Germany Introduces First New Chancellor in 16 Years
For the first time in 16 years, Germany will have a center-left government and a new chancellor, Olaf Scholz, a Social Democrat, whose job will be to fill the shoes of Angela Merkel, the woman who made Germany indispensable in Europe and the world.
After much anticipation, Mr. Scholz and his coalition partners from the progressive Greens and the pro-business Free Democrats stepped in front of the cameras on Wednesday to announce a 177-page governing deal they have negotiated under strict secrecy since the Sept. 26 election.
They acknowledged their differences but said they had found enough common ground to push forward with plans to beat back the pandemic, increase the minimum wage and put Germany on a path to quit coal and expand renewable energy to 80 percent by 2030.
“We are united in a belief in progress and that politics can do good,” Mr. Scholz said in a joint news conference. “We are united in the will to make the country better, to move it forward and to keep it together.”
Mr. Scholz is expected to be sworn in as chancellor early next month. He will immediately face a pressing roster of crises, including a pandemic that is spiraling quickly upward and border conflicts in Belarus and Ukraine.
It is the end of an era for Germany and for Europe. For over a decade, Ms. Merkel was not just chancellor of Germany but effectively the leader of Europe. She steered her country and the continent through successive crises and in the process helped Germany become Europe’s leading power for the first time in modern history.
Mr. Scholz’s center-left party, which narrowly won the September election, governed with Ms. Merkel’s conservative Christian Democrats for three of her four terms. Mr. Scholz himself was her finance minister for the last four years.
“It’s typical for Germany: It’s change and continuity in one,” said Cem Özdemir, a prominent lawmaker for the Greens and one of 300 negotiators of the new coalition treaty.
There is clearly tension built into the new government, with important yet opposing ministries in the hands of coalition partners who sit on opposite ends of the political spectrum. That tension is likely to remain a theme of the government and to test Mr. Scholz’s ability to balance competing agendas.
In one key concession, according to a person close to the coalition talks, the finance ministry will go to the leader of the Free Democrats, Christian Lindner, a fiscal conservative who has ruled out tax increases.
Mr. Lindner could serve as a brake on the new government’s boldest ambitions for change, especially those coming from the Greens, who had campaigned on revolutionizing the economy to meet the challenges of a warming planet.
But the Greens did not walk away empty-handed. The party’s co-leaders, Annalena Baerbock and Robert Habeck, secured two powerful posts.
Mr. Habeck will run a new superministry combining the economy and climate, the person said, and Ms. Baerbock, who ran as the Greens’ candidate for chancellor, will be Germany’s first female foreign minister.
On issues ranging from Europe to trade and foreign policy, most analysts expect the new government to broadly stay the course set by its predecessor. But a number of urgent crises — and Mr. Scholz’s two more hawkish coalition partners — might force the new chancellor to rethink some past policies.
Mr. Scholz’s Germany could turn out to be somewhat more willing to throw its weight behind European integration and to close ranks with the United States in putting pressure on China and Russia.
But the buzzword was continuity.
“The new government will essentially be one of continuity, not change,” said Holger Schmieding, the chief economist of Berenberg Bank. “All those who were hoping that this would be the start of something completely different will be disappointed.”
Olaf Scholz succeeded in his campaign to become the next chancellor of Germany primarily by convincing voters that he would be very much like the towering and long-serving figure he will replace: Angela Merkel.
Terse, well-briefed and abstaining from any gesture of triumph, Mr. Scholz not only sounded like the outgoing conservative chancellor, he perfected the art of embodying her aura of stability and calm to the point of holding his hands together in her signature diamond shape.
“He’s like a soccer player who studied videos of another player and changed his game,” said Robin Alexander, a long-term political observer of both Ms. Merkel and Mr. Scholz. “From temperament and political style all the way down to facial expression Scholz now channels Merkel. If Scholz was a woman he would wear pantsuits.”
As Mr. Scholz unveiled his new center-left government on Wednesday and prepared to take office next month, one question for Germany and for the whole of Europe and the world is: Can he deliver and fill Ms. Merkel’s very big shoes?
Rarely has a German leader come into office with so many burning crises.
As soon as he is sworn in as chancellor in early December, Mr. Scholz will have to deal with a surging pandemic, tensions at the Polish-Belarussian border, a Russian president mobilizing troops on Ukraine’s eastern border, a more confrontational China and a less dependable United States.
“The pressure is huge,” said Jana Puglierin of the European Council on Foreign Relations. “The new government is taking office in a situation that has been heating up on multiple fronts. And when it comes to foreign policy, Olaf Scholz remains a bit of an enigma.”
Indeed, which Olaf Scholz will show up as chancellor in two weeks is a matter of intense speculation. A lifelong Social Democrat, Mr. Scholz, 63, has been a familiar face in German politics for more than two decades and served in twogovernments led by Ms. Merkel’s Christian Democratic Party, most recently as her finance minister.
But he has also been something of a political chameleon, a pragmatic politician who straddles left and right so easily it is sometimes hard to know where he stands.
Born in Osnabrück, northern Germany, Mr. Scholz grew up in Hamburg, the city he would later run as mayor. His grandfather was a railway man, his parents worked in textiles. He and his brothers were the first in his family to go to university.
He was still in high school when he joined the Social Democrats. A fiery young socialist, he spent a decade as a labor lawyer defending workers threatened by factory closures. Then, as secretary-general of his party under the last center-left administration of Chancellor Gerhard Schröder, he defended painful labor market reforms with a machine-like efficiency that earned him the nickname “Scholz-o-mat.”
When he was first elected into Parliament he sat with the left wing of his party. Today he is considered to be to the right of much of its base — not unlike President Biden in the United States, with whom he is sometimes compared.
As they haggled for weeks over the shape of their partnership, the three parties in the new German government faced a slate of pressing issues: how to finesse a green transition without busting the budget; how to handle relations with China and the United States; and how to ensure the cohesion of Europe, among many others.
But the one issue they had hoped was behind them suddenly vaulted to the top of their agenda, even before they took office: a spike in Covid cases that has thrust Germany into its worst crisis since the pandemic began nearly two years ago.
In that first test, the incoming government stumbled badly, political observers agreed, and then regained its footing, though not before shaking the confidence of many Germans and perhaps still too late to check the spread of the virus before the winter holidays.
So on Wednesday, when Olaf Scholz, the incoming chancellor, stepped before the cameras to present the new government’s coalition deal he started with the pandemic.
“Corona is still not defeated,” Mr. Scholz said. “Intensive care wards in some places are reaching their limit. The situation is serious. The future government, along with the states, has initiated decisive steps to to rein in infections.”
The new government will institute a permanent Covid crisis committee inside the chancellery as well as a panel of experts who will give Mr. Scholz daily updates on the pandemic. He also plans to make a billion euros available for bonus payments to workers in hospitals and nursing homes.
In recent weeks, the incoming government had sent decidedly mixed signals — allowing emergency powers for the pandemic to expire, ruling out another lockdown and playing down the latest wave — before the spike in cases forced an inglorious retreat to tougher measures.
Volker Wissing, general secretary of the Free Democrats, the libertarian partners in Mr. Scholz’s new coalition who have been most critical of coronavirus restrictions, put a message on Twitter earlier this month that the situation in Germany’s health care system was “stable.” When cases surged, he deleted the post.
The fumbling raised immediate worries over how Germany — and Europe — would fare without the sure-handedness of the country’s longtime chancellor, Angela Merkel.
Virologists warned that the incoming government was failing the country on badly needed leadership. “They don’t seem to understand the seriousness of the situation,” said Michael Meyer-Hermann, head of the systems immunology department at the Helmholtz Centre for Infection Research, who has advised Ms. Merkel throughout the pandemic.
Allowing the national state of emergency to lapse on Nov. 25, risked sending “completely the wrong signal,” said Nina Warken, a conservative politician. The law was introduced by Ms. Merkel to allow the government to respond quickly to new waves of infection without having to get authorization from Parliament or states.
The new coalition has “misjudged the situation,” Markus Söder, Bavaria’s conservative leader, tweeted on Monday. “It is inappropriate to get rid of the state of pandemic emergency and simultaneously legalize drugs,” he added, referring to expectations that the new government will decriminalize cannabis.
After reports of ambulances driving Covid patients from overfilled hospitals in Bavaria to northern Germany and even Italy to have them treated, the incoming coalition hastily reworked a draft law and added a raft of tougher measures states could impose.
Those steps included vaccine mandates for people in certain high-risk jobs, mandatory tests in nursing homes and a vaccine or test requirement for those riding public transport or using a shared work space.
Whether it will be enough to appease the critics or will instead overshadow Mr. Scholz’s swearing-in next month remains a question.
“It is their first test,” said Holger Schmieding, chief economist of Berenberg Bank, “and they haven’t even taken office.”
Besides climate politics, digitalization and a higher minimum wage, the coalition has agreed on one fringe issue Chancellor Angela Merkel’s party has blocked for years.
Germany’s new government wants to legalize marijuana.
“The legalization of cannabis, long blocked by the Union, allows us to have a regulated and taxed dispensary, controllable quality and effective youth protection through education,” wrote Lars F. Lindemann, a regional cadre of the Free Democrats, on Twitter.
The parties in the new coalition have agreed to legalize the sale of cannabis — as long as it is sold in licensed establishments that can tax it properly and ensure both quality control and that it is sold only to adults. After four years, the parties vow to re-evaluate the law and its effect on society.
If Germany does legalize recreational marijuana, it will become the first major European country to do so, after Canada and certain U.S. states, opening a significant market for legal cannabis growers and dealers. (Other European countries like the Netherlands have decriminalized the drug, but producing, buying and selling remains legal only in medical contexts.)
Under current German law it’s not illegal to consume cannabis but it is to buy it.
Criticism of the plan came swiftly. Markus Blume, the party secretary of the CSU, the Bavaria-only sister party to Ms. Merkel’s C.D.U., called the idea a “dangerous experiment” and warned that cannabis acted as a gateway drug.
“It makes a drug that is harmful to health into a lifestyle product,” Mr. Blume said of the proposal.
Indeed, Mr. Blume is not alone. A study released last month found that only 30 percent of respondents thought the drug should be legalized for recreational use. Another 59 percent believed it was better left the way it has been since 2011: a medicinal product that requires a doctor’s prescription.
And while the Greens campaigned on clear rules for cannabis use and the Free Democrats have argued legalization could bring money into state coffers, the outgoing conservative government insists legalization is dangerous.
“Cannabis legalization would be a breach of the dam,” Stephan Pilsinger, the conservative parliamentary faction expert on drugs, said in October. “At some point, unfortunately, we’ll be talking about legalizing all drugs.”
For decades, the small Free Democratic Party found itself with outsized postelection power to determine which party would lead the German government.
This time, although it shared its kingmaker status with the Greens — who got more votes — the party secured perhaps the biggest prize in the new government after the chancellery: control over Germany’s powerful finance ministry.
The incoming chancellor, Olaf Scholz, a Social Democrat, skirted questions on Wednesday about who specifically would take the post. But the German news media widely reported that it would be the Free Democrats’ leader, Christian Lindner. A person close to the coalition talks confirmed the reports.
For Mr. Lindner — and all of Germany — that power will likely allow him to follow through on pledges not to raise taxes and to restrain spending.
Speaking to reporters at the announcement of the agreement on Wednesday, Mr. Lindner said the new government would ensure financial stability, even as it invests in future green technology, digitization and education.
“Germany will remain a defender of solid finances,” Mr. Lindner said. “At a time when many people are concerned about inflation, this is important.”
That is likely to frustrate many of those who had voted for the Greens in hopes of more dramatic change to transform the German economy for a carbon-neutral and digital future.
But the choice of Mr. Lindner should make some of the Free Democrats’ supporters in the business lobby happy, and please Germans who wanted continuity in the new government.
Mr. Scholz sought to strike a conciliatory note on Wednesday, stressing that fiscal prudence would not stand in the way of green investments.
“We will invest massively,” Mr. Scholz said. “These investments have been agreed and at the same time we will maintain the debt brake that is guaranteed by our constitution.”
He may also provide Mr. Scholz, his new boss, with a brake against some of the more strident demands of the Greens and the left wing of his own Social Democrat party.
“This will be a constant restraint on the coalition,” Holger Schmieding an economist with Berenberg said of a Free Democrat-run finance ministry. “They have all accepted it, but I expect that it will be a frequent source of modest friction, without putting the entire project at risk.”
While Mr. Lindner’s party shares some of the Greens’ ambitions — increased investment in green technology and infrastructure — it would rather not draw from Germans’ incomes or increase the budget to get there.
The apparent contradiction sets up a challenge, analysts said, because without raising taxes, other sources of income will have to be identified. One way to raise money might be to use a temporary suspension of Germany’s debt brake in the pandemic, another is to pare back tax advantages and close loop holes.
“Ambitious environmental policy costs money,” said Cem Özdemir, a prominent Green lawmaker. “We will have to find that money elsewhere. It makes it harder but not impossible. The debate has shifted: German industry has advanced considerably on this issue so we have new allies who are also willing to invest more.”
For Mr. Lindner, 42, who will now oversee a budget of almost 500 billion euros, about $560 billion, and a staff of 2,000, the position is the realization of an ambition that started in 2013 when he took over the leadership of the party after it had crashed out of Parliament.
In interviews since Germany’s Sept. 26 election, Mr. Lindner has dodged questions about European economic policy but warned about the dangers of inflation and increasing public debt. Soaring energy prices in Germany have been driving up inflation, which hit 4.5 percent in October — it’s highest point in 28 years.
By entering into government with two parties that lean more to the left than his own, Mr. Lindner has shown a willingness to compromise. But his reputation as a fiscal hawk worries some.
“The last thing either Germany or Europe needs is a politician at the helm of the Finance Ministry in Berlin who treats it as a platform from which to fly his party’s conservative fiscal colors,” wrote the economist Joseph E. Stiglitz in an editorial published in the German weekly, Die Zeit.
Mr. Lindner shot back, saying, “Some criticism must be seen as confirmation of one’s own position, because left-wing U.S. debt economists are just hoping for inflation.”
Rarely has a German leader come into office with so many burning crises.
When Olaf Scholz is sworn in as chancellor in early December, he will have to deal with a surging pandemic, tensions on the Polish-Belarusian border, a Russian president mobilizing troops near Ukraine, a more confrontational China and a less dependable United States.
“The pressure is huge,” said Jana Puglierin of the European Council on Foreign Relations. “The new government is taking office in a situation that has been heating up on multiple fronts.”
Foreign policy was barely discussed in the election campaign but it might well end up dominating the first months of the new administration. With Germany taking over the presidency of the Group of 7 in January, Mr. Scholz will immediately have the spotlight on him on a host of pressing international questions.
Few analysts expect Mr. Scholz to change course significantly from Ms. Merkel.
To those of Germany’s allies who are hoping for a more robust stance on China and Russia and an increase in military spending that promise of continuity may be only partly reassuring.
“Many of our allies are yearning for more robust German leadership but they’re unlikely to get it,” said Thomas Kleine-Brockhoff of the German Marshall Fund.
With so many fires burning on the international stage and some structural geopolitical shifts underway, circumstances — and his more hawkish coalition partners — might force Mr. Scholz’ hand, Mr. Kleine-Brockhoff said.
In Europe, one of the first tests Mr. Scholz will face is how to deal with Poland, which has violated some of the democratic principles underpinning membership in the European Union but is also under pressure from neighboring Belarus, a Russian ally.
Mr. Scholz’ Social Democrats are traditionally dovish on Russia, supporting projects like the contentious Nord Stream 2 gas pipeline. But if Moscow begins another offensive in Ukraine, it would be a significant test.
On China, the picture is more complicated.
As Beijing has become more confrontational and German industry more outspoken about its dependency on the Chinese market, Germany’s China policy was ripe for evolving from the mercantilist soft touch of the Merkel era, analysts say.
“The German position will get tougher on China for structural reasons,” said Mr. Kleine-Brockhoff. “Mr. Scholz is no hawk. But he is not Merkel either and he will face pressure from the other parties in his government,” he said.
In the United States, Mr. Scholz does have a seeming center-left ally in President Biden.
But no one knows how long that’s going to last.
“We don’t know how dependable the Biden administration is and we don’t know how long it will be in power,” said Ms. Puglierin of the European Council on Foreign Relations.
As one of Mr. Scholz’ advisers put it: “Biden is America First, just more polite.”
As a result, Mr. Scholz will focus much of his energy on strengthening the European Union, his advisers say. His first foreign visit will be to President Emmanuel Macron in France, who faces his own difficult election campaign next year.
“We will talk a lot more about European sovereignty. We will sound more French. But in reality it will be hard to turn that into real policy,” Ms. Puglierin said.
After weeks of negotiations, the three parties that will make up the next government presented a road map for their partnership on Wednesday, a coalition agreement worked out in excruciating detail in the tradition of Germany’s postwar, consensus-driven politics.
Germany has a long history of coalition politics. Since the end of World War II, only once did a single party win a clear majority — in 1957 under Konrad Adenauer. Nevertheless, he chose to join forces with a smaller party to build a coalition.
The coalition agreements, though not legally binding, serve as a way to ensure that members are all on the same page, especially when faced with a crisis or unexpected events. They are a way to try to minimize tensions between partners and to ensure the stability and durability of their governing alliance.
The new government to be led by Olaf Scholz is an uncommon arrangement that brings together three parties — his Social Democrats, the environmentalist Greens, and the pro-business Free Democrats. It is the first time since the 1950s that three partners have had to put aside differences and horse-trade over issues to form a government, making the agreement all the more crucial.
Considering how unusual it is, the current coalition agreement was worked out with relative speed, even though it will have taken nearly 11 weeks by the time the government is likely to be sworn in.
For Chancellor Angela Merkel’s last government, by contrast, the deal-making went for nearly 25 weeks because a first round of coalition talks failed and a second try — with new partners — was needed. The agreement they finally reached was nearly 64,000 words, a record.
The new agreement will be presented by the party’s leaders on Wednesday afternoon. In it the partners found common ground on key policy issues, such as increasing investment in digital and climate infrastructure, refraining from raising taxes or upholding the country’s commitment to democracy and the European Union,
“Germany needs a stable and reliable government that can address the challenges facing our country,” the parties wrote in an outline of their agreement that was made public earlier. “Our talks have shown that we can succeed in this.”
The document presented on Wednesday still needs to be approved by each of the parties’ leadership or members. That process is expected to be completed by early December, after which Mr. Scholz and his new government can be sworn in.
In the recent past, the system allowed coalitions to stay together for the four-year legislative period. In the 1960s and early 1980s, however, several governments fell because the junior partner broke from coalitions both with the conservatives and the Social Democrats.
She’ll miss it by less than two weeks: Angela Merkel in all likelihood will not be the longest-serving German chancellor since Otto von Bismarck, the nation’s founding leader.
When Helmut Kohl finally gave up the keys to the chancellery in 1998, he had spent 5,870 days in the top job; if Olaf Scholz is sworn in as planned in early December, Ms. Merkel will leave office just days behind his record, the second-longest serving chancellor in postwar history.
Still, 16 years are a long time and after spending almost a quarter of her life in the highest office, many are wondering what Ms. Merkel might do next.
Her departure has been a long time coming — she announced that she wouldn’t run for re-election three years ago. Since then the rumor mills have been spinning. Some saw her accepting a guest lecturer role at an American university, while others hoped she would take on a senior role at the European Union or another international institution.
What was clear from the outset: She wanted to leave office on her own terms, in her own time. “I want at some point to find the right time to quit politics,” she told Herlinde Koelbl, a German photographer, in 1998. “I don’t want to be a half-dead wreck.”
Two years ago, when she experienced fits of uncontrolled trembling, it appeared as if she would not make it to the end of her term. Yet if Ms. Merkel has fallen short of Bismarck in longevity in office, she shared with him the moniker of “iron chancellor” and pulled through.
At 67, Ms. Merkel is still young enough to take on other challenges, but has been characteristically tight-lipped about her retirement plans. When pressed, Ms. Merkel brushed away the idea that she even had the time to think about it, insisting that only when she was out of office would she be able to begin focusing on her next step.
“I think every government day has to be taken equally seriously and always looked at with the same alert eye,” she said. “I believe in governing in the midst of life and as sensibly as possible, and to do so until the last day of my responsibility.”
With that last day drawing ever closer, she has begun to speak more freely about a need she feels to pause long enough to rest and contemplate what truly interests her. In an interview given this summer after receiving an honorary doctorate — her 18th — from Johns Hopkins University, the chancellor gave the first real insight into how she envisions her future.
“I’ll try to read something, then my eyes will fall shut because I’m tired, then I’ll sleep a little bit, and then we’ll see,” she said.
But when Parliament approved a staff of nine full-time employees for her office as former chancellor, many were quick to point out that it was a formidable number for someone with plans to lie on the couch reading books.
“I would like in this next phase of life to consider very carefully what do I want to do,” she said in September.
“Do I want to write? Do I want to speak? Do I want to wander around? Do I want to be at home? Do I want to travel the world?” Ms. Merkel said. “For that reason, I have decided that at first I will do nothing, and I will see what happens. I think that is really fascinating.”