Merkel and Schulz lose in Federal Elections – Right wing populists with 3rd largest faction in German parliament

Faces of the supporters of all democratic parties froze last night, when the bars of the TV grafics displayed the results of the “Alternative for Germany (AfD)”: around 13% of the votes went to the right wing populistic party. It was expected, latest polls saw similar numbers. But until the last moment there was hope, more people would not follow these pied pipers. Compared to other European states, 13% is still almost not worth to mention. For all democrats in Germany this result is frankly painful.

Chancellor Angela Merkel and her Social Democratic contender Martin Schulz lost dramatically. Minus 8,6 percentage-points for Ms Merkel`s conservative CDU/CSU and only 20,5% for the Social Democrats at their historic worst result.

What are the reasons?

Surely, a good deal can be explained with Merkel`s “Willkommenskultur”, Germany`s willingness to receive more refugees than any other European country. The SPD supported this policy decisively.

Analysing facts on economic growth, unemployment rate, number of jobs, crime statistics and even on committed and prevented terror attacks, it becomes hard to explain, that so many voters did not acknowledge undoubted successes by the Grand Coalition government of CDU/CSU and SPD.

Looking at the election campaign of the last weeks, the atmosphere was dominated by frustration, even anger. It seemed many people where fed up with Merkel and her government. Engaging people into discussion, it became clear, that hardly anyone could clearly articulate and explain his or her rejection.  In the next days analysis will draw a clearer picture when regional results will be broken down into more detail. But one explanation is as obvious as uncomfortable: The disconnect between the political crowd in Berlin, politicians, government and party officials but also lobbyist of all kind and the people, the voters in the rest of the country. These people do not understand anymore what is happening in political Berlin.

What will happen next and what does it mean for Germany and Europe?

First of all: 87% of the German voters did not vote for AfD. The losses of both Merkel and Schulz strengthened other small parties, too. The socialistic Left, the Greens and the Liberals ended up with around 10% each.

One might praise this diversity, for Merkel it poses an unpreceded challenge. After the Social Democrats were quick to declare that they will not re-enter a Grand Coalition government with Conservatives, Merkel is stuck with only one option: Jamaica. Following the colours of the Caribbean island state Merkel needs to find common ground for the next four years with the yellow Liberals, the green Greens, and the black Conservative.

Some find it easier to herd a flock of sheep, since political positions and concepts of the parties involved are diverging widely.  At federal level there has never been a Jamaica coalition before. Only in the state of Schleswig-Holstein the government is trying to rule in this set up.

Today it is too early to make any prediction whether Merkel will find a way to cooperate with the Liberals and the Greens. One thing seems certain, though: negotiations on the coalition contract will take some time. It is highly unlikely that we will see a new German government sworn in well before Christmas.

Last night the frontrunners of all parties were quick to role out their core positions, some even stipulated red lines already. We will see, what will be left at the end of the day. Although, predictions about detailed policies on the digital agenda, on trade, on taxes, on energy cannot be done, yet. Too diverse are the positions by the different parties to see where compromises could potentially be found.

Good news is, that on Europe there seems a lot of common ground in Jamaica. Conservatives, Greens, and Liberals are committed to the EU and want to strengthen their institutions. Ideas on how might differ, but there is no real casus belli in sight.

What happens, if Jamaica is not going to happen? Schulz and the SPD will get under pressure to take responsibility for Germany and sit down with Merkel to forge a new government. Even though in this scenario the Social Democrats would be in a good negotiation position in relation to their results for now. In a mid-term perspective they will lose even further their own decisive party profile, with the high risk of being marginalized completely. So if the SPD is not going down this way, Merkel could try to get elected in an open vote by the parliament, and henceforth rule with shifting majorities. As of today this seems a rather theoretical approach, especially since this would give the AfD extra influence.

If everything fails, the Germans will be called to the ballot again, but this would not only be historically the first time, but also ill perceived. Voters do not like the idea to elect until the results are to the liking of the parties. The risk of right wing populists gaining even more support would be considerable high.

Difficult and uncertain times ahead, one hopes that they will not last too long.


Markus Weidling

Managing Partner, Germany

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