The Fate of Social Democracy Is Being Decided in Germany

It is not easy being a European social democrat these days. Just ask Martin Schulz, the leader of the Social Democratic Party of Germany (SPD). Schulz’s party, which governed together with Angela Merkel’s Christian Democratic Union (CDU) in a grand coalition for eight of the past 12 years, suffered its worst electoral result since the late 1940s in the most recent German parliamentary contest. In historic elections held last September, the SPD received just over 20 percent of the vote. The party seems to have suffered the fate of its center-left cousins in France and the Netherlands, both of which suffered historic defeats at the polls last spring. All these social democratic parties paid a heavy price for their pragmatic shifts toward the political center ground while serving in government.

The weakness of European social democracy is not new. With only a few exceptions, social democratic parties have been steadily losing ground in Europe since the 1970s. Nevertheless, those center-left parties have played a critical role in anchoring the working-class vote to the welfare state domestically and to the European project across the continent. Social democratic parties have also been central actors in integrating immigrant communities into the democratic electorate and in maintaining pressure against the rise of income inequality. To some extent, Europe’s social democrats are the victims of their own success. They managed to create a broad consensus around the need to balance capitalism’s excesses with active government intervention.

The SPD has been particularly important for the broader European social democratic cause. Without the Social Democrats, the German economy would be less efficient, its leadership in Europe would be more austere, and the country’s policies toward new immigrants would be less welcoming. But the SPD is also emblematic of social democracy’s current impasse. By governing in a national coalition with center-right Christian Democrats for eight of the last 12 years, Social Democrats have often had to compromise against the interests of their traditional working-class base. Tainted — some would say corrupted — by power, they have become both less pure and less effective as a progressive movement in German politics. When they have had real legislative achievements — for example, the introduction of a statutory minimum wage during the last government — they have been neutralized electorally by their close association with the center-right. In the eyes of many voters, the SPD has become just another centrist establishment party. And if that is the case, why not just vote for the real thing, i.e., Merkel’s CDU?

The SPD is now being forced to consider what role, if any, it is going to play in the next German government. The answer it settles on could determine the fate of the party — and the future of Europe’s broader social democratic movement.

Another Grand Coalition Would Be A Disaster For The SPD

Damaged by his ballot-box defeat in September, Schulz immediately announced his intention to have the SPD spend the next four years on the Bundestag’s opposition benches. This left Merkel with the unenviable task of cobbling together a so-called “Jamaica” coalition (black-yellow-green) with the liberal Free Democrats (who are the yellow to the black of the Christian Democrats) and the Greens (who are, well, green). The Free Democrats — still heavily scarred from their previous coalition experience with Merkel, which saw them ejected from the Bundestag in 2013 — agreed to talk but not to bargain. They abandoned the negotiations on a point of principle, although which point really mattered depends upon which leak from the talks you choose to believe. Some say it was Europe, others say it was immigration, and yet others cite irreconcilable philosophical differences. The bottom line is that the Free Democrats would not do a deal, and so Jamaica is not on the cards. This leaves only one realistic possibility to form a coalition government that does not include the far-right Alternative for Germany (AfD).

In effect, in a country that prides itself on its stability culture and lack of political drama, the SPD is now being forced to rethink its strategy of rejuvenating its forces in opposition. German President Frank-Walter Steinmeier — himself a Social Democrat — made it clear that he sees finding a workable majority as a political obligation for any major party worthy of its name. Caught between the call of national duty and the need to revamp their waning electoral support, Schulz and his colleagues are now faced with three choices: (1) to join another grand coalition with Merkel’s Christian Democrats; (2) to support a minority government led by Merkel and her more conservative partners in Bavaria’s Christian Social Union; or (3) to face the German voters once again in early elections.

Alas, it is not hard to guess what those options will bring. Another grand coalition will be fatal for the SPD, because it would deprive the party of its distinctive identity in the eyes of the voters. If it cooperates with the center-right CDU to craft policy for another four years, the SPD should be expected to hemorrhage votes both to the democratic socialist Left Party — to which it lost half a million votes last September — and to AfD, waving its anti-immigrant and welfare chauvinist banners, to which it also lost half a million votes. The other social democratic parties that have gone down this route — like the Dutch Labor Party — have suffered mightily as a consequence: Votes for the Dutch Labor Party fell from 2.3 million in 2012 to just under 600,000 in 2017 as voters shifted to the left-liberal D66, the Greens, and a party whose major platform is to support animal welfare rights. Matteo Renzi’s Democratic Party in Italy is worried about suffering a similar splintering of its support base next spring if it chooses to link up with Silvio Berlusconi’s Forza Italia.

As for the third option, another round of voting will return much of the same as the last election. Worse, there could be a slight surge in support for the Free Democratic Party because it made its stand on principle, a bit of an increase in support for Merkel’s CDU as centrist voters yearn for political stability, and additional losses for the SPD, which will only look weaker and more indecisive now that it has committed to exploring another grand coalition. This means the only option remaining is to support a minority government.

Germans shudder at the thought that a minority government will mark a return to the instability of the Weimar era of the 1920s, when extremist parties pulled away support from the political center, eventually resulting in the rise of Hitler and the Nazis. Elites in Berlin also worry that it will imperil Germany’s leadership in Europe at a crucial time, as discussions are on the agenda on how to restructure European institutions after the United Kingdom’s departure, and with an eye on preventing another economic and financial crisis like the one that dominated much of the past decade. The SPD should take one for the team, they argue, both to show that Germans can be responsible to the electorate and to make sure that Europe continues to hew to German preferences. The opposite is more likely.

If the SPD stays out of the government, then we are less likely to see early elections before they are ready to face the electorate. In the meantime, the SPD would have the opportunity to push its agenda selectively both in the Bundestag and before the media. It may not have a seat at the table either in the various ministries or at the Council of the European Union, but it would have substantial agenda-setting powers nonetheless.

If the SPD is in the government, then its support can be taken for granted. But if the SPD is on the outside, Merkel will have to ask for its support, and it will be able to announce the conditions for their participation. Merkel will also have to accept the blame for working with other voting blocks like the AfD in promoting her agenda when the SPD is not persuaded. In other words, the balance of power will shift. The SPD will be able to take credit for success while leaving the Christian Democrats to take the blame for failure.

A Minority Government Is Not Unstable

The German Basic Law is in many ways an institutional reaction to the political instability of the 1920s Weimar Republic. As a result, the constitutional provisions to shore up the chancellor and her government are very strong. The chancellor is the only one who can face a confidence vote. The rest of the government is appointed by the chancellor. Hence, the only challenge is for the chancellor to be elected. That can take place by a simple majority of the Bundestag in the first of two rounds of voting — one initiated by the president of the republic and, if that fails, the other initiated by the Bundestag itself. If no candidate in either of those first two rounds wins the support of the majority of members of parliament, then the voting moves to a third round, where the candidate with the most votes wins.

In the current situation, Angela Merkel would almost certainly win more votes than any other candidate. The only questions in that case are the following: (1) Would Steinmeier, who used to serve as her foreign minister, agree to appoint her as chancellor of a minority government? (2) If so, would Merkel, who has expressed major reservations against leading such a government, actually agree to serve? From this perspective, it is no mystery why both Steinmeier and Merkel are eager for a renewal of the current grand coalition government. They do not want to be responsible for a leap in the dark, and both would much rather see Schulz fall on his own sword and accept a grand coalition government.

Neither Steinmeier nor Merkel is eager for early elections. The most recent polls do not show an increase in support for the AfD, but that is no guarantee that the outcome will be any better than it is at the moment in terms of forming a stable coalition. In other words, the instability and impasse that could result from a quick return to the polls would be on them. The burden would fall particularly hard on Merkel’s allies in Bavaria’s Christian Social Union. They are already in the throes of a succession struggle, and they have to go to the polls for regional elections in Bavaria in less than a year’s time. Another round of national elections only increases the risks that the party will lose further ground to the AfD on its right. That is why the Christian Social Union is tacking from the more centrist Horst Seehofer to the more right-wing Markus Söder. The SPD has no business forming a coalition with the Christian Democrats in such circumstances. Luckily for them, they do not need to do so.

If Merkel agrees to become chancellor again (and Steinmeier agrees to appoint her), then she and her Christian Democrats will own the German government. They will not be able to guarantee a majority in favor of legislation without the support of other parties. It will be a weak government in the policy sense. But they will not be constantly threatened with a vote of no confidence. The only way to throw them out of office is to find another candidate for chancellor who can win a majority in the Bundestag. Merkel could of course lose a no confidence vote and then request to dissolve the Bundestag. In turn, the president would have to agree to that request. But, in that case, it would again be Steinmeier and Merkel who would be responsible for any instability, since they would control the decision-making process. If they wanted to avoid inflicting that instability on the German people, they would just have to make a deal with the SPD. The bottom line is that a minority government is only as unstable as the chancellor and the president would like it to be. The SPD should make them own that responsibility, and they would be better for it as a result.

A Social Democratic Policy Agenda Is Possible In A Minority Government

Of course an uncooperative SPD would make it an easy scapegoat for both Steinmeier as president and Merkel as chancellor. That is why it would be important for the SPD to announce a progressive agenda up front, both domestically and with respect to the European Union. This is where the SPD gets to set the agenda. In many ways, it can do so more easily from outside a coalition than from working inside the ministries. The goal should be to chart the broad direction of policy rather than to invest too much effort and attention on the implementation. This time around — and in contrast to what happened in the last two grand coalition governments — the SPD can take credit for the successes and leave the Christian Democrats to explain the policy failures.

Germany is one of those rare countries with a bit of a budget surplus. The SPD could insist its support in the Bundestag for a Merkel-led minority Cabinet depends on much of that surplus to either go to public investment in infrastructure or targeted tax cuts for the working classes. On the environment, the SPD could point to the paradox of Merkel chastising Donald Trump’s America for pulling out of the Paris climate change accords while not doing enough at home to meet its own carbon emissions targets. On migration, the SPD should tie its support for family reunification of over 1 million Syrian refugees to a more active policy to shore up the wages of the bottom half, which have been stagnant for over a decade. On education, it could push the minority government into the direction of investing more in Germany’s vocational training programs in a concerted effort to gain some of their lost lower-skilled voters back. These are policies for which there is broad public support on the left of the political spectrum. It would allow the SPD to re-establish itself as a genuinely progressive political movement.

On Europe, Martin Schulz already made a big splash by suggesting he wanted to see a “United States of Europe” by 2025, supported by a new constitutional treaty that is the result of serious consultations with civil society and the people. Most controversially, Schulz suggested that those countries that opposed such a new treaty could simply leave the EU, in a not-too-subtle swipe at Hungary and Poland. While Schulz’s proposals may seem pie in the sky, they at least have the virtue of moving the needle on many EU integration issues that are in need of completion. We may not get a new constitutional treaty, let alone a “US of E,” but the SPD could insist Merkel move her European agenda away from national risk reduction toward European risk-sharing.

In concrete terms, that would mean completing the banking union by accepting shared deposit insurance, and even bringing Eurobonds — a commonly issued eurozone debt instrument that could compete with U.S. treasury bills on international markets — back onto the negotiating table. The SPD could bring about a shift in emphasis from austerity and structural reform toward joint investment and solidarity. They could go a long way to meeting French President Emmanuel Macron’s ambitious proposals for making the next step in European integration. It could also support further steps toward a genuine common foreign and security policy. This would not be without risk. While there is strong support among the SPD’s establishment for these pro-EU policies, the party will have to convince the German public and its own grassroots that policies of European solidarity are both in Europe’s and in Germany’s interest. The only way the European project will survive is if Germany can move from blaming the EU periphery for all the euro’s woes and put its shoulders under a policy that has EU solidarity as the quid pro quo for national fiscal responsibility.

Germany and the SPD find themselves at the crossroads. While it is Angela Merkel who seems to be the one who holds all the cards, having just won a fourth consecutive electoral victory with her CDU, in many ways the SPD holds the key to the future of Germany and the future of Europe. If the German Social Democrats can let go of the Weimar ghost of unstable minority governments, this could be the beginning of social democracy’s renewal — both in Germany and in Europe writ large.