Germany: What's holding Olaf Scholz's coalition together?

The leader of the neoliberal Free Democratic Party (FDP), Finance Minister Christian Lindner, used the days around Easter to once again emphasize his political demands in the ongoing budget negotiations. They can be summarized as follows: Germany needs to make massive savings, preferably on social welfare — that, he said, would be the best way to make room for growing military expenditure.

The newspapers immediately ran headlines along the lines of "Pensions or arms?" And Chancellor Olaf Scholz's Social Democrats (SPD) and the Greens, the two bigger parties in the three-way coalition, reacted gruffly to the suggestion from their junior partner.

Scholz had said before Easter: "For me, by the way, it is quite clear that the coalition has agreed that there will be no deterioration in the welfare state."

Green Vice-Chancellor and Economy Minister Robert Habeck made similar comments.

Budget cuts on the horizon for German government

But Lindner will not back down. He has to draft the federal budget for 2025, which is likely to be short by between €25 and €30 billion ($27–$32 billion), or around 6% of what the ministries need to implement their declared plans. Lindner has now defined budget caps for the ministries, and they are almost all significantly lower than what was approved in 2024. The red pencil is to be applied particularly drastically to development aid, but also to the family and foreign ministries.

The ministers have until April 19 to make concrete proposals as to where exactly they want to save — and the finance minister is not shy when it comes to giving advice.

A "turnaround in the welfare state" is just as necessary in Germany as an "economic turnaround," he said. In view of the dramatically poor economic situation, this is a comparison that is tantamount to a declaration of war on the coalition partners.

The SPD, Greens and FDP have been in government together since December 2021. The next regular federal election will take place in September 2025. But there is a growing sense that the alliance has long since reached the end of its marriage.

For one thing, there are some basic ideological differences between the two left-wing parties and the neoliberal FDP. At first, all three tried to put these aside and look instead for common ground. They saw themselves as a progressive coalition and wanted to modernize Germany. But then Russia invaded Ukraine, and Germany was hit by an energy crisis and inflation, the economy crashed and money became scarce.

Parties retreating to their core values

Some of the projects agreed in the coalition agreement have been implemented, others are now probably a waste of time given the situation. The coalition is suffering from poor poll ratings; never before has a federal government been so unpopular with the public.

The SPD and FDP have dropped especially far below the level of popularity they achieved in the Bundestag elections — the SPD, which took 25.7% in 2021 is now polling at 15%-16%, while the FDP, which won 11.5% of voters in 2021 is now on 4%-5%. If the party drops below 5% at the 2025 election, it may even lose its representation in parliament.

But there are other elections coming up sooner: first, for the European Parliament in June and then state elections in September. With these looming, parties are retreating to their core values to win over their base.

Lindner told the news agency dpa at the end of March that citizens could decide in the elections "whether there should be more government, more debt and higher taxes, or a leaner state with lower interest burdens and lower taxes."

Ukraine war another cause for disagreement

But that is not all that divides the coalition. For months, the centrifugal forces have also been increasing on the issue of arms deliveries for Ukraine. On this issue, the Greens and FDP are closer together, both supporting more military support. The SPD, on the other hand, has been much more hesitant on the issue of heavy weapons. This was the case with the Leopard tanks and is no different with the Taurus cruise missiles.

While the tanks are now rolling, Scholz rejects delivering the Taurus system to Ukraine.

"I'm the chancellor, and that's why this is so!" he insisted in March.

And yet the debate continues and is becoming increasingly poisonous. In the Bundestag last week, the SPD even used words such as "malicious" and "classless," referring to statements made by FDP politicians, while the SPD chancellor said he found the Green and FDP arguments "embarrassing" and "ridiculous."

The FDP, for its part, accused the SPD parliamentary group leader Rolf Mützenich of wanting to drop Ukraine and move closer to Russia because he suggested "freezing" the war. The Green Foreign Minister Annalena Baerbock shook her head disapprovingly as he spoke, while leading members of the FDP voted in favor of an opposition motion to deliver the Taurus, thus defying the chancellor.

Everyone could lose out in new elections

In these circumstances, it seems almost fairytale-like that Scholz continues to back his coalition. At an SPD anniversary celebration, he said he hoped that "the spirit for the whole government could be rekindled." If there are "differing views," they simply have to "come together," he argued.

Is this any more than just wishful thinking? It remains unlikely that the coalition will dissolve prematurely and trigger new elections, but only because the SPD would run the risk of having to vacate the chancellorship and the FDP would have fear for its place in the Bundestag. It is more likely that the three parties will simply carry on as they have so far: Arguing while somehow trying to define their own profiles more clearly to the electorate.

For the SPD, this means returning to its tradition as a party of peace. In 2002, when then-Chancellor Gerhard Schröder refused German participation in the Iraq war, he found much support in the population. The SPD later won the Bundestag elections, which had already been thought lost.

A parallel to today? When French President Emmanuel Macron said that even the deployment of ground troops in Ukraine should not be ruled out, Scholz hastened to state that he would never send Bundeswehr soldiers to Ukraine.

Where others accuse him of hesitancy, even cowardice, the chancellor speaks of prudence and sees himself in line with the majority of citizens. Although they are in favor of arms deliveries to Ukraine, they are also afraid that Germany could be dragged into the war.

However, an incendiary letter from five historians to the SPD leadership cast doubt on whether the chancellor's line is unchallenged in the SPD. In the letter, the professors, all SPD members, accused Scholz of failing to show "unequivocal solidarity" with Ukraine. Mützenich's talk of "freezing" the war is "fatal," the letter said, and dismissed the party leadership's arguments as "always arbitrary, erratic and often factually incorrect."

The professors, who include the renowned academic Heinrich-August Winkler, concluded with a statement that was tantamount to a slap in the face for Scholz: "If the chancellor and party leadership draw red lines not for Russia, but exclusively for German policy, they are weakening German security policy in the long term and playing into Russia's hands."

This article was originally published in German.

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