What's Happening With Germany? Explainer

A day after Donald Trump’s trailblazing victory in the US Presidential Election, political drama unfolded in Germany, as the nation’s first-ever three-party coalition fell flat on its head.

The three-party coalition, comprising the Social Democratic Party of Germany, the Free Democratic Party and the Green Party, formed government in Germany in 2021. 

It was an unlikely trio which involved contrasting ideologies—starting from SPD’s left-leaning policies to FDP’s pro-business ideas.

Also known as the ‘Traffic Light Coalition’, the government came to power with the message of Fortschrittskoalition or a coalition of progress. This came as a pivot to 16 years of Merkelian status quo politics in Europe’s largest economy.

However, the coalition came to an end on Wednesday, Nov. 6, following a series of events, which ultimately led to the ouster of Finance Minister Christian Lindner.

A day after Trump became the President-Elect of the United States, the German chancellor sacked Finance Minister Christian Lindner, the head of the Free Democratic Party.

This came on the back of years of tension between the three parties. Their contrasting ideas on how to manage an ailing German economy became the breaking point.

Scholz fired Lindner after a crunch meeting that was held between the senior members of the three parties. Lindner had proposed sweeping reforms to jumpstart the ailing German economy, which was opposed by the other parties. 

The biggest economy in Europe has been on a troubling decline for the past two years. Issues such as post-pandemic blues, war in Europe and the Middle East and a multi-billion Euro hole in the budget, have plagued the economy.

While the pro-business FDP called for a debt ceiling in Germany’s economy, the SPD and the Greens were in favour of more government spending and stimulus support to aid a fledgling economy.

The Lindner-led FDP has historically advocated for individualism, capitalism and social reform. Their ideas are akin to libertarianism - envisioning a state that promotes individual liberties and a weaker government.

However, the FDP’s vision of a lean state contrasted with the policies of the Green Party, which vouched for heavy subsidies to reach Germany’s net zero goals. The SPD, on the other hand, struggled with internal rifts and a seemingly increasing identity crisis. 

This kind of Spannungsverhältnis (tense relationship) was present throughout the three years of the Yellow Light Coalition, ultimately ending with FDP leaving the coalition.

FDP’s ouster means the Traffic Light Coalition is as good as over. Although Scholz will continue to serve as the German Chancellor, he will be a part of the minority government until the end of the year.

This means Scholz-led SPD’s coalition with the Greens must pass the legislation with cooperation from opposing parties.

Scholz has recently announced his intention to initiate a vote of confidence. This vote is scheduled for January 15, 2025, and based on the results, it could pave the way for early elections. 

The next German Federal Election is scheduled to take place in September 2025. However, if the SPD-Green Party coalition fails to win the vote of confidence - which he likely will, without the help of the Free Democratic Party - the Federal election would then need to be held by early March.

Following the demise of the Traffic Light Coalition, Chancellor Scholz has faced immense backlash from opposition parties, who are calling for early elections.

A poll conducted by ARD-DeutschlandTrend at the end of October suggested only 14% of the German population were happy with the Traffic Light Coalition, with the majority favouring putting an end to it.

Friedrich Merz, the leader of the opposition conservatives has already called for a vote of confidence "by the beginning of next week at the latest". 

This sentiment has been echoed by other opposition parties, with Merz pushing for an election as early as January.

 "We simply cannot afford to have a government without a majority in Germany for several months now, followed by an election campaign for several more months and then possibly several weeks of coalition negotiations," Merz told reporters.

Many scenarios could play out as Germany braces itself for snap election next year.

Following the demise of Traffic Light Coalition, the ruling-SPD and Green Party will likely find new coalition partners, especially amid record-low sentiment among voters.

However, support could be hard to come by, especially with FDP now out of the equation while far-right Alternative fur Deutschland are ideological rivals.

The only option for the Greens and CDU could be the populist left wing group Die Linke, which has had its issue with the Traffic Light Coalition in the past.

Meanwhile, the FDP could once again play the role of kingmakers by finding new coalition partners. The Lindner-led party may likely find a partner in the form of Merz's Christian Democratic Union (CDU).

Alternative fur Deutschland may also play a key role in snap elections, given the group's growing popularity in the past few years.

However, parties across Germany have historically avoided the idea of partnering with the AfD and there's no reason it can't be the same this time around.

With mounting economic challenges and growing political uncertainties, the coming few months could indeed be pivotal for Germany as its looks to navigate another economic downturn.