Friday, 16 August 2013

GERMANY: German election & EU's issues

Germany's federal elections are scheduled on September 22, 2013 and Chancellor Angela Merkel has finally hit the campaign trail in earnest on Wednesday, when she held her first large rally of this campaign, one of 56 such gatherings on her schedule between now and the vote.

Germany’s economy is performing well, particularly when compared with the rest of the European Union. So there is no real mood to change a winning team. And, when it comes to European issues, there does not even seem to be a real choice. All major parties in Germany’s parliament, the Bundestag, have given their support to Angela Merkel’s verdict that ‘there is no alternative’ to her government’s euro rescue operations.

But the election outcome is still unclear. If Germany had a simple majority-voting, first-past-the-post system like the UK and the US, the family of the Christian Democratic Union (CDU) and its Bavarian sister Christian Social Union (CSU) would win around 90 per cent of the electoral districts.
But as seats in parliament are strictly allocated by proportions of the votes, above a five per cent threshold, the CDU/CSU will not be able to rule without a partner.

The present centre-right coalition partner, the liberal Free Democratic Party (FDP), seemed unlikely to end up above the five per cent but it has recently recovered. However, if the FDP remained below the threshold, the CDU/CSU could form another coalition with the Social Democrats or, in a rather daring move to both of its constituencies, even test a ‘black-green’ coalition with the strong Green party.

Finally, political observers still see a 10 per cent probability that a left-green-far left government could form - if the FDP does not make it into parliament and if the SPD, Greens and the radical post-communist ‘Linke’, a blend of communists in the former East Germany and left-wing social democrats, were able and willing to form a three-party coalition.

There is one more party of European interest, the Alternative for Germany (AfD), . This is the only party advocating a ‘regular resolution of the eurozone’ and an end of what it sees as illegal bailouts.

The AfD is unlikely to attract much public and media attention during campaigning as memories of the eurocrisis loom in peoples’ minds and more topical or straightforward issues, such as spying by America’s National Security Agency (NSA), mismanagement of the Euro Hawk drone programme, taxing the rich, financing renewable energy and education, are more likely to dominate debates.

There are four parties with real chances to be part of a future German government.

When it comes to a further mutualisation of Eurozone debt, the present centre-right coalition takes a firm stand against eurobonds and against what one might call a ‘light version’ of mutualisation of debt in the form of a ‘debt redemption fund’ - as proposed by the German governments’ own Council of Economic Advisors.

Technicalities aside, this would imply that substantial parts of eurozone sovereign debt would be refinanced collectively against commitments to redeem them in a given period of 20 to 25 years.
Here, a left-green coalition would be much more willing to grant these forms of debt mutualisation.

When it comes to the future use of bailout-money via the European Stability Mechanism (ESM), a similar centre-right (governing) vs. centre-left (opposition) divide can be detected. Loans and guarantees to struggling eurozone members have to be given on strict terms of conditionality and a quid pro quo basis for the CDU/CSU.

The FDP would like to see the ESM phased out as a rescue mechanism over a limited time-horizon. In contrast, the green and red parties would like to loosen the strings of conditionality and austerity and use the ESM as a European solidarity pool and an investment tool according to their ideological priorities.

When it comes to banking union, arguably the essential missing piece in the present governance of the eurozone crisis, the parties seem to agree on its general need, but disagree on important detail.

By Guylain Gustave Moke
Political Analyst/Writer
Investigative Journalist
World Affairs Analyst

Photo-Credit: AFP- German Chancellor Angela Merkel