Is This the Twilight of Angela Merkel’s Chancellorship?

In Germany, the exploratory talks on forming a coalition government collapsed last night. The country faces political instability.

What has happened?

Almost two months after the federal elections and four weeks after the start of the official exploratory talks between the conservative parties CDU/CSU, the liberal party FDP and the Green Party, the FDP walked out of the negotiations late on Sunday evening and declared the end of talks. The so-called Jamaica-Coalition (based on the parties’ colors black, yellow and green) is therefore effectively dead. While the parties achieved agreement on many issues, they remained divided over taxation, migration and environmental policies. Interestingly the coalition talks collapsed even though Germany expects a budgetary surplus for the next few years.

Following the FDP’s exit from the negotiations, and the social democratic SPD’s refusal to enter a new government immediately after the elections, only a few options remain for Chancellor Merkel to form a government, without involving the radical left party The Left or the right-wing extremist Alternative for Germany.

What are the options now?

In this situation Merkel has four options:

• Another grand coalition of CDU/CSU and SPD: After the devastating electoral defeat of the SPD in September, in which they achieved only 20.5% of the vote, the social democrats are not eager to become Merkel’s partner again. Straight after the elections, the party declared itself opposition leader and is currently dealing with significant infighting surrounding the party’s strategic orientation and the future of party leader Martin Schulz. Therefore, it seems unlikely at this point that the SPD would be in the position to form a coalition.
• A minority government led by Angela Merkel:  There has never been a minority government at the federal level in Germany. Under such an arrangement, the conservatives would have to find partners to push through legislation on an ad-hoc basis.  Minority governments are not at all popular in Germany and minority governments at the state level have generally not lasted for a whole legislative period.
• New federal elections: This would be an unprecedented option and the constitution presents many obstacles which would need to be overcome before new federal elections could be held. Since 1949, coalition building has been the normal way to form governments. Before a new election could be called, the Bundestag would have to try to elect a chancellor. After two failed attempts, the Federal President could then call for new elections, which are not likely to happen before Spring next year.
• “Reunion” of Jamaica: The FDP returns to the negotiating table and the Jamaica-partners finally agree on the formation of a new government.

What is at stake?

• Several policy objectives need to be urgently addressed by a new government, e.g. reforms in the care sector and investments in ailing infrastructure, in digitization and in education.
• From an international perspective, the recent United Nations Climate Change Conference in Bonn showed that Germany is unable to lead on climate policy, as long as no agreement has been found on the coal phase-out in Germany. Moreover, German companies strongly want a stable government to manage the Brexit-negotiations and to strengthen the European Union as a whole.
• Chancellor Merkel’s failure to form a coalition strengthens the case of the (conservative) critics within her own party. Merkel had already been criticized after the conservative parties CDU/CSU defended their position as the strongest faction in parliament in the latest elections, but had to accept a loss of 8.6% of the votes (compared to the elections 2013). At the moment, there is no alternative and no clear challenger within her party, but a handover of power to a successor after a stabilizing phase is nevertheless likely.
• New elections might strengthen radical parties, especially the right-wing extremist Alternative for Germany. The result would probably be a deeper division in German society but new elections would not be likely to open up any new options for a coalition, if current opinion polls are accurate.