With the beginning of exploratory talks between SPD and CDU/CSU on January 7, 2018, the German political system offers a last opportunity to form a stable government after the September 2017 national elections. Final results cannot be expected any time soon. After the exploratory talks the SPD will hold with Chancellor Merkel and her CDU/CSU colleagues until January 12, a Special Party Congress of the SPD on January 21 will decide whether to begin formal negotiations about a new Grand Coalition. If the decision of the Party Congress is to go forward with a Grand Coalition, the SPD party membership will have the final say in a referendum around mid-February. Under these circumstances, the establishment of a new German government cannot be expected before the Easter recess, unless the SPD decides against a Grand Coalition after the exploratory talks.
Failure to establish another Grand Coalition is still possible in the course of the coming talks and negotiations. Should this happen, the alternatives would be a largely unpredictable minority government of the CDU/CSU under the leadership of Chancellor Merkel or new elections, most likely with results similar to the last elections.
The election results last September opened up the possible formation of a so-called Jamaica Coalition between the CDU/CSU, the FDP, and the Greens. This experiment failed unexpectedly. Negotiations collapsed when the prospective coalition partners ended up being unable to achieve a consensus on their future government platform. Disagreements on migration and unbridgeable positions on taxes, the budget, and Eurozone reforms caused FDP leader Christian Lindner to conclude that it would be better not to govern than to govern the wrong way.
Causes of the Paralysis of the Political Center in Germany
Lindner acted out of fear that the FDP, after receiving less than 5 percent of the votes and missing representation in the Bundestag for the last four years, could again be perceived as caving too much in government with the CDU/CSU and losing the trust of voters. Lindner’s position shows a critical weakness of the political center in Germany. The country is still a stable and successful democracy. Voter support for the center is strong. More than 70 percent of German voters still support either the center-right CDU/CSU (32%) and FDP (10%) or the center-left SPD (20%) and the Greens (9%). The problem is that neither the center-right nor the center-left has the necessary absolute majority of seats in the Bundestag to form a government. Either the center-right or the center-left now needs to reach out to the other side for an absolute majority of seats in the Bundestag. Coalition building will exclude the extreme right-wing AfD as a matter of principle for all center parties. For the foreseeable future, the extreme left-wing Die Linke, too, cannot be part of coalition building, unless the party can make the necessary adjustments for serving in government on the national level. So far, their government experience is limited to the state and local level.
During the Jamaica negotiations, the Greens were willing to compromise with the two center-right parties, but not at all costs, for example, when migration policy and the right of family reunification for accepted refugees became the issue. The CDU/CSU and FDP were unable to accept the more liberal Green position. For the Greens, this was an issue of party identity and for the CDU/CSU and the FDP, the concept of national identity and “Leitkultur” (core cultural traditions and values) was at stake. They feared that growing right-wing nationalism and anti-immigration sentiment would undermine their political future. The election results showed that the AfD was able to take away votes in particular from the CDU and CSU.
Social Democrats are now not only confronted with their own near-death experience of power sharing with the CDU/CSU. They also have to find a way out of the paralysis of the political center in Germany. German center parties have been gripped by such a strong fear of losing out to the extreme AfD or Die Linke that political compromise all of a sudden became a no-go area for fear of identity loss. Small wonder that the Grand Coalition model of power sharing is deeply unpopular within the SPD rank and file as well as within the party leadership. Fear of identity loss has also gripped the SPD. The German political system now seems to have reached a point where possibilities of cooperation between the center-left and the center-right have been exhausted.
The gut reaction of the SPD and its leadership after the September elections was to seek renewal in opposition, and this position has been reaffirmed after the collapse of the Jamaica experiment. A formal request of the federal president after this event, however, forced the SPD to reconsider. Since the federal president, Frank-Walter Steinmeier, happened to be a former foreign minister of the SPD, it was difficult for the SPD to not to follow up on his request. But it was with the strongest reservations that SPD leader Martin Schulz and the new floor leader of the SPD in the Bundestag, Andrea Nahles, began talks with Chancellor Merkel and the CDU/CSU. They knew how unpopular the Grand Coalition of power sharing was within the SPD after continuously losing voter support since 2005 and two Grand Coalition governments, from 2005 to 2009 and again from 2013 to 2017. After winning 40.9 percent of the votes in 1998, the SPD has lost half of its voters since then.
The Grand Coalition Model of Power Sharing
It is now very popular in SPD circles to put the blame for the loss of the SPD in the last elections on the Grand Coalition as an institution. A closer look at election results for the SPD reveals, however, that this is the wrong kind of analysis. In the last elections both Grand Coalition partners lost voters—the CDU/CSU even more than the already weak SPD. While this is no comfort for the SPD, it is important to understand that the real reason for the defeat of the party in 2017 is primarily the openness of the Grand Coalition to more than one million refugees in 2015 and 2016. Although the stream of refugees is much slower now, the refugee issue is far from over: according to a Gallup poll, more than 700 million people, or 14 percent of the world’s adult population, would like to leave their country of origin permanently, with Europe and the United States being the most sought-after destinations.
A new German government will have to address the migration issue thoroughly. First of all, a clear distinction needs to be made between asylum-seekers and economic refugees. The number of asylum-seekers should not be limited because they are victims of discrimination, persecution, and violence including civil war. Germany, because of its own history, has to remain a welcoming country for those in need of asylum. This is also a human right protected by international law and Social Democrats must defend the right of asylum. A different question is how to deal with refugees from countries without civil war, discrimination, and persecution. This is an issue of immigration and Germany has to find better ways of dealing with immigration. Whereas asylum has to remain without numerical limits, immigration cannot be unlimited. Any German government needs to be able to control the level of immigration, first of all with effective border control instruments. As a result of the Schengen Agreement, this means stronger control of EU borders. But more importantly, the issue also needs to be addressed with regard to Germany’s labor market conditions as well as the capability to absorb immigration successfully by way of integration.
Germany should remain a country open for immigration, but this will need a willingness of refugees to integrate as well as the capacity to offer employment opportunities and the necessary services. At the same time, more development assistance will be necessary for countries with large parts of the population willing to emigrate. The new social media often contribute to unrealistic expectations of people willing to leave their native country and cultural environment by playing down the hardship of moving into a totally new social, political, and cultural environment. Reducing migration pressure is key both for the countries of origin as well as for the countries at the receiving end of migration.
Responding to the 2015 and 2016 refugee crisis predominantly caused by the Syrian civil war and the ongoing wars in Afghanistan and Iraq by displaying a welcome culture was certainly a courageous act of compassion. But it came with great political and economic costs. The refugee crisis also determined electoral outcomes everywhere in Europe, most importantly in the case of Brexit. There is little doubt that the nationalist revolt in Great Britain determined the outcome of the referendum. The same type of revolt took place all over Europe, fortunately with different outcomes, for example, in the Netherlands and, most importantly, in France.
In Germany, the nationalist and anti-immigration wave was also visible with the growing support for the AfD, the PEGIDA movement (Patriotic Europeans Against the Islamization of the West), as well as even more radical movements such as the pro-Nazi Reichsbürger movement (“citizens of the Reich”). Holding up a welcoming culture against these movements saved Europe’s dignity, but there was also a blow back. Voters opposing large-scale immigration switched to the AfD in September 2017 at the expense of the Grand Coalition partners.
With 12.6 percent of the votes for the AfD, political stability is not under threat yet. As long as the center parties can negotiate a sufficient number of consensus areas, political stability in Germany is not at risk. Democracy would be threatened if the extremes would be strong enough to prevent an absolute majority of center parties. Whether the SPD likes it or not, the party is part of the political center and still the heart and core of the center-left. Its future is not on the extreme left where Oskar Lafontaine wants to move the party by suggesting a new movement comprised of Die Linke, parts of the SPD, and parts of the Greens. Following his advice can only lead to the destruction of the SPD. Driving the SPD out of the political center of Germany would be a great disservice to the party as well as to Germany as a country and a nation.
Renewal in Government
The SPD has to renew its self in government. As difficult as such a task may be in another Grand Coalition, all the alternatives would be worse. To hold new elections can only be the last solution if nothing else works. The most likely alternative to a new Grand Coalition would be a minority government of the CDU/CSU under the leadership of Chancellor Merkel. That would theoretically allow the SPD to serve as the strongest opposition party and renew itself in opposition. But political reality would soon bite back. The necessary hard decisions of Germany in the process of reforming Europe together with France will push the SPD into the arms of the CDU chancellor without then being able to impose its will. And Merkel could always put together a majority for her policies with a different majority of votes, most likely a majority of Jamaica partners.
The SPD is the strongest European political pillar in Germany. The current leader, Martin Schulz, has the strongest credentials on European issues. His ambitious project of creating the United States of Europe until 2025 will most likely remain a long-term goal. Creating the United States of Europe on the basis of a constitutional treaty to be ratified by all members will be difficult to reach until 2025. The SPD should not insist on this idea as an immediate project to undertake.
If the SPD were to end up in opposition, could the party afford not to support a European initiative that will most likely come from France and Germany under any future German government? Certainly not, because the consequences would be disastrous and the SPD could easily lose its soul with an opposition strategy against its own European agenda. None of the signature policy issues of the SPD such as a public health insurance system (Bürgerversicherung), the reduction of low-wage jobs, basic retirement income (Solidarrente), publicly provided child care and kindergarten facilities, as well as the education initiative the party wants to start would be possible. These are important substantive issues the SPD could not implement in opposition.
Even more important to consider for another role in government and not in opposition is the need to enrich the European reform process with a progressive economic and political agenda. Macron’s strategy of preserving economic liberalism while at the same time creating a Europe that protects against market failure and rising inequality is exactly the right antidote to populism and nationalism. This can only be achieved with German Social Democrats in power, not in opposition.
Strengthening Europe as a Way to Regain Power
Part of the problem that all Social Democratic parties in Europe face is their own success. Social Democratic policies have undergone massive change in the past, but it would be wrong to interpret these changes as a loss of identity. Most of these changes were necessary adjustments, such as the reforms undertaken by Tony Blair, Bill Clinton, and Gerhard Schröder. Social Democrats should take credit for the success of these reforms. Going back to more traditional policy prescriptions cannot be helpful today. Social Democrats have made peace with market principles and an open world economy realizing that there are no commanding heights under the conditions of a globalized world. Excesses of neoliberalism, in particular as they emerged in the United States and promoted as the “Washington Consensus” need to be corrected, but defending liberalism and openness against the new enemies is a central task of modern Social Democracy. The only way forward is trial and error, the hard way of designing and adjusting rules and regulations that prevent or correct market failure. That’s the hard part of reforming Europe today. The Eurozone needs institutional as well as policy reforms, most importantly completion of the banking union and a European Monetary Fund. Macron’s plans go even further including a Eurozone budget and a Minister of Finance. It is important for Germany to respond to the French reform initiative with a solid German majority behind these reforms.
Germany, too, needs a new economic strategy to make the German economy safe for the twenty-first century under the conditions of digitalization, quantum computing, artificial intelligence, and extremely fast innovation. Key will be investments in digital infrastructure as well as research and education. Today, more than ever, the hand of Social Democracy is necessary for a successful adjustment to the challenges of new technologies, as well as to soften the social consequences of globalization. The SPD can only prepare itself to master the economic, social, cultural, and political challenges of the future with a hands-on approach and the responsibility to test the validity of its program ideas by being willing to implement them.
The Grand Coalition model to look back for inspiration today is the first Grand Coalition from 1966 to 1969. The SPD, also a junior partner of the CDU/CSU at the time, used power sharing to prepare itself for a role in government. This opportunity came three years later in a coalition with the FDP and a social liberal reform agenda. Now is the time for a new progressive SPD agenda thereby setting the stage for other European center-left parties to assume a role in government.
For the progressive center left to succeed in Europe, government experience is not a burden but an advantage. If the SPD can manage to occupy key cabinet positions, in particular for the European reform project as well as for the challenges of the future such as digitalization, quantum computing, and artificial intelligence, the party could lay the groundwork for a future progressive center-left majority in Germany and Europe.
The Limits of Renewal in Opposition
In opposition, the SPD would be squeezed between the extreme right and left, the AfD and Die Linke. This would risk being pulled apart by the siren sounds of left radicalism, on the one hand, and more often than not forced to support the chancellor, on the other hand, without being able to impose its views on major policy decisions. The renewal and rejuvenation effort the party desperately wants to achieve in order to secure its survival as a popular party will turn out to be more difficult in opposition than in government.
Embracing the new digital economy will be just as important as coming to terms with industrialization in the past. In fact, making the economy work for everybody and not only for the blessed few was always key in SPD party programs. Now that Pax Technica is a real possibility in the sense that a globally connected world could emerge on the basis of the vast opportunities digital technology would provide, the SPD should seek a leading role in pushing German leadership in digital technology and digital governance.
Although economically successful at the moment, Germany must now spend its budget surplus for the digital future, improve the digital infrastructure, and start a modernization and education program empowering the country to diversify from traditional manufacturing to an improved service sector, including public services. This is also important for the new middle-class clientele of the party. It will be difficult to acquire the necessary economic competence for the digital future in opposition. The new economy cannot be built on public institutions only. Public-private partnerships will be increasingly necessary for infrastructure modernization such as underground and air transport technologies.
Today, Germany plays a leading role in traditional transportation technologies such as ships, airplanes, trucks, automobiles, and trains. New technologies will require governments to partner with business. In this respect, the SPD needs to overcome traditional reservations vis-a-vis public-private partnerships. What emerged in large parts of the party is an unhealthy hostility toward new technologies (Technikfeindlichkeit). The forefathers of the SPD have been leading thinkers on technological progress. Now is the time to return to the forward-looking capabilities of Social Democratic thinking. This will also help to modernize outdated party structures such as the all-powerful Parteitag, the congress of state and local party leaders which tends to be stuck in self affirmation rather than modernization. Opening the party to new ideas from outside should be part of the renewal process and new communication technologies would allow such an opening.
A New Reform Agenda
Social Democrats learned to live with economic liberalism through crisis experience and adding progressive programs and ideas where markets failed or needed correction. Such an effort is also necessary today after the 2008 financial crisis. Social Democrats also learned from the collapse of communism that there are no commanding heights to run a modern economy. Today, neoliberalism reached its limits and needs to be corrected. This was most obvious in the huge market failure of dealing with climate change and the environment as well as with regard to the banking sector.
Not all neoliberal reforms beginning in the 1980s were unsuccessful. Helmut Kohl was driven out of office in 1998 largely because of a lack of reforms in Germany along the line of the British and the American model. It was the Social Democrat Gerhard Schröder who came to power on a strong reform agenda with elements of a “Neue Mitte.” His reforms of the labor market and the social security and health system were very effective, albeit controversial. The reason why Germany was able to advance from the “sick man of Europe” at the end of the twentieth century to the strongest economy in Europe and a leading export nation on a global scale at the beginning of the twenty-first century is precisely his reforms. Politically, these reforms turned out to be costly. But Germany as a country benefitted from Schröder’s policies with low unemployment rates, low inflation, a substantial budget surplus, as well as a huge trade surplus. The SPD should take credit for what has been achieved.
Social Democrats mostly blame neoliberalism for the decline of Social Democracy. True, everywhere in Europe Social Democratic parties are losing ground. In France, the Socialist Party dropped to 6.4 percent while in power under the leadership of François Hollande. In the Netherlands, the PvdA used to be in power with solid electoral results. In the last national elections, the party received just 6 percent of the vote. Even in Scandinavia, the heartland of Social Democracy, power shifted to more conservative political parties and right-wing populism gained ground. It is important to realize that neoliberal policies were not the only cause for such a development. What Social Democrats in power have experienced were also massive cultural changes related to immigration. Social Democrats should not give up openness for pluralism, diversity, and immigration as well as pursuing liberal economic and trade policies. However, they need to assure those who are concerned about national identity that patriotism is in better hands with them than with extreme nationalism.
Since the election of Donald Trump in the United States, nationalism is again on the rise and the liberal international order is under pressure from outside the European Union as well as from the inside. Hungary and Poland are openly challenging the values of liberal democracies in Europe and the West by crafting domestic policies in opposition to European core values. Hungarian prime minister Viktor Orban even advocates “illiberalism” as a new political doctrine and holds up authoritarian systems of government such as Putin’s Russia, Erdogan’s Turkey, Modi’s India, and Xi’s China as models for Hungary and Europe.
The trend toward authoritarian illiberalism and ethno-nationalism is also gaining ground in Poland and other Central and Eastern European countries. In most of these cases as well as in the case of Brexit, the refugee crisis in the wake of the civil war in Syria served as a catalyst for these developments. It would be wrong to interpret the rise of the AfD exclusively as a result of the social and economic consequences of neoliberal reforms. To be sure, in parts of East Germany, as a result of economic distress after unification, the AfD did particularly well. While it is true that the AfD has now substantial support from workers, the reasons for the decline of the SPD and other Social Democratic parties in Europe are just as much cultural in nature and the result of a sense of loss of national identity, loss of border control, and security concerns as they are social and economic.
The success of the SPD under the leadership of Willy Brandt and Helmut Schmidt in the 1970s with the signature label of “Modell Deutschland” or Gerhard Schröder’s reform strategy of the late 1990s and early 2000s promoted as “The German Way” (Der Deutsche Weg) was the result of combining economic and social reform and patriotism. For Willy Brandt, it was the commitment to be a people of good neighbors (“ein Volk der guten Nachbarn”). For Schröder, it was the patriotism of a modern German nation based on universal values. Social Democrats need to adopt a patriotism based on universal values, a constitutional patriotism as suggested by Jürgen Habermas, to stand up against new dangerous forms of nationalism, in particular ethnic nationalism.
As Ralf Dahrendorf pointed out almost half a century ago, the traditional social base of Social Democracy has melted away. A new middle class no longer part of the proletariat that has emerged, which is not only interested in social and economic advancement, but also law and order, the capability to defend the core values of Germany and Europe, as well as environmental, non-material, and cultural issues. The SPD needs to respond to these developments with policies that allow Germany to act on a national as well as a European and international level.
With its economic and political weight in Europe today, Germany is willingly or not in a leadership position. Leadership requires a stable government at home and under the present circumstances this will only be possible in a Grand Coalition on the basis of a firm and predictable agenda for the future of Germany and Europe. European unity and holding up European values such as human rights and universal values against the forces of a new nationalism must be the common ground for Social Democrats in Europe.
Dr. Dieter Dettke is a Non-Resident Fellow at AICGS and an Adjunct Professor in the Center for Security Studies at Georgetown University.
The views expressed are those of the author(s) alone. They do not necessarily reflect the views of the American Institute for Contemporary German Studies.
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