Scholz begins German coalition push as Laschet’s hopes fade

Bloomberg

Olaf Scholz of the center-left Social Democrats appealed to potential partners to join him in a new German government as soon as possible as his conservative opponent’s rival claim on the chancellery ran into the sand.
At party headquarters in Berlin on Monday, Scholz appealed to the Greens and the pro-business Free Democrats to back a three-way coalition following his narrow victory in Sunday’s election.
Armin Laschet, the candidate for Chancellor Angela Merkel’s Christian Democrat-led bloc, was effectively told to drop his push for an alternative coalition that would consign Scholz to the opposition. “No claim to form a government comes from a second place finish,” Markus Soeder, the leader of the CDU’s Bavarian sister party, said at a press conference.
Still, the embattled CDU leader is refusing to renounce his dream of being chancellor and insisted in a news conference that he could still have a crack at forming a government. He took some responsibility for his party’s worst electoral
perfomance on record.
While Scholz faces potentially months of negotiations to lock in a coalition accord, the outline of a new German government is coming into focus. With three parties needed for a majority, the pro-business Free Democracts will demand the tight fiscal policy that was the hallmark of Merkel’s years in power and, within that framework, Scholz will have to find a way to deliver the energy transition that is the core of the Greens’ plans.
At a meeting with his party leadership earlier on Monday, Laschet himself backed away from his pitch to lead the next government, telling colleagues that no one has a clear mandate and that the CDU/CSU should be ready to jump in if Scholz’s efforts to broker a coalition fail, according to a person with knowledge of the discussions. Yet his stance was under attack from other officials.
“The CDU lost this election,” Michael Kretschmer, the CDU state premier of Saxony in the former communist East, said Monday morning. “Mistakes have been made in substance, in government and also in personnel choices. If we carry on like this, then I’m extremely concerned about what will be left in four years’ time.”
Laschet’s bloc was beaten by 25.7% to 24.1%, according to provisional results.
Christian Lindner, the leader of the FDP, has proposed negotiations with the Greens in order to address their various policy differences before heading into discussions with either of the bigger parties. Both groups on Monday sought to talk up their common ground.
The Greens finished third on 14.8%, their best-ever result, although the outcome was tainted somewhat for candidate Annalena Baerbock who saw her support slide by about 10 percentage points after starting the campaign as a contender to be chancellor. Her struggles on the campaign trail have created tensions with party co-leader Robert Habeck.
Habeck has also been pushing the idea of holding preliminary talks with the FDP and has won Baerbock around to the idea, according to one party official. While Habeck helped to forge a deal with the CDU and the FDP in his home state of Schleswig-Holstein offering a possible precedent, the election result makes that outcome difficult for a national government, the
official said.
The Greens’ leadership would face potential opposition from the members if it sealed an agreement with the Christian Democrats. Though the FDP could face a similar problem if it joins an alliance led by the SPD.
That means that Scholz may have to make him a particularly appealing offer in order to pacify his base, and Lindner has made an explicit pitch for the post of finance minister.
“When a new government is eventually formed it is almost certain to involve the Greens, implying a greater focus on climate change policies,” said Steven Bell, chief economist at BMO GAM. “The feasible coalitions would involve compromise on all sides and imply no major policy shift.”
Standing near to a giant statue of Willy Brandt, the former Social Democrat chancellor, Scholz was greeted with sustained cheers and applause from supporters when he appeared at party headquarters on Monday. He said that he’d slept well, was pleased overall with his party’s performance in the election and reminded his potential partners of how their parties had helped take Germany forward during previous coalitions.
“Germany always has coalition governments and it was always stable,” he said. “My idea is that we will be very fast in getting a result for this government, and it should be before Christmas if possible.”