The new three-party coalition offers a mix of continuity in foreign policy, innovation at home and an economic stand-off
Confirmation that Germany will soon be governed by a three-party coalition led by the social democrat Olaf Scholz is an event to take seriously, and not just in Germany. That is especially true because once the coalition parties – social democrats, greens and liberals – have each voted their formal approval, Mr Scholz will take over from Angela Merkel, who has governed resourcefully for 16 years while providing great stability on the international stage.
Mrs Merkel’s departure means her centre-right CDU-CSU alliance faces a period of eclipse and reinvention. The new administration, dubbed the traffic-light coalition because of the parties’ colours, will, however, provide continuity with the recent past, especially in foreign, European and defence policy. More problematically, the new finance minister, Christian Lindner of the liberal Free Democratic party, is now positioned to uphold Germany’s familiar fiscal orthodoxy and debt aversion in the face of future spending pressures from the other coalition parties, as well as on the EU budgetary stage. To an extent, such tensions are implicit in any three-way coalition. These should neither be exaggerated nor downplayed. Yet the new government and the EU will not easily survive any hasty German return to traditional austerity and debt avoidance, so the commitments in the coalition deal may prove more aspirational than achievable. The investment pledges on infrastructure and climate crisis measures will also challenge the culture of budgetary restraint. Ultimately, the test of the Scholz government will be how it deals with these tensions.
