Mixed signals from Germany’s traffic-light coalition
14 Apr 2023|

The policy bottlenecks that many people thought would impede Germany’s Ampelkoalition (‘traffic-light coalition’) have materialised, well into its second year in power. The country’s first three-party government since the 1950s, comprising the Social Democrats, the Greens and the Liberal Democrats, took office with an ambitious agenda and high hopes for far-reaching reform. The almost 200-page coalition agreement promised to ‘dare more progress’, signalling a break from the complacency that characterised the last years of Angela Merkel’s chancellorship.

Presenting a raft of policy proposals in an orderly, rational fashion, the coalition agreement gave the impression of a government willing and able to implement reforms. The results so far suggest otherwise. Some, like the electoral reform bill, have been poorly designed, while others, including a recent meeting convened to address the country’s ailing education system, ended in failure.

Policymakers have reneged on promises. Whereas the coalition agreement placed public transportation, especially improvements to the country’s ageing railways, at the top of the agenda, Transport Minister Volker Wissing has successfully advocated for building more highways. He also opposed a previously agreed European Union ban on internal combustion engines, forcing member states to settle on a much-criticised last-minute compromise.

Likewise, Foreign Minister Annalena Baerbock’s party, the Greens, included the concept of a feminist foreign policy in the coalition agreement, and she reiterated Germany’s commitment to this values-based approach to diplomacy and development work in September 2022. Yet Baerbock was criticised for not speaking out sooner and louder in support of the women-led protest movement in Iran.

The list goes on. With Chancellor Olaf Scholz remaining aloof, the coalition risks losing its way. Ministers are going in different directions and increasingly facing off, heightening the likelihood of policy failures. Plans to establish a German national security council were dropped, for example, because of political deadlock: the chancellery and the foreign ministry couldn’t agree on where the council would be located and who would be responsible for its governance.

An open conflict between the Ministry of Finance, led by the Liberal Democrats’ Christian Lindner, and the Ministry for Economic Affairs and Climate Action, led by the Greens’ Robert Habeck, has blocked badly needed reforms, with each minister pointing the finger at the other. For example, Habeck wants to ban almost all new oil and gas heating systems in Germany from 2024 and fast-track their replacement with heat pumps. To be sure, it’s a pie-in-the-sky proposal. But it has also fuelled a budget spat with Lindner’s ministry, exacerbating uncertainty.

Of course, one could argue that coalition agreements amount to little more than expressions of intent. But in Germany, they usually carry more weight because a powerful coalition committee monitors implementation and balances interests. This inner circle, too, is beset by partisan wrangling, with the next state elections eclipsing proposed reforms. While a recent three-day retreat resulted in the committee reaching some painful compromises, the bickering continues.

A key factor underlying the coalition’s drift is the Zeitenwende—the ‘epochal shift’ in Germany’s defence and foreign policy, which Scholz proclaimed a few days after the Russian invasion of Ukraine. There was no way to anticipate the massive challenges implied by this watershed when the coalition agreement was concluded in late 2021. National security and defence don’t feature prominently in the document; now they are front and centre. But the response has been woefully lacking. The government has spent very little of the €100 billion allocated for beefing up the armed forces, owing to the administrative inefficiencies of outdated, overregulated procurement processes.

What applies to security is also the case for infrastructure, digitalisation, energy, the environment, administrative reform, social security and migration. The urgent need for reforms, combined with the imperative to respond quickly to new geopolitical realities, has overloaded an already fragile coalition in which three quasi-chancellors—Habeck, Lindner and Baerbock—operate alongside Scholz. Collectively, they give the impression of an unmoored government with too many veto players catering to their constituencies.

One hopes that Scholz will do more to rein in the coalition partners’ infighting. Yet even if he’s successful, it won’t be enough to prevent the government from working at cross purposes. The only chance for meaningful reforms is to go back to the drawing board and reformulate the coalition agreement: version 2.0 should have a slimmed-down agenda, clear priorities and reasonable timelines.

The next German federal election is only two years away, and a resurgent Christian Democratic Union, the largest opposition party, is polling at 30%, whereas the Social Democrats—the leading partner in the coalition government—is at 18%, down significantly from the 26% of the vote it received in the 2021 election. Based on current polling, the Ampelkoalition would not win a majority.

To stave off a political debacle, the government parties need to revamp their muddled reform efforts—and fast. Daring more progress remains a noble vision. But unless the current government delivers results, figuring out how to survive the next election will soon become the more immediate goal.