willing to back FDP's free-market program is finite and the party came close to its maximum resource in the last election. Even if Merkel, still Germany's most popular politician, is punished at the polls for her failure to form a government, the conservatives will still be the biggest political force. Little would change for the Social Democrats, who are still struggling to define their agenda; their chances for a coalition with far-left Die Linke and the Greens would still be infinitesimal because these parties would need more than 10 percent of extra support.

A minority government, although unprecedented in Germany, looks like a better option than another inconclusive election. If nothing else, it would avoid a waste of time. In a similar situation, Spain held two elections in rapid succession in 2015 and 2016 and ended up with a center-right minority government led by Mariano Rajoy --  but not before wasting 10 months on fruitless coalition talks and campaigns that couldn't tell voters anything new.

The German economy is booming, but this is one country that can do without radical policy change. Digesting the large inflow of immigrants in 2015 and 2016 is largely an administrative task that only requires minimal legislative interference -- for example, in making it easier for immigrants to prove their qualifications. That's the kind of change a minority government could achieve. Merkel would also enjoy broad support in lowering the tax burden on the middle class. For Germany, a minority government could be a relatively comfortable option, preserving the status quo.

It would, however, destroy -- at least temporarily -- Germany's leading role in Europe. Macron's ambitious plans for a common euro zone budget and other attributes of closer unity would remain a pipe dream, and illiberal governments in Poland and Hungary would feel safer as they make a mockery of the EU's values.

The so-called Jamaica coalition, so named after the combination of party colors, would have been a creative, hopeful option. The FDP's push for digitalization and lower taxes and the Greens' compassion for immigrants and insistence on quickly phasing out coal could have been underpinned by Merkel's formidable moderation skills and her conservative bloc's common-sense support for industry and the middle class. Merkel should take some of the blame for the failure of those talks -- she was too much of a moderator, letting the smaller parties argue things out -- but her skills, experience and popularity still make her the only obvious choice for Germany's leadership in this political cycle.

The current German political crisis is quite unlike the painful confusion of Brexit or Donald Trump's rejection of policy in favor of Twitter politics. By contrast, the conversation in Germany has been largely about substance: which categories of refugees should be allowed to send for their families, how a tax subsidizing the former East Germany should be phased out, how quickly Germany should move toward sustainable energy goals. These are wonkish matters of governance, not the stuff of huge ideological swings or a populist personality cult. That gives hope that whichever path Germany ends up taking, it will result in a workable compromise.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

    To contact the author of this story:
    Leonid Bershidsky at

    To contact the editor responsible for this story:
    Therese Raphael at

    Before it's here, it's on the Bloomberg Terminal.