|Which way will Angela Merkel choose?|
There has been a lot of posturing over the past couple of weeks from all sides about the willingness to do a deal and what is needed to secure one. So far though, things have basically followed our expected timeline with end of November still looking to be the likely date for a final agreement.
A grand coalition still remains the most likely outcome but a CDU/CSU and Green coalition (Black-Green) has increased in likelihood. Below we lay out the key developments in each party’s position:
- Despite being the runaway winner of last month's elections, it has taken a relatively back seat in the recent public discussions (behind closed doors it is obviously leading things).
- Has kept the door open to formal talks with both the SPD and Greens, ensuring that the former knows it has a “serious alternative”. That said, some within the party have expressed unease about a Black-Green coalition, with CSU Chief Horst Seehofer notably saying he “would not hold talks” with them.
- Has begun to lay out its terms for joining a coalition, focusing on higher taxes on higher incomes and a national minimum wage. Has also made overtures about renewing its push for a financial transaction tax of some form, possibly linking this to the proposed eurozone bank resolution fund.
- The spokesman of SPD’s conservative wing, Johannes Kahrs, told Die Welt it is “non-negotiable” that “the SPD appoints the Finance Minister”, although speculation over this has now gone quiet and seems unlikely to happen given how keen the CDU/CSU is to hang onto this ministry.
- There is clearly some hesitancy within the SPD however, with many still scarred by the effects of the previous grand coalition in 2009. The party leadership has also promised that any coalition deal will need to be ratified by the full party membership – this adds uncertainty to the negotiations.
- Much of the party leadership has stepped down meaning it is in somewhat of a transition phase, with senior politicians divided in terms of their eagerness to conduct negotiations with the CDU/CSU.
- The party would likely want similar agreements to the SPD on tax but also some assurances on support for renewable energy. However, given the change in leadership of the Greens and the shifts in the CDU/CSU’s energy policy, the two parties are now much closer on both of these issues.
- That said, there are plenty of areas of discord, one being immigration and asylum policy, which came to a head in the wake of the Lampedusa tragedy. Interior Minister Hans Pieter Friedrich (CSU) said earlier this week, “It cannot be the responsibility of Germany or the EU to accept all the people who are not as well of as the people here”, and went on to hit out at those immigrants who come to Germany allegedly to only access benefits. Joint leader of the Greens Katrin Göring-Eckardt hit back saying, "The rhetoric of allegedly excessive demands in view of the terrible Lampedusa catastrophe is something we cannot and will not accept”. Some have speculated that the row is in at least in part tactical, so as to provide cover in case the negotiations fail.
Meanwhile, it looks the SPD and Greens have ignored the siren calls of Die Linke to use the three parties' combined parliamentary majority to force through measures such as the minimum wage.
One final interesting point, is that these negotiations are starting to cause tremors in other countries with the Irish Independent running the front page headline this morning, “German parties battle over our corporation tax”. Clearly the lines between national and EU politics are becoming increasingly blurred in the eurozone.