A year in crisis mode – DW – 12/08/2022

German Chancellor Olaf Scholz is at peace with himself. In his latest video podcast, he matter-of-factly and objectively outlined what his government has achieved in its first year in office: Supporting Ukraine against Russian aggression with humanitarian aid, money, and with weapons. Securing Germany’s energy supply and laying the legal groundwork for expanding renewables. Providing financial relief for citizens facing sharp price rises, raising the minimum wage, and pushing through improved social benefits.

His message is: We have things under control, despite a cluster of existential crises, the likes of which no federal government has had to deal with before.

Olaf Scholz expresses satisfaction with the achievements of his “traffic light coalition” — named after the signature colors of the three parties: Scholz’s center-left Social Democrats (SPD), the business-oriented Free Democrats (FDP), and the environmentalist Greens, whose respective party colors are red, yellow and green.

A demonstrably upbeat new government took over on December 8, 2021 Image: Markus Schreiber/AP/picture alliance

Voters unsatisfied

Many citizens see things differently. For months, polls have shown that the coalition government would no longer have a majority in parliament if there were an election now. Dissatisfaction has grown. Only a minority believes the coalition is doing a good job.

But political scientist Ursula Münch does not want to judge too harshly. “I would give the government the grade ‘satisfactory,'” the director of the Academy for Political Education (Academy for Political Scholarship, Education, Public services) told DW. They faced many large and difficult challenges. Instead of simply working their way through their coalition agreement, they reacted flexibly and moved away from “many of their political beliefs,” she said.

chart showing that only 30% of voters are satisfied with the government
Less than a third of the voters polled, said they were satisfied with the government

The three-party alliance took office on December 8, 2021, calling itself the “Fortschrittskoalition” (progressive coalition). They promised to put all their efforts into modernizing the country. Germany was to become more climate-neutral, and more digitalized, women’s and minority rights would be strengthened and bureaucracy would be streamlined. The projects necessary to achieve these goals were laid down point by point in the coalition agreement.

Only two and a half months later, everything changed. Russia invaded Ukraine and forced the world to a “Zeitenwende” (turning point), as the chancellor called it during a Bundestag speech. The immediate consequence: Scholz announced €100 billion ($105 billion) for Germany’s armed forces, the Bundeswehr, as well as support for Ukraine.

Energy crisis and inflation

The decision to break the previous German state doctrine of not supplying weapons to conflict zones shook the SPD and the Greens to their core. They had to move away from their fundamental pacifist convictions. The Greens emerged as the strongest supporters of weapons deliveries to Ukraine. The SPD and Chancellor Scholz, on the other hand, have long been accused of being too hesitant.

Scholz: Putin ‘destroying the European security structure’

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Political scientist Ursula Münch sees it differently: “It was right to seek a balance between support for Ukraine and concerns about escalating the war.” It is irksome, she says, that both Germany’s European partners and the US are still unsure “which strategy the chancellor is actually pursuing.”

In response to Germany’s support for Ukraine, Russian gas supplies to Germany — which is highly dependent on them — were cut off to put pressure on the country. Energy prices skyrocketed, triggering the highest inflation in decades.

Since then, the dramatic consequences for the state, the economy, and citizens have steered the government’s actions. Three relief packages worth a total of about €100 billion were launched. In addition, came a €200 million euro economic “defensive shield” with caps on gas, heating, and electricity prices. Not to forget funding for German companies who are affected by sanctions or the war, and the costs of accommodating and caring for about a million refugees from Ukraine, whom Germany has now taken in.

Distrust within the coalition

In total, the coalition government has taken on about €500 billion in debt during its first year in office. Chancellor Scholz coined the term “double whammy” (Doppelwumms), to describe the cash injection, based on the singular “whammy” he used to announce the COVID-19 aid package in 2020 when he was finance minister. Scholz, who is not known for displays of emotion, relies on such linguistic gymnastics to convey the gravity of a situation.

Because of the tense financial situation, many of the projects in the coalition agreement have had to be put on the back burner. Despite this, all three partners were able to achieve some of their goals: The SPD pushed through the “Bürgergeld” (literally “citizens’ money”) — a major reform of unemployment benefits, expanded basic social security and raised the minimum wage. “The Greens can point out that they are sticking to the phase-out of nuclear energy, but that is something that will be appreciated by their own supporters, not most of the population,” says political scientist Münch.

The FDP, however, has taken a dive in the polls and in regional elections. It is struggling to achieve its goal of restructuring public finances and curbing public debt. “The crisis means that a solid budget is a long way off, and the infrastructure projects will take years,” Münch explains.

Münch feels “the government has quite often gotten itself bogged down in disputes over principles.” In the case of extending the lifeline of the country’s remaining three nuclear power plants, this went so far that the chancellor had to intervene.

Looking ahead, Scholz is demonstrating strength also in the international arena. “Germany intends to become the guarantor of European security that our allies expect us to be,” he wrote this week.

Infighting was something that the coalition partners wanted to avoid. But this does not work if a party feels like it is falling behind. Over the European summer, when the Greens were beating the SPD in the polls and Economy Minister Robert Habeck, of the Greens, had far higher approval ratings than the Scholz, SPD lawmakers took aim: “The Habeck principle goes like this: camera-ready appearances, questionable technical implementation and in the end the citizen pays for it.”

The Greens countered by saying “the poor performance of the chancellor, his lousy poll numbers” would “not be cured by disloyalty and resentment in the coalition.”

Looking ahead, the coalition needs to find other solutions than throwing money at problems, says political scientist Ursula Münch. For her, the caps and subsidies on gas and electricity prices are not a satisfactory solution. “Energy costs are being heavily and expensively subsidized, but at the same time little is being done to increase the supply of climate-friendly energy.”

The energy shortages will remain. If gas reserves are emptied in spring, ways must be found to refill them by late autumn — a Herculean task without gas supplies from Russia.

Inflation is expected to remain high; the economy is facing a recession. The government could be facing even tougher challenges in its second year than it did in its first. The chancellor must hold his coalition together and stay the course. No easy tasks. Olaf Scholz will likely approach them the way he always has throughout his decades-long political career: unflinching, stoic, and sometimes a little stubborn.

This article was originally written in German.

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