Scholz loses majority, triggers election call

German Chancellor Olaf Scholz fired his Free Democratic Party (FDP) coalition partner finance minister Christian Lindner on Wednesday over differences on economic policy. Scholz wants to break the debt brake and allow government to raise debt to revive the economy as well as finance the Ukraine war. Lindner and his FDP who are financial conservatives refused to raise the debt limit of governmental borrowing.

Scholz blamed Lindner for not working as a team. He said, “Anyone who joins a government must act responsibly and reliably, they cannot run for cover when things get difficult. They must be willing to make compromises in the interest of all citizens...But that is precisely not Christian Lindner’s focus right now, he is focused on his own clientele.”

Lindner hit back in a press conference saying that he made proposals for an economic shift but Scholz was not wiling to accept because he was unambitious. Linder stated that his party was willing to work in any future government. “The Free Democrats are ready to carry responsibility for this country and we will fight to also do this in a different government next year.” There is already pressure on Scholz to call for immediate elections, and it looks like Scholz would not be able to put them off for too long. The expectation is that the elections will be announced in January, and they will be held in March. And it is quite certain that the Social Democrats of Scholz and the Greens will lose.

Frierich Merz, leader of the opposition Christian Democrats, demanding immediate elections said, “We simply cannot afford to have a government without majority in Germany for several months now, followed by an election campaign for several more months and then possibly several weeks of coalition negotiation.” Wolfegand Grosse Entrup, leader of the VCL lbby groups, which represents the pharma and chemical sector, echoed Merz: “Especially in these challenging times, we need a solution-oriented federal government capable of taking action. We cannot afford a month-long standstill and political deadlock.”

But it is clear that no party will emerge a clear victory in any election. It will be another coalition with its own compulsions. The Free Democrats are looking to find a place in the next coalition as well. But there is no consensus on the political right about the solutions to Germany’s economic woes. German industry is unable to face competition from Asian countries, especially China. They want tariffs against imports.

But they are also not too enthusiastic about a trade war with China because the German car industry has more than a foothold in the Chinese domestic market which the German automakers do not want to lose. So, it is a messy affair.

American president-elect Donald Trump is quite clear in his mind that America should not support Ukraine for all time and at any cost. He does not believe in the ideological opposition between democracy and authoritarianism.

But the Germans have to decide whether they can live with Russia as the next-door neighbour. It is not an easy decision. Even as Russia needs a buffer zone between Russia and NATO countries, so do Germans want a buffer state between them and Russia. The NATO countries are not too eager to give membership to Ukraine in the Western alliance. The German conservatives cannot easily throw aside the big political dilemma.

Germany’s economy is poised to go into a recession because the global markets are not looking too good. If the German economy gets hurt, so will the European economy. What we will witness in the next few months is tortuous political negotiations between the many political parties, big and small. And there is the danger lurking in the corner of the far-right Alternative for Germany (AfD), waiting to grab any opportunity to be the big player in German politics.