Germany's Mainstream Parties Form Coalition to Combat Economic Challenges and Far-Right Rise
Germany's largest mainstream political parties have come together to forge a coalition government, effectively excluding far-right factions from power amid ongoing economic troubles and the looming threat of new U.S. tariffs. The conservative CDU/CSU party, under the prospective chancellorship of Friedrich Merz, announced the successful agreement with the center-left Social Democrats (SPD), who had led the previous coalition since 2021.
During a press conference, Merz described the 146-page 'Responsibility for Germany’ roadmap as a robust statement to the German populace and Germany’s European Union partners. “Germany is back on track,” he asserted confidently.
However, the coalition agreement is subject to approval from the SPD's 357,000 members through an online ballot, as well as endorsement from the CDU and CSU leadership, known as the Union parties. If these steps are finalized by the end of April, Merz could potentially be sworn in by early May, marking a significant milestone after years of political rivalry with former Chancellor Angela Merkel.
The coalition’s pact introduces tax incentives for low- to moderate-income families, phased tax reductions for corporations, subsidies for electric vehicles, and reforms of the so-called 'debt brake'—a fiscal policy viewed by critics as a constraint on public investment.
Immigration policy emerged as a critical issue during the campaign, particularly in light of a series of violent crimes attributed to asylum seekers. Merz indicated that the new government would implement measures to curb irregular immigration while collaborating with neighboring nations to manage border control. In contrast, SPD co-leader Lars Klingbeil, expected to become vice-chancellor, emphasized the government's commitment to maintaining asylum rights and recognizing the benefits of immigration for Germany’s social and economic fabric. "The excavators have got to get to work and the fax machines must go," he remarked, signaling a drive for modernization within the government.
Germany has experienced a prolonged political hiatus following the collapse of Chancellor Olaf Scholz's SPD-led coalition in November, which was marked by public dissatisfaction. The CDU/CSU triumphed in the February 23 elections with 28.5% of the vote, surpassing the far-right Alternative für Deutschland (AfD), which received 20.8%, marking a historic high for the AfD since World War II. In stark contrast, the SPD languished at 16.4%, but their commitment to exclude the AfD created a critical partnership with the CDU/CSU.
This precarious political landscape allowed the SPD to negotiate assertively during coalition talks, leading Merz to tone down several campaign commitments, notably on issues of fiscal discipline and immigration policy. The SPD secured assurances to maintain pension rates until 2031 and gained key control over critical ministries, including finance and defense, while the conservatives will oversee foreign affairs and interior, crucial for handling immigration and domestic security.
Merz, previously a corporate lawyer, limited his public exposure throughout the negotiation process as economic challenges mounted, which afforded the AfD an opportunity to criticize mainstream parties for their inability to navigate these turbulent times successfully. During a recent poll, the AfD captured the lead with 25%, while Merz's CDU/CSU followed closely at 24%.
The rise of the far-right party has prompted some concerns, with AfD co-leader Alice Weidel declaring, "Citizens want political change and not a more-of-the-same coalition between the Union and the SPD." The current global market turmoil and uncertainty over future international alliances have exacerbated public doubts regarding Merz's leadership capabilities amid an array of economic, diplomatic, and security crises.
A recent Forsa Institute poll revealed that only 32% of respondents believed Merz was the right candidate for chancellor, a decline from 40% in early March, with 60% expressing disapproval of his leadership. As Germany's economic downturn continues, frustration mounts among allies who are looking to the country for strong leadership, particularly concerning the impact of Donald Trump’s trade and defense policies, and the assertive stance of Russia on the global stage.
Merz remains committed to maintaining strong support for Ukraine while working to rebuild relations with France and Poland and fostering some degree of independence from U.S. influence. Last month, he reached a significant agreement to modify existing debt rules to facilitate increased defense spending and improve critical infrastructure investment—an initiative that has faced backlash from conservatives and scrutiny from the AfD regarding its deviation from traditional fiscal principles.
Merz acknowledged that his centrist coalition must act decisively to address voter dissatisfaction or risk the AfD emerging as the dominant political force in future elections. "That is our mission to show that problems can be solved by the political center of our country," he affirmed, underscoring the urgency of consolidating public trust.
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