Germany: Schaeuble’s Vote of No Confidence

Published on September 29, 2017
Finance Minister Wolfgang Schaeuble’s willingness to leave his finance ministry post to become President of the Bundestag could be taken as a good sign for Chancellor Angela Merkel’s efforts to broker a four-party coalition government by freeing her hand to award the post to either the Free Democrats or Greens. 
 
We are not so sure.
 
*** Schaeuble’s move may indeed help the complex coalition talks and to temper the Alternative for Deutschland in the Bundestag. But we understand his intent may also be to position for a possible challenge to Merkel for leadership of the Christian Democrats and to lead a new government should the four party negotiations fail. In that sense, Schaeuble’s move could be seen as something of a vote of no confidence.  
 
*** Indeed, we continue to caution the market may be under appreciating the political risk in Germany (SGH 9/25/17, “Germany: A Weakened Merkel”) in the sharply contrasting policy positions of the Christian Social Union and the Greens in particular. Merkel may fail to put together a durable coalition government, or if she does, questions will persist how stable it will be going forward. ***
 
Schaeuble’s Gambit?
 
The proposal for Schaeuble moving over to the Presidency of the Bundestag came from Chancellor Merkel herself immediately after the first post-election cabinet meeting. It wasformally proposed jointly by the CDU’s parliamentary leader, Volker Kauder, and his CSU counterpart, Alexander Dobrindt. The thinking is that the Bundestag will need a strong hand in the parliamentary leadership to contain the impact of the far right Alternative for Deutschland, which for the first time gained seats in the Bundestag. 
 
The move also helps to ease the coalition talks, in that the finance ministry post is now likely to go to the Free Democrats, who will assume the main junior coalition partner role (the Greens will likely take the foreign ministry). 
 
Schaeuble has signaled his willingness to take on the new role. The position, however, is largely ceremonial and lacks the comparative power of the US House Speaker, for instance, who controls the legislation calendar and which bills can be brought to the House floor. The German speaker’s office lacks any of those powers, at best first among equals with power shared by the party parliamentary leadership. The position does have a budget and staff independent of the Chancellor’s office.
 
It is our understanding that Schaeuble concluded he could probably not able to hang on to the finance ministry post, and isaccepting the Bundestag presidency as a fallback position in case the coalition negotiations fail. While Schaeuble will no longer have a seat at the table in the negotiations, his parliamentary state secretary of finance, Jens Spahn, himself member of the CDU’s executive board, will.  
 
 
If the talks fail, or if negotiations reopen with the SPD to go back into a Grand Coalition with the CDU (which will only happen if Jamaica-talks fail), or if the CDU attempts to lead a minority government with the CSU and the FDP, it is almost certain Chancellor Merkel would be asked to step down as party leader. 
 
In that scenario, Schaeuble would then be free to step into the leadership role from his position as Bundestag president.
 
Lindner May Make Similar Move
 
One sign of further trouble in the coalition talks would be if Christian Lindner, the leader of the Free Democrats, opts to pass as well on the finance ministry post that will be on offer. 
 
On the one hand, Lindner will be certain to make sure it does go to the FDP in the coalition talks, probably to Carl-Ludwig Thiele, a vice president at the Bundesbank and a former Deputy Chief of the Bundestag Group being at the top of the list. For now, Merkel’s chief of staff Altmaier will be filling in as acting finance minister.
 
 
Lindner’s motives would largely be the same as Schaeuble’s: a sense of a high risk of failure for that first ever Jamaica coalition. In order to hold a powerful position in the government usually means securing a posting in one of the power cabinet seats, but a cabinet minister will always be at risk of getting the sack from a chancellor, ending up without staff and influence. 
 
What’s more, Merkel’s track record in co-opting and then outmaneuvering her political opponents is well known. Lindner like Schaeuble, would be free to reposition for another round of coalition talks, or even for preparing for the next round of elections. 
 
Under such a scenario, Lindner may opt to step back from the Vice Chancellor position, retaining his position as FDP party leader and taking direct charge of the FDP’s parliamentary group. In any case, he is unlikely to make his position known until well into the coalition negotiations to maximize his influence. 
 
In both cases, if either Schaeuble or Lindner, or both opt for safe positions for the time being it should be taken as a strong signal that key players are sensing how difficult the coalition negotiations are going to be, or how poor the probabilities are for a stable federal government in Berlin. 
 
Difficult Coalition Negotiations Ahead
 
In any case, even with the powerful finance ministry seat now open to the Free Democrats, the coalition talks will still be exceedingly complex. Merkel will need considerable tact in particular to meet the CSU demands for a clear rightward tilt to blunt any further inroads by the AfD in Bavaria. That will mean an extremely delicate balancing act in also keeping the Greens on board.
 
Merkel, and her chief of staff Peter Altmaier will be meeting CSU head Horst Seehofer for a first round of discussions on October 8, though negotiations are not expected to gather momentum until after an October 15 state election in Lower Saxony, which is currently ruled in a Social Democrat-led coalition with the Greens. 
 
The CSU can also hold off from making concessions in the expected months of negotiations since it retains its power in the current caretaker government until a new coalition agreement can be reached. The FDP and Greens, being on the outside, will be under the most pressure to make concessions, especially the Greens.
 
But the Greens also have their own internal divisions. The party leadership leading the party in the coalition talks are mostly from the party’s conservative “realo” wing. But the party’s still powerful left wing, or “fundos,” are already demanding the Green leadership hue closely to the party’s progressive policy positions, fearful too much may be ceded to Merkel for the sake of a seat at the cabinet table. 
 
The Green rank and file, realo or fundo, would be unlikely to accept coalition terms that could be seen as a sell-out. They will insist on green ink being legible in any coalition agreement. But what that might look like with a CSU set to stress the political right wing remains to be seen. 
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