Coalition's federal budget dispute: 5 possible scenarios +++ Interior Ministers meet to discuss asylum policy +++ China takes lessons from the Germans on trade
Weds 19th June
Good morning. Today’s post focuses primarily on the big questions facing Germany’s government: the Federal Budget, due to be submitted to the Bundestag on 3rd July (and as yet not agreed). After that there’s some very quick discussion of a meeting in Potsdam of the federal and state interior ministers, where asylum policy is top of the agenda, and a piece suggesting China is learning from the Germans in defending its aggressive trade policy.
Federal Budget: Five Scenarios
Zeit’s Ferdinand Otto has an excellent run-down of five potential outcomes of the ongoing budget negotiations between the three parties of the Social Democrat-Green-Free Democrat Ampelkoalition (Ampel means ‘traffic light’, owing to the parties’ colours:🚦)
The liberal FDP are proving to be the major source of disagreement among the parties. Their leader Christian Lindner has been on the war footing over the so-called ‘debt brake’, a constitutionally-imposed limit on the public deficit set at 0.35% of GDP enacted in 2009. This has partly been ignored by the federal government ever since its suspension during the pandemic and the invasion of Ukraine, but Lindner wants it back in full.
Scholz agrees in principle, but his party (especially the ‘Jusos’— young socialists, SPD youth wing) are threatening to revolt in the event of a ‘reimposition of austerity’. The Greens are against, but are keeping stumm, trying keep their powder dry.
Otto sums up five potential scenarios:
Somehow, the coalition gets it together in the nick of time.
As the author says, all parties are aware that a government crisis in Germany could plunge Europe even deeper into crisis. Perhaps pragmatists will win the day.
No agreement: the budget gets handed over to the Bundestag
In the event of no deal emerging, the government may offload the job to the Bundestag’s members to stitch something together themselves. Otto says this is highly unlikely: such a move would be seen as utter failure, plus if the entire machinery of the executive couldn’t come up with a decent compromise, it’s unlikely that the Bundestag will.
No budget, but the coalition keeps governing
Unlike in the US, no budget does not mean government shutdown. The government would continue to govern, but all spending would have to be run past the Finance Minister, Lindner. This potential for a massive increase in Lindner’s power and influence might explain the FDP’s appetite for brinkmanship.
No budget, Tschüss FDP
This is also quite improbable, but not impossible: Scholz, finding himself possessed by an uncharacteristic boldness, makes a stunning move and listens to his party’s anti-austerity calls, bangs the table against the FDP and threatens to kick them out of government. SPD and Greens trudge on in a minority government until next September. Though this would not give them the authority to do anything about the debt brake, which ultimately is still a constitutional requirement which could be enforced by the courts.
The Ampel falls
The coaltion fails; fresh elections have to be called as no alternative coalition can be built out of the current Bundestag (although the CDU are apparently planning in the event of an approach by the SDP for another ‘Grand Coalition).
Given the absolute kicking the SPD got in the EU elections, I’m sure this is the one thing Scholz would like to avoid.
Faeser brings heads together discuss migration policy
Today marks the start of a 3-day meeting of federal and state interior ministers in Potsdam, called by Federal Minister Nancy Faeser (SPD). Coverage from the SZ concentrates on the SPD’s recent proposal to start deporting migrants (including those granted asylum) who are convicted of serious crimes back to their countries of origin, including Afghanistan and Syria. Faeser is said to be ‘examining how this would work without resuming relations with the Taliban or the government of Syrian President Bashar al-Assad’. So far the answer seems to be ‘we will negotiate with neighbouring states’.
The FAZ, meanwhile, considers the application of a Rwanda-style scheme in the EU.
China takes a leaf out of the German book
Finally, Handelsblatt has a piece out today about China’s response to the EU’s imposition of tariffs on imports of cars manufactured in the People’s Republic. It’s strikingly similar to the German response to threats made by President Trump to impose tariffs on German exports to the US: ‘our cars are simply better than the competition— it’s not out fault your customers like them’.