Voters say goodbye to the status quo in Germany
The strong performance of the Greens in the German federal elections – although less strong than the party hoped just a few weeks ago – gives hope that the country will finally start to move in a more promising direction. This may mean moving away from the authoritarian and friendly positions of outgoing Chancellor Angela Merkel, notably her support for the Nord Stream 2 pipeline between Germany and Russia, and her defense of an EU investment deal with the China (which has since been blocked by the European Union Parliament).
Unlike Merkel’s Christian Democratic Union (CDU) and Merkel’s Social Democratic Party (SPD), both of which have displayed a pro-Russian bias since Gerhard Schröder’s Chancellery (1998-2005), the Greens are in favor to stricter policies towards Russia and China. And they are now in a position to control the past prejudices of the SPD towards Russia, since they could join its candidate chancellor, Olaf Scholz, in a new government coalition which would turn over the CDU to the opposition.
In the last televised campaign debate, Scholz and Greens leader Annalena Baerbock spoke out specifically in favor of this arrangement. While forming a new government can be a slow process and many combinations and permutations are possible, the Greens are ready to play a key role in almost any. They are the common denominator, and this fact will not have escaped Russian President Vladimir Putin, whom many Germans believe is active behind the scenes in an attempt to downplay the electoral success of the Greens.
The problem for the CDU is that even Merkel’s pro-export and pro-employment policies have acquired politically unsavory attributes in recent years. True, in 2020, German trade with China totaled 212.9 billion euros ($ 342 billion), compared to 171.5 billion euros ($ 275 billion) with the United States, 147.3 billion billion euros (237 billion dollars) with France, 114.4 billion euros with Italy (184 billion dollars) and 101.6 billion euros (163 billion dollars) with the United Kingdom . Because so many German jobs and income depend on trade with China, German leaders have often ignored that country’s human rights abuses and challenges to the open, rules-based world order. As former German vice-chancellor and SPD leader Sigmar Gabriel said in a recent interview, “Germany has walked a tightrope between condemning Chinese human rights violations and ensuring the ‘access to Chinese markets for German companies’.
Still, I’m sure many Germans are bothered that their exports have come at the expense of victims of human rights violations in China. Worse yet, Germany’s over-reliance on Chinese trade has prevented the European Union from establishing a united front against Chinese authoritarianism. How can Europe be tough on China when its biggest economy is so soft?
Merkel has been out of step with her EU partners on autocrats. If the Greens have more influence on German politics, there could be more EU solidarity when it comes to dealing with China and Russia. There would also be more transatlantic solidarity, in line with US President Joe Biden’s pledge at the United Nations to move from “relentless war” to “relentless diplomacy” with China and Russia.
In any case, what the Greens want most for Germany is a modern economy, not a mercantilist and backward-looking economy. Their catchy campaign slogan, “Goodbye the status quo, hello future,” perfectly captures what sets them apart from both the CDU and the SDP, the two main parties of yesterday.
The green slogan strongly suggests a new pro-European strategy for German growth. Among other things, this means a redeployment of Germany’s productive resources from exports (many of which are fossil fuel vehicles) and into renewables, high tech, digital and other sectors.
Most critics agree that the biggest shortcoming of the Merkel era was its failure to feed the industries of the future. “Despite growth and increasing employment,” notes Katharina Utermöhl, senior economist at Allianz, “there has been little modernization”. Under Merkel, low rates of public investment left the country ill-prepared. The economic policy has been to live for today and forget about tomorrow. While Germany has achieved a thriving economy with plenty of jobs, especially for women, it is an old-fashioned economy that will inevitably stagnate unless policymakers change course.
Merkel left a big void for the Greens to fill, and that is what they now intend to do. One promising option is to introduce an export tax, the proceeds of which would be used to finance industries of the future. It would kill two birds with one stone, rolling back Merkel’s mercantilism and investing in the sectors necessary to maintain Germany’s global competitiveness.
Of course, the Greens do not actively advocate an export tax. During the election campaign, they pleaded for tax increases on the rich, regulatory measures to cut greenhouse gas emissions, reform of German debt rules, and stricter policies towards China and the United States. Russia. But if the idea is to get rid of the status quo and pursue economic modernization, an export tax would establish the party’s credibility and gain media attention. What better way to accelerate the fall of Merkel’s mercantilist economic model?
Germany’s status quo is not yet overcome. But the Greens’ strong performance in this month’s election should give it a much shorter lifespan.