Grand Coalition Talks Proceed: Elections Avoided? Not Yet

The Guardian reports Germany’s SPD Gives Cautious Green Light to Merkel Coalition Talks.

Germany has inched a step closer to forming a new government after the centre-left Social Democratic party (SPD) gave its lukewarm endorsement for a renewed Angela Merkel-led “grand coalition”.

At a special SPD congress in Bonn that welcomed a speech by the party’s leader, Martin Schulz, with sarcastic applause and saw standing ovations for his fiercest critics, 56% of the party’s delegates voted in favour of moving on to the second and final stage of coalition talks with Merkel’s centre-right Christian Democratic Union (CDU).

The cautious green light provides major relief not just for the beleaguered leaders of Germany’s two largest parties but also European heads of government, who have been holding off on major strategic decisions since federal elections in September.

With so many casting their vote against their leader’s recommendation, a mere show of hands did not yield a visible majority. After a nervous delay, an official count showed that 362 delegates out of 642 had endorsed the party’s official line.

Under a renewed grand coalition, the rightwing populist party Alternative für Deutschland (AfD) would form the largest opposition force in the Bundestag. Commentators point at Austria’s recent rightward lurch after a decade of grand coalitions as proof of the view that lengthy spells of centrist rule can fan support for extremist political parties.

Schulz actively tried to fend off such criticism in his speech: “I know some say that another grand coalition would further strengthen the rightwing fringe. But who says that fresh elections wouldn’t also strengthen the right?”

Some polls after the first round of exploratory coalition talks have seen the SPD drop to record lows of 18.5% while the AfD has consolidated September’s 12.6% of the vote.

Done Deal? No, Not Quite

For starters, 56% of the party voting to proceed is a shockingly weak percentage.

This quote is telling: “At a special SPD congress in Bonn that welcomed a speech by the party’s leader, Martin Schulz, with sarcastic applause and saw standing ovations for his fiercest critics, 56% of the party’s delegates voted in favour of moving on to the second and final stage of coalition talks with Merkel’s centre-right Christian Democratic Union (CDU). “

A final deal still has to be hammered out.

That said, I expect a final deal will be a qualified success at putting together ambiguous statements that both sides can interpret however they want. Then the real fun begins.

Eurointelligence offered this comment six days ago:

“At this point we see no support for a grand coalition among the party’s rank-and-file, but this might change if the SPD either manages to pull a surprise, or if some external event changes the mood of its members. Such events are impossible to predict.”

Once a final deal is reached, assuming a deal is reached, the party’s 450,000 members have an up or down vote on the package.

With only 56% of the party leaders in favor of the deal, the membership vote is certainly questionable. Then again, such uncertainties assume Schulz will actually put this to a rank-and-file vote.

Real Reason For a Deal

Martin Schulz claims there is a moral obligation to form a government.

OK, so where was the moral obligation following the election? If there is a moral obligation now, why wasn’t there one then, when SPD first rejected the grand coalition?

Eurointelligence sums up the situation nicely.

“Losing power is very much in the nature of opposition, and it seems to us that the loss of prestigious jobs and limousines has become a real issue.“

What’s It All About? Limousines

Schulz and all the high-ranking officials want to hang on to their job perks and exorbitant political slush funds for as long as they can.

AfD the Winner

AfD is the winner regardless of what happens. Here are the scenarios.

1. Grand Coalition forms: AfD becomes the largest opposition party with increased parliamentary powers as a result.
2. Grand Coalition does not form: There will be new elections if Merkel keeps her word about not forming a minority government. Support for SPD is on the wane. A “grand coalition” may not even be possible after the next election. That is CDU/CSU and SPD will not reach the 50% threshold.

1.A: Within option one, there is the possibilities the grand coalition quickly collapses over infighting. I highly doubt it goes four years.

1.B: Within option one, there is a possibility the final agreement demand Merkel step aside after 2 years. Would she agree? I do not know. However, Schulz may need to pull some rabbit out of his hat to get the rank-and-file to approve the final deal.

What About Rabbits?

To get the rank-and-file to vote for the deal, Schulz may need to pull a rabbit out of his hat.

If that rabbit is some sort of pro-Europe, budget-commingling madness, or some sort of minimum wage or job guarantee madness, the rabbit will benefit AfD and FDP at the expense of Merkel’s CDU/CSU party.

Peak Merkel has clearly come and gone, and it did not even benefit SPD!https://t.co/vmP4xSI74e

— Mike “Mish” Shedlock (@MishGEA) January 21, 2018

Best Possible Result

The best possible result depends on your outlook. If you are eurosceptic, the best result is this sequence of events:

1. A grand coalition that lasts for a year or so, with AfD gaining parliamentary powers.
2. The grand coalition then splinters with infighting and another election in which Merkel steps down and SPD is trounced.

Mike “Mish” Shedlock