Germany's Schulz Has Little Choice But to Compromise

The likeliest result of September's elections is the most familiar one.

Fatal attraction.

Photographer: Herby Sachs/WDR/ARD via Getty Images

German politics is no longer boring, but that doesn't mean German political outcomes shouldn't be. The likeliest result of last September's election is the most familiar one: another "grand coalition" between Angela Merkel's conservative Christian Democrats (CDU) and Martin Schulz’s Social Democrats (SPD). It would be the third one since 2005.

This is a case of natural and perhaps fatal attraction between the two parties operating in the center of German politics. Long term, it's undermining both of them. But that’s not necessarily Merkel’s priority at this point in her political career. If the goal is four more years of stability -- and that’s what Merkel favors, as do many German voters -- the CDU and SPD represent the only viable combination that can govern all of Germany.

Only a week ago, Germany appeared headed for a new election. Christian Lindner, leader of the liberal Free Democratic Party, broke off talks with Merkel's bloc and the Greens about forming a government. Schulz was adamant that, after coasting to its worst result in history in September, the SPD would remain in opposition to revive its political fortunes. But such a principled stand will be hard for him to sustain, given the pressures he faces from within his own party.

Lindner, who is only 38, has a strong case against serving under Merkel underscored by an oft-repeated slogan: "It's better not to govern than to govern falsely." He just achieved one of the best results in his party’s history -- 10.7 percent of the vote -- while refusing to compromise on his vision for the country. Lindner called for an overhaul of the German education system, an immigration policy that would be more meritocratic than humanitarian, and a hard line against further European Union integration. If the grand coalition talks fall apart, he’d fare just as well in elections, polls show. And his prospects look likely to improve after Merkel leaves the political scene once and for all.

It's different for Schulz and the SPD. The party's dismal showing in September, if repeated or -- unthinkably -- weakened, would consolidate its reputation as a declining force. SPD backbenchers, who had just witnessed a dispiriting national campaign and seen their friends lose seats, told the party leadership they didn't want a new election. Pro-business groups within the party pushed for a coalition with Merkel as a chance to retain power and get things done. President Frank-Walter Steinmeier, until recently a major figure in the SPD, also applied pressure, telling Schulz that handing the mandate back to the voters wasn't a good idea.

Schulz, who was elected leader in a hopeful unanimous vote, quickly felt he was on shaky ground. According to a poll of SPD members published on Monday, while about two thirds of them still want Schulz as leader, only 58 percent approve of his performance, and 62 percent want more influence for Hamburg Mayor Olaf Scholz, a potential rival for the top party post.

The SPD doesn't have to lose face if it turns around and makes a deal with Merkel. Germans like responsible leaders, and the SPD will be seen as the party that saves German stability when no one else could. Besides, it won't have to compromise too much.

After four years of governing together, the SPD and the CDU have few insurmountable differences.

Ranking Social Democrats' "red lines" include no cap on immigration -- something that can cause trouble with the CDU's Bavarian sister party, the Christian Social Union, which has insisted on a soft ceiling. But the CSU is in favor of a new "grand coalition," and its own leadership struggle is unlikely to prevent it from falling into line. 

The SPD also wants to keep the "solidarity tax" to boost the former East German states' economies, which the CDU considers obsolete. It insists on subsidies for poorer retirees and would like an end to what it calls "two-tiered healthcare" -- a system that gives Germans a choice between mandatory and private health insurance. Private plans provide better coverage, and the socialists consider it unfair.

The CDU, on the other hand, has only one true red line -- a balanced budget, Merkel’s greatest achievement as chancellor. With Bloomberg's consensus forecast predicting a budget surplus of 0.6 percent GDP this year, Merkel can accommodate some SPD demands for more spending. If the Social Democrats really want a "fairer Germany," as they said during the campaign, the next Merkel government can afford to go in that direction, just as it could during the last political cycle, when the "grand coalition" implemented some SPD demands such as a nationwide minimum wage. 

Besides, the CDU and the SPD are both strongly pro-EU, and their alliance would create a historic chance for Germany and Emmanuel Macron-led France to revive some integrationist dreams.

Steinmeier has arranged a meeting with Merkel and Schulz for Thursday. It will likely kick off the coalition talks and, barring major surprises, open the path to a stable government with a solid parliamentary majority early next year. But if a "grand coalition" works out, a time bomb will start ticking under both governing parties.

Another four years of CDU and SPD cooperation has the potential to merge them, for all practical purposes, into a single moderate, centrist force. Breaking apart to run separate election campaigns could be even more difficult in four years than it was in 2017. There will be no new reasons for left-leaning voters to pick the SPD over the Greens and the far-left Die Linke. Conservative CDU voters already have been complaining about Merkel's drift to the left, and the compromises necessary to work with the SPD again will only make those complaints louder. Political forces that will retain their purity -- the FDP and the nationalist Alternative for Germany (AfD) on the right, and the Greens and Die Linke on the left -- will be better positioned to appeal to principled voters. The center, which visibly eroded in this year's election, will need a strong infusion of new blood and more meaningful platforms to hold in 2021. 

Merkel has always preferred tangible results to pies in the sky. She'll start thinking about 2021 the day after the coalition talks are over -- and only if they succeed. SPD leaders have little choice but to follow suit.

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

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    Leonid Bershidsky at

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    Mike Nizza at

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