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Various Facets of the ‘Traffic Light Coalition’ in Germany

Dr. Swasti Rao is Associate Fellow at the Europe and Eurasia Center, Manohar Parrikar Institute for Defence Studies and Analyses. Click here for detailed profile.
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  • December 23, 2021

    The Merkel era had shaped not only Germany’s economic and strategic worldview, but also that of the European Union where she remained the most formidable cohesive leader. Olaf Scholz, the new chancellor from the Social Democratic Party of Germany (SPD) had served as the finance minister in Merkel’s coalition government since 2018. Hailing from Hamburg, the important port town where Chinese multinational giant COSCO holds the economic reins with an ever-increasing footprint, his chancellorship is under keen observation from world over for the changes or continuities Germany will show under his leadership.1

    Traffic Light Coalition

    The rather catchy phrase “traffic light coalition” comes from how the first traffic light, an unusual technology back in 1924 when first introduced, became a game-changer in modernising Germany. Scholz has described his Social Democrats’ coalition with the Free Democrats and the Greens as a similar path-breaking event that will become indispensable in times to come and will radically change Germany.2 While part of it is usual electoral optics, there is no denying that there is some truth in the claim as well. It is for the first time that a difficult coalition has been formed (in departure from Merkel-era coalitions that lasted for decades). As Scholz takes office, speculations are flying high about how he will manage the “traffic light” coalition as per the 177-page deal that was struck after two months of negotiations with its partners.3 The deal lays out the coalition plan to run the country. With major cabinet reshuffles to reconcile the ideologically opposed coalition members on key issues to steer Germany’s future course in months (perhaps years to come), the deal document is rife with several sharp divisions among the coalition partners on major economic, fiscal and foreign policy issues especially with regard to energy security, Russia and China.4

    The policies (directly or indirectly) away from Russia and China would mean closer ties with the US, especially with regard to the new energy security deal and the nuclear umbrella. In a welcome step for the US, the coalition document has already indicated that it will observe a longstanding nuclear sharing arrangement allowing the US to continue deploying 20 atomic bombs at an airbase in western Germany. This has prompted a sigh of relief in Washington because in their election manifestos, both the SPD and the Greens election programmes condemned the basing of nuclear weapons in Germany.5 That these differences have been reconciled in the final coalition document is indeed a sign of the incoming administration responding to the fast-changing geopolitical scenario.

    What also binds them together is their desire to modernise and overhaul Germany. However, while the document furnishes good-sounding plans, it offers little insight into how those plans would work on the ground. In current geopolitical times, Germany’s new leadership will have to tackle the fact that industrial policy cannot be separated from foreign policy especially in the context of over-reliance on certain countries for energy, specially fossil fuels and industrial exports.

    Resetting Relations with Russia

    The new cabinet has an interesting composition. Heiko Maas, foreign minister for the past three years and a keen advocate of the Nord Stream 2 pipeline has been replaced by Annalena Baerbock, co-leader of the Greens, who has opposed the Nord Stream 2. The new Economic Minister is Robert Habeck, again a Greens leader. He will oversee the regulatory approval process for Nord Stream 2. Things were different with his predecessor Peter Altmaier, who lobbied on behalf of Russia and was instrumental in getting the controversial Nord Stream project through.6 Whether Robert Habeck will do so, seems unlikely because Greens view Nord Stream 2 as symbolic of Germany’s subservient relationship with Moscow.

    Not Scholz himself, but other members of his Social Democratic Party have been close to Russia. Former Chancellor Gerhard Schröder (from SPD) has been Putin’s chief international lobbyist as well as the chairman of the Nord Stream 2 company.7 But with radically opposed Economic and Foreign Ministers, the earlier relationship with Russia will be challenged. The success of Scholz’s coalition will depend to a large extent on whether he can distance himself from his party’s Putin loyalists and define a more even relationship with Russia. He has to aim for some continuity but with enough flexibility to tackle the tweaks. The Nord Stream 2 project therefore offers the first test of his resolve towards resetting relations with Russia. With delays costing millions of euros every day, Putin has been warned time and again by the new German administration that invading Ukraine would result in “severe consequences” that could mean shutting off the multi-billion gas pipeline.8 The future of Nord Stream then depends on the extent to which it is continued being used as a political weapon, first by Putin and now by Germany and the West.

    Trends in Germany–China Relations

    An array of interesting facets emerge upon examining the trends in Germany–China relations. Under Merkel’s chancellorship, Germany became China’s biggest trade partner in Europe. However, the Greens have been more critical of Xi’s regime with some of their MPs being subjected to sanctions by the Chinese Communist Party (CCP) for critiquing China’s human rights violations against the Uighurs.9 How will Scholz coalition maintain close ties with China under prevailing conditions, will be a matter of interest. Scholz recently drew flak from CCP when he unveiled the coalition deal document that includes surprisingly strong language on China, pledging to call out on human rights violations of Uighurs and backing a “democratic” Taiwan’s entry in international organisations.10 It is noteworthy that the coalition agreement mentions China at least a dozen times and that terms such as "system rivalry", "human rights" and "fair rules of the game” feature repeatedly in China’s context.11

    The bright side is Scholz’s reputation as a balancer, just like Merkel. He is likely to deftly balance the economic dependence on China with his Atlanticist enthusiasm and is expected to coordinate his China policy more closely with Washington and US nuclear umbrella.12

    Germany and the Equation with EU

    The coming months would see Scholz immersed in key negotiations in Brussels that have already started with his first trip to meet Ursula von der Leyen, the EU Commission president.13 The same trip, however, saw him dodge questions about the Nord Stream 2.14 However, it may be extrapolated that with new US and EU sanctions against Russia’s Wagner group to step up pressure, Putin knows that any undesirable action on the Ukrainian front will lead to further delaying (or even dumping) the expensive Nord Stream 2.15

    In coming days, in his negotiations with EU, Scholz would focus on the reform of fiscal rules (officially, the Stability and Growth Pact), the long-term viability of the EU's €750-billion recovery fund (Next Generation EU) and the huge investment needs to decarbonise and digitalise the whole economy.16 In his maiden trip to Brussels as a Chancellor, Scholz has reiterated “a stronger Europe” where “German politics has to take on a role of responsibility”.17

    A pertinent question is how does Germany plan to play a strong, responsible role when Scholz’s choice of defence minister seems like a let-down for now.  Picking up a virtually unknown former Justice Minister Christine Lambrecht, a member of the SPD’s leftist wing, suggests that Scholz’s coalition is not likely to develop Germany’s dysfunctional military. It needs to be noted that Lambrecht has neither military nor foreign policy experience nor an international profile. Her nomination itself has come as a surprise.18 In her new role, she is expected to bring about sustainable changes. Speculation is strife about how that will happen though.

    Back in 2014, Lambrecht, considered at the leftist end of the SPD's political spectrum, expressed her opposition to the German military acquiring armed drones. And now in 2021, she is likely to oversee the procurement of drones, though, as commentators fear, perhaps not without protest.19 She has also said that her first priority in office would be to re-evaluate all of the German army’s foreign engagements, which primarily consist of peacekeeping missions around the world involving about 3,000 troops and devising an “exit strategy” when needed.20

    How German defence outlook will shape in coming months will depend on how Scholz and his defence minister react to global pulls and pressures. Yet to defend its own interests on the international stage, a more proactive stance and posturing is required.

    Scholz’s Policy towards the Indo-Pacific

    Scholz coalition’s commitment to the Indo-Pacific is noteworthy. The coalition agreement lays out plans to build relations with key players in the region like Japan, South Korea, Australia, New Zealand and India as part of Berlin’s fledgling Indo-Pacific strategy to protect its economic interests in the region.21 Germany aims to strengthen its trade and investment linkages with Australia, New Zealand, India, ASEAN, Japan and South Korea. A rules-based order, freedom of navigation and supporting multilateralism are the pillars of German outlook towards Indo-Pacific.22 Post AUKUS, as the French take over presidency of the EU Council from 1 January 2022, there will be a renewed attention and engagement of France and the EU.23 A sharper German focus on the region would follow.

    Apart from the obvious push that Germany–India bilateral relations would get as Germany expands footprints in the Indo-Pacific, the two countries also have a longstanding cooperation on climate change that in the coming times will focus on financial and technical assistance.24 Germany sees India as a central partner for tackling issues of energy, climate change, food security and international order. Scholz Administration has been forthcoming in stressing on continuity towards Merkel-era policy on India.

    Economic Tensions among Coalition Partners and Covid-19 Fourth Wave

    The bigger tension lies in the nature of the coalition parties themselves. While the Social Democrats want to increase social spending, the pro-business Free Democratic Party rejects higher taxes. At the same time, the coalition, on the whole, wants to spend €50 billion annually to accelerate the transition to green energy and modernise the outdated public infrastructure.25 The July 2021 US–Germany green energy deal that aims to invest more than €200 million in energy security in Ukraine as well as sustainable energy across Europe, is too fresh to show sustainable results. Hence, the mutually exclusive policies among the coalition partners have to be worked out in equilibrium soon. Without the money to put into green energy transition, Germany will continue to rely on natural gas from Russia.

    Domestically, as the new administration takes charge, the rising number of cases of the fourth wave of Covid-19 pandemic needs utmost attention. As the incoming Health Minister Karl Lauterbach takes office, Germany has been fighting one of its deadliest Covid-19 waves.26 One of the many reasons behind the rising number is that ‘epidemic situation of national importance’ status has expired and as a result, state governments have lost the legal basis to introduce emergency measures such as lockdowns and school closures. This governance failure has directly resulted in the worsening situation. Karl Lauterbach’s success will be determined by how deftly he manages to not further alienate the anti-vaxxers and the unvaccinated on whom punishments like nation-wide contact restrictions and ‘2G’ rules barring them from entering most public places, were introduced.27

    The path of the “traffic light coalition” headed by Scholz, on the one hand, is laden with challenges and on the other, replete with spaces for positive action. With several new faces in key positions, its success would lie in maintaining continuity, and tweaking it to accommodate necessary changes when required.

    Views expressed are of the author and do not necessarily reflect the views of the Manohar Parrrikar IDSA or of the Government of India.

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