Germany: time to get worried?

By Editorial staff Simon Wilson Dec 12, 2005

“Have all our politicians gone bonkers?” asked Germany’s mass-market Bild Zeitung this week, as efforts to build a cross-party ‘grand coalition’ government descended into chaos.

On Monday, the SPD’s Franz Muntefering – a respected elder statesman figure – quit as party chairman when colleagues refused to nominate his candidate for party general-secretary. He had concluded that the bulk of his party “did not sincerely support a a CDU-SPD accord”, said The Times. On the contrary, the SPD is “obviously, if irrationally, itching to move to the left”. Muntefering may still take up a role as Angela Merkel’s deputy chancellor – but without his party’s backing, he’ll have little authority, and his resignation threw the coalition into crisis.  

In response to the SPD power struggle, Bavarian PM Edmund Stoiber – leader of the CSU and Merkel’s main partner and rival on the German right – grabbed the opportunity to jump ship from the putative Berlin coalition. Stoiber claimed that without Munterfering, the SPD is no longer a credible coalition partner. “He may well have calculated that he personally will be better off out than in”, said The Times – keeping his powder dry for a future run as chancellor. But in any event, the chances of any cabinet implementing meaningful reforms without these two powerbrokers is “disturbingly slim”.

So it’s time to admit defeat and order fresh elections. The only other alternative, said Edward Hadas on Breakingviews, is a left-wing coalition of the SPD, the Greens, and the Left Party. Although they would have a majority, it would be desperately bad news for business and investors. Until now, markets have responded with eerie calmness to Germany’s political crisis, believing that Germany’s big business is much too international to be hurt by “anything but the most business-hostile government”. It might be time to get worried.

Published in Economics | More articles by Simon Wilson

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