Merkel’s coalition options complicated following political jolt

Bloomberg

A day after Angela Merkel’s party turned in its worst performance since 1949, the political reality began setting in that forming a new German government will not be an easy task.
The chancellor’s partner the last time around, the Social Democrats, did even worse, leading them to conclude they don’t want to take part in the next government—at least for now. That’s left Merkel with only one real option: a coalition between her bloc, the pro-business Free Democrats and environmentally friendly Greens that has never been tried nationally.
“All parties have a responsibility to ensure the creation of a stable government,” Merkel told on Monday in Berlin, adding that she would pursue talks with the Greens, FDP and also the SPD.
Most everyone on Monday was acknowledging that a Jamaica coalition—named for the party colors of Merkel’s Christian Democratic Union, FDP and the Greens, which are the same as the Jamaican flag—would be a difficult task to accomplish. Should that fail, the options left to the chancellor would be trying to convince the Social Democrats to change their mind, forming a minority government (unheard of in Germany) or calling new elections.

Jamaica
It would be the first time the Greens had joined a national government that wasn’t led by the SPD, and the party’s insistence on policies such as phasing out combustion engines and brown coal collides with Merkel’s bloc and the FDP. That said, one senior party member indicated before Sunday’s vote that such policy positions weren’t red lines in possible talks.
“For us, it’s clear that the next federal government must have a clear European compass and that compass must be pro Europe,” Cem Oezdemir, co-leader of the party, said, adding that implementing the Paris climate agreement, social justice and ensuring a fair society will also be key in any talks.
Katrin Goering-Eckardt, the Greens’ other chief, summed it all up by saying the upcoming negotiations will be difficult.
For his part, FDP leader Christian Lindner called for a “turnaround” plan for Germany’s economy with larger cuts in income taxes and more business-friendly approach. The FDP also wants to allow countries to leave the euro in an orderly way without quitting the European Union, limit the firepower of the European Stability Mechanism—the euro-area’s bailout fund—and introduce automatic sanctions in case of excessive budget deficits.
“Our recommendation is that the old stability-oriented policy be resumed in Germany, and yes, that is a change of direction,” Lindner said. Given the complexity of the coming negotiations and an upcoming state election in Lower Saxony on October 15, political observers expect the talks to drag on for weeks, making it likely that Merkel won’t be sworn in for a fourth term until December.

Macron presses ahead
with Europe vision
Bloomberg

French President Emmanuel Macron will press ahead with his vision of remaking European institutions, seeking to set the direction of debate as German Chancellor Angela Merkel grapples with tricky talks to form a new coalition government.
In a speech at the Sorbonne in Paris on Tuesday, Macron will make proposals for re-shaping Europe, touching on topics ranging from defense and immigration to the economy, an official in his office told reporters. While he isn’t seeking to interfere in German domestic politics, it makes more sense to air the ideas before a coalition is formed than after, the official said.
Macron needs Germany if he is to push through change in Europe, yet with Merkel weakened in Sunday’s German election and her potential Free Democratic Party coalition partner relatively more hostile to closer integration, the French president may face the biggest challenge yet to his agenda. Macron has been forcing the pace on economic reform and deficit cuts in a bid to win support for change at the EU level. “Macron should continue to push hard for a stronger EU,” said Henrik Enderlein a professor of political economy at the Hertie School of Governance. “Germany can’t afford to block progress,” he wrote on Twitter.
Merkel, asked about potential cooperation with Macron, signalled that euro-area integration is on hold as she sets about forming a new government.