German Coalition Negotiations Failure and Associated Risks

• The Freie Demokratische Partei (Free Democratic Party, FDP) withdrew from coalition negotiations, collapsing the most likely coalition deal.
• The present government will remain in place until a new government can be formed, most likely following an election.
• Small scale political rallies and demonstrations are highly likely.

Political: The leader of the FDP, Christian Lindner withdrew from discussions for the proposed “Jamaica Coalition” with Angela Merkel’s Christlich Demokratische Union (Christian Democratic Union, CDU), and Die Grünen (Greens). This has removed the possibility of Angela Merkel commanding a majority government, provided she maintains her refusal to cooperate with the far-right Alternative für Deutschland (Alternative for Germany, AfD). Martin Schulz’ Sozialdemokratische Partei (Social Democratic Party, SDP) continues to resist a repeat of the previous Groβe Koalition ( grand coalition, GroKo), in which it supported the CDU.

Mr Lindner’s withdrawal from the negotiations has been reported as due to irreconcilable differences between the FDP and the Greens on key policy matters. The German President, Frank-Walter Steinmeier, has summoned the leaders of both the Greens and the FDP for discussions after the failure of negotiations, apparently seeking to find compromise between the two. There are no time limits imposed upon the negotiations by law, but the inability of Chancellor Merkel to control a majority in the Bundestag (Parliament) means the elected members could compel the President to remove her with a simple majority vote. This would, in turn, force the dissolution of the Bundestag after a further three weeks, if a replacement Chancellor could not demonstrate a majority in that period.

At this stage, the outcome of the political crisis remains unclear, although the relatively peaceable nature of events should not be taken to understate their importance; senior German officials have indicated that it amounts to the greatest crisis of governance since the end of WWII. Whilst this reads as an excessively pessimistic view, it highlights the fact that Germany’s political system has not had to withstand a combination of stubborn parties, and entrenched reluctance to negotiate or compromise in the face of a politically divided population.

Based on the results of the election and the historical ability for parties to work together, the only two viable coalitions are centered on the CDU, either with the SPD alone, or the aforementioned three party “Jamaica coalition”. Provided the FDP and SDP remain resolute in their decisions to withhold their support for either of these, the only viable outcomes appear to be either a minority government, or a new election.

The minority government situation could arise if a majority in the Bundestag were willing to elect a major party leader, most likely either Merkel or Schulz, with a single vote of confidence, but without formally tying their parties’ votes into a coalition agreement. No party leader has voiced support for this outcome, but it remains a constitutional possibility. This would likely prove short-lived; despite Germany’s normally fixed election terms, such a situation would likely prove unviable and force the President to dissolve the Bundestag within 12 to 18 months, in the hope that the following election would result in a more compatible mix of candidates and parties.

A new snap-election appears to be the preferred option for most of Germany’s political leaders in the case that negotiations continue to stall. This opinion appears to be mirrored by polling, which has shown a significant preference for new elections, as opposed to minority government. The dissolution of the Bundestag could occur as soon as mid-December, however; considering the likelihood of further negotiations, and the Christmas season, this is most likely to occur early in the new year. Senior members of the Greens have supported this suggestion, indicating that they are planning for an election around Easter-time 2018.

In the intervening period, Germany will be able to maintain effective government by keeping existing officials in office, however it will prove challenging for any party to put forward and carry out a meaningful legislative program. It is difficult to assess what effects this may have; the September election was widely criticised for the lack of notable policy differences between major parties, therefore public appetite for substantial change appears limited. The exception to this may stem from supporters of the AfD and other fringe groups; the ongoing issues with conventional politics are likely to further fuel their discontent with the system and lead to more vocal calls for change.

Low level protests are likely to occur around key government buildings in major urban areas, particularly Berlin, and these are likely to grow in size closer to the anticipated election. Open spaces near major rail-hubs have also recently hosted demonstrations, therefore some limited disruption to travel can be expected. Protests in Germany are generally well policed, with instances of violence being isolated and small in scale.