Dr Patrick Schröder
Okay, we’re right on time. Good morning, everyone, a warm welcome to you all, friends and members of Chatham House, both here today and online. Here at Chatham House, we’ve been convening for over 100 years on the big issues in international affairs and today, we’re very happy you’re joining us to hear more about the German elections and what the implications might be for European policy and other issues. Generally, German elections haven’t been traditionally very exciting or haven’t generated a lot of international interest. It’s been a bit different this time, for various reasons.
And to introduce myself, I’m – my name’s Patrick Schröder. I’m the Senior Research Fellow in the Environment and Society Centre. I’m standing in for my colleague, Armida van Rij. He – she leads the Europe Programme here at Chatham House, but unfortunately, she’s fallen ill and can’t join us, but the credit for organising today’s event is all hers. And maybe also, somewhat, sort of, background, at the Environment and Society Centre, we actually quite closely follow German and European economic and trade policy, and we’ve had engagement over the years with Germany’s Ministry for Economic Co-operation and various EU institutions, DG Trade, DG GROW, on sustainable and resilient supply chains. So, we’re quite keen to learn more about what the German election policy changes might also have implications in that field.
Then Chatham House has also broader interests around Germany, for example, Germany’s evolving security role in Europe and Ukraine, especially, and other topics. And we really have an expert panel today, outstanding experts with deep expertise on these topics, on trade, German economy, security, German domestic politics. So, we’ll hear from the panel. Before I introduce you all, a couple of housekeeping points. So, today’s event is on the record, so we’re not using the Chatham House Rule. You’re free to share the information from today’s event. If you want to share it online, please use the #CH_Events and also @ChathamHouse. I think, yeah, so, that’s it.
And we have about 30 minutes with the moderated Q&A with the experts and then, we shift to a Q&A. So, there’s option – opportunities for everyone to raise questions. You can stay seated, so the microphone will come to you, once you’ve raised your hand, and for the online participants, you can post your questions through the chat, and we can maybe also answer a couple of questions from the online audience.
Now, enough from me. Let me introduce the experts. Let’s start with Dr Thu Nguyen, who’s the Deputy Director at the Jacques Delors Centre, for the Hartie School. She leads the think tank’s work on institutional questions of EU policy. In her own work, she mainly focuses on EU institutional reform, the rule of law, democracy and economic governance. She is also the host of the Jacques Delors Centre podcast, “EU to go,” their podcast for Europapolitik. And before joining the centre, Dr Thu was Assistant Professor of EU and comparative constitutional law at the Faculty of Law in – at Maastricht University in the Netherlands.
Then Dr Christian Odendahl, European Economics Editor at The Economist, and you joined The Econ – who’s here with me on the stage. You joined The Economist in 2022. You’re the European Economics Editor, covering Europe’s economic integration, monetary and fiscal policies and broader economic trends. And before joining The Economist, Christian was Chief Economist at the Centre for European Reform, Britain’s European think tank.
And then, also online, Dr Nicolai von Ondarza, Associate Fellow with the Europe Programme at Chatham House, as well as Head of EU Europe Research Division at the German Institute for International and Security Affairs in Berlin. His research focuses on Germany’s role in Europe, EU policies and institutions, EU-UK relations, as well as democracy in Europe. And he’s advised the German Government and EU institutions on various policy fields.
So, that’s enough from me. Now, we’re jumping straight into the questions and I’m starting with you, Christian. So, could you share for – with us, maybe some of your initial reflections on the election results? And we also may be interested to hear, what has been the responses from the business community that might give an indication what a CDU-led government might mean for the economy?
Dr Christian Odendahl
Sure. Shall we briefly repeat what the election result was, in case?
Dr Patrick Schröder
Right, yes. I’ve…
Dr Christian Odendahl
Because I remember, you wrote down the numbers.
Dr Patrick Schröder
No, I did write down. In case we haven’t been able to look at the results, so, the CDU, the Christian Democrats, achieved 80 – 28.5%, which is lower than the 30% they were aiming for. The AfD, Alternative for Germany, are second strongest party, 20.8. So, that’s the strongest result for that party in the history. And the Social Democrats, SPD, only came to 16.4%, which is the weakest result in their history. Then the two parties on the left, the Greens, 11.6% and Die Linke, The Left, 8.8%. So, that means there are five parties in the new Bundestag. The Liberal Democrats didn’t pass the 5%, so they’re not represented in the Bundestag this time, and the Bündnis Sahra Wagenknecht, which is a new party that was founded last year, also just missed the 5%. So, that’s the current situation, and voter turnout was very high this time, 83% around that time.
So, okay, over to you, Christian.
Dr Christian Odendahl
Yeah, 83% is a big jump, so it’s – it shows how much this important – this election mattered to the German voters, as well. I think – I guess the first thought was, sort of, this could’ve been worse, both in terms of the AfD results, I mean, 20% is terrible, but it still could’ve been worth and – given some of the polls. I think that BSW, I mean, that they just missed it by, like, 13,000 votes or so. I mean, the BSW is, sort of, a leftish Putin fan club, right? And that they missed it by such a small margin, I think that’s just cosmic justice. And then that it is enough for two parties to form a government, I think that was important.
That was what worried people before the election, because we just had a three-party government in Germany, where it was quarrelling most of the time. And so, having that experience again, I think, was on people’s minds and that – it just about was enough for the CDU and the SPD to govern together. We call it the grand coalition, because those used to be our two big parties. Given how small it has become, you know, they – we need another name for this, but it’s still, sort of, the well experienced pair of parties across the aisle, they can work together and have worked together previously. So, in that sense, you know, it could’ve been worse.
But then, you know, you think about well, hold on, this grand coalition of CDU and SPD, weren’t those the ones that got us into this mess in the first place? Because they have governed three out of four terms of Angela Merkel and are largely responsible for the mess that Germany is in, right? So, it’s geopolitical naivety, it’s lack of security investment, it’s lack of investment in, frankly, anything. It’s lack of economic reform, which now, you know, is tasked with – this government is tasked with and so forth.
So, the second thought, as well, well, hold on, we are giving, sort of, the power back to those who didn’t prepare Germany well for the future. I think it’s worth pointing out, particularly in Britain, that the Conservatives in Germany do not have a track record of reform at all, right? So, it’s not like Thatcher or Reagan in the US and so forth. The – I would go so far as to say that the CDU has not done meaningful economic reform in Germany since the 1960s, right? And so, they have to prove now that they can actually reform the country quite substantially. This – the Social Democrats have a bit of experience with reform, but not necessarily a positive one when it comes to the electoral result, because they got punished at the voting booth for precisely that. And so, they are – if you look at their election manifesto, it doesn’t exactly scream, sort of, reform and future, right? It screams more we need to protect the voters that we still have, right?
So, these two parties together are now tasked with, basically, transforming Germany, right? So, this is, sort of – that’s the second thought, and the third is, I don’t think this election campaign prepared the German voters for what is about to hit them, right? So, if you look at the period of this previous government, which started off as a reformist coalition, but then quickly got upended because of the war and the energy crisis and inflation and so forth, and the election campaign was largely about migration, because the AfD, our far-right party, wanted it to be about migration and the CDU foolishly followed them. So, it was, you know, electoral debates before – on TV and so forth. You – it just wouldn’t stop.
The Journalists would always ask about migration, the parties would always answer about migration and then, 45 minutes in, suddenly, they started to talk about something else. But you could tell when there were voters in the audience, like your BBC Question Time, and they got to ask the question, almost none of the questions were about migration, right? So, it wa – there was a detachment between, sort of, what, yeah, the slightly excitable electoral debate wanted to talk about, migration, migration, migration, and, sort of, the real issues facing the economy. And so, the country is not prepared and so, this coalition is also not prepared for what it has to do, right?
Take the debt break, we’ll talk about this maybe a bit later, but there’s one instance where, you know, during the election campaign, the CDU would still say, “Well, no, we still want to keep that,” and literally 24 hours after the result, realise, hold on, we have to spend a lot of money to modernise the country. Something we have failed for 16 years to do, so we need to do it now. And this, likewise, to Social Democrats, while in government trying to defend their record as much as they could, but doing a slightly better job of preparing the country for the future because they had to talk about these issues. But I feel there is not a – this new coalition does not have a programme yet, does not have a narrative yet and hasn’t prepared the country for what is about to come.
And, you know, we’re now – after the election, everybody’s, sort of, relieved a bit that this is over, that there’s a two-party government. But give it a year or two and they will immediately think about the next election and they will think about the threats from the AfD, in the case of the CDU, or the threat from The Left Party, which did amazingly well, with almost 9%, or the BSW for the SPD. So, I don’t expect them to be the reformist coalition that Germany needs.
Dr Patrick Schröder
Okay, great, yeah, thank you, Christian. So, stability, but nec – not necessarily reform and – yeah, okay, great. Then Thu, over to you. Can you share some of your initial thoughts on the election and maybe also based on your work you’re doing around the EU institutions, will there – are you seeing any potential major policy shifts that will occur, that have impact on European Union cohesion or the institutions or decision-making processes within the European Union?
Dr Thu Nguyen
Hmmm hmm. Yes, thank you for having me. Essentially, I can just fully agree with what Christian said about the elections. I think the overall feeling was really a feeling of it could have been worse. It could have been better, but most generally, it could have been worse. The two-party coalition was what everyone was hoping for. I do have to say, the fact alone that everyone was hoping for a grand coalition also says a lot about what was expected of these elections in general. It is not the most exciting coalition you can think of, but at least it – everyone hopes it will provide some stability.
And I would say, even though the CDU/CSU won the elections in terms of being the strongest party, I think the real winners were the AfD and The Left. And Christian has mentioned this, the AfD has the strongest result it has ever had. It doubles – doubled its votes from last time. Could have been worse. I think they were expecting perhaps 22/25%, but 20% is enormous for them, and of course, they have also, shortly before the elections, the opportunity to, in fact, become one of the parties on which the CDU also relied on for a majority. So, they have, before the elections, also, sort of, moved into this space where suddenly, they could be part of a majority in Parliament, which before, was unthinkable.
And The Left were just sensational. I think everyone, or a lot, had – people had written them off before the elections. They were aiming for maybe three districts, hopefully 5%. They made 9% six districts. They were the strongest party in Berlin and also among young voters, and I think this is amazing. If you look at young voters’ results, the strongest party is The Left and then, just shortly after, 21%, I think The Left has 23 or 24% among young voters, and then the AfD 21%. So, you also see that, really, young voters between 18-24 are not voting for the mainstream parties anymore, right? They’re – they don’t vote only for the far-right, but they clearly are – have a preference for the more fringe parties, and I think this is also something that, sort of, needs to be reflected upon by CDU, SPD and Greens in the next elections.
And I agree with Christian that electoral campaigns were very disappointing, both in terms of future orientation – and I understand why maybe young voters are not very drawn to the centrist parties, because they offered them very little. And I agree I think the campaigns failed to convey to the voters in the country what kind of problems are coming up in the next few years. And in that sense, it was a missed opportunity.
What do I expect for EU policy with the new government? I think two things. Friedrich Merz has very much campaigned on him being different than the previous government and even different than Merkel, being a real European leader. So, I think he has the intention to take on leadership in the EU and he wants to transform Germany’s role in the EU. He wants Germany to take a bigger role, to have less in-fighting, less of abstention because they cannot agree on things. He wants to streamline EU policy in Germany better, with him at the helm. I think we will have to see whether that works. I mean, the famous German vote has not only existed under the traffic light coalition. This is simply something that is born out of the political system of Germany, between the ministries and the different parties. So, I think we’ll have to see, because of course, leadership is not only about what he wants to do, but is also about whether he can form the coalitions and the compromises to do it.
And the second interesting thing to watch, I think, is how the interplay between Friedrich Merz, so the CDU leader, and Germany, will be with Ursula von der Leyen, the Commission President who hails from the same party and Manfred Weber, the party and group leader of the biggest party in Parliament. So, they’re all three German Conservatives and Merz has said that he wants to use the majority, the EPP majority in the European Council, so, sort of, enforce or implement his own visions. And we’ve seen this in January already, when EPP leaders came to Berlin to also support him in the campaigns.
At the same time, I’m not sure whether he necessarily agrees on everything that Ursula von der Leyen, for example, would like to do. And I think the Green Deal and the question, how much of a role that will we see on the European Green Deal, will be one of the issues to watch. But it is, of course, an interesting dynamic that might, sort of, might evolve between these three institutions and the three Germany Conservatives. And I think maybe I leave it at that for now.
Dr Patrick Schröder
Okay, great. Thank you, Thu. Yeah, definitely the space to watch the dynamics between Ursula von der Leyen, Friedrich Merz, and you mentioned also the Green Deal. This is also something from, let’s say, an environmental perspective, that people are concerned about. And you mentioned the real winner was the AfD and maybe over to Nicolai, let’s dig into this a little bit deeper. Can you share some of your thoughts on this, the rise of the AfD? What are the future challenges that will bring to Friedrich Merz’s government and what are maybe wider implications, also, for the far-right movement across Europe?
Nicolai von Ondarza
Yeah, so thank you very much for having us, and I think as somebody who believes in a liberal democratic Germany, I think the scale of the win of the AfD was really hard to see. And I think just to put it a little bit into perspective, a couple of points are important for me. First, they didn’t win by becoming more moderate, they won by becoming more radical, and this is a difference to many other European far-right parties, like Le Pen or the Finnish – the Swedish Democrats and so on, who tried to, at least, give themselves a more moderate picture, an image in the public.
Whereas the AfD, over the course of the last 12 years, have – with every iteration, has become more radical. And they were also quite radical in their party programme on migration, no longer hiding this re-migration idea, on proposing to leave the European Union, on very close relationship to Putin’s Russia. And I think that they, with this radical programme, got ten million votes, doubled their vote share, won almost every constituency in Eastern Germany and some of them above 50%. I think this is saying quite something.
The second point that I would add to what has already been said is that the pro – the election campaign really favoured them. So, Christian already mentioned the focus on migration. I would disagree a little bit with him that this was not the choice by the other parties. I think Friedrich Merz originally wanted to focus on economic policy, but we had the series of atrocious terror attacks in Germany on, sort of, people on the streets, on kids and so on. You will have seen them, and that really, sort of, swung the electoral debate on migration and I think only then came the added strategy of the CDU/CSU to really double down on this issue, copy some of the AfD programmes, and I think that added to their benefit.
The third point about the campaign that has not yet been mentioned, that I think has not been electorally important, but is important for the German political class, has been the interventions from the US, from Elon Musk, from JD Vance, in Munich. And I think it was interesting that Friedrich Merz, after the election, not only said that these interventions were outrageous, but on the level coming from Moscow. And really putting the interventions from the US on the same level to those of Putin is saying quite something. And I think the anger in mainstream political Germany about these interventions is quite strong.
Now, looking forward, what will the effects be? I’m fairly confident that despite the flirt with the AfD during the frantic phase of the election campaign, where Friedrich Merz was willing to vo – at least accept their votes for an issue of migration in the Bundestag, the CDU and Merz himself are crystal clear that they will not go into coalition with the AfD. They are not even having talks with them, and so, this, sort of, now widely discussed firewall, a Brandmauer in German, I think this will hold for this legislative period. And the coalition talks with the SPD might be bumpy. You will hear some threats, but I think at the end of the day, those two parties will hang together.
That being said, you can already see the strategy of the AfD. They’re saying in public, “Friedrich Merz will only be able to pursue his programme of reform if he works together with the AfD and if he works with The Left,” and they lump everything from the SPD, to the Greens and to The Left, together in this, “then this reform will fail, and they will make poisoned offers.” So, they will make offers in the Bundestag to vote together with the CDU on issues where the differences with the SPD are particularly strong, for instance on migration, but also on economic policy, on taxation, on getting rid of some of the green regulations. And so, I think the pressure on the government will be continuous throughout this whole coming electoral period. And we don’t know what will happen, both on the regional level, but also geopolitically, but I think it’s not like the past, when coalitions, where Angela Merkel always had big majorities. I think Friedrich Merz will have to constantly fight for the coherence of a coalition he builds.
And maybe the last point, and this is also where I disagree slightly with Christian, many in the CDU now speak of a “government of last chance.” And they say, if they do not get this right this time, then the next time, the AfD will be the biggest party and potentially form the government. And I think therefore, the willingness to reform will be bigger in this coalition than it has been in any of the Angela Merkel grand coalitions. Whether they actually be successful in that is an open question, but certainly, the political pressure to move and be, for a lack of better word, a bigger driver, a radical driver, of change, is much bigger this time than in the past years.
Dr Patrick Schröder
Than – yeah, thank you, Nicolai, for the explanation, also for mentioning US interference, or US support, for the AfD. And we’ll come back to what the Germany-US relationship might develop towards now that – but first of all, back to Christian, to you.
Dr Christian Odendahl
Hmmm hmm.
Dr Patrick Schröder
Let’s talk a bit more about the economy. What are your – what’s your take on whether Friedrich Merz will be able to kickstart the economy and get the country out of recession, re-boost the manufacturing sector? And I wanted to add another angle to this, as well, just the issue of, like, green technologies.
Dr Christian Odendahl
Hmmm hmm.
Dr Patrick Schröder
Future industries.
Dr Christian Odendahl
Right.
Dr Patrick Schröder
How will this – where Germany has a leadership role, where do you see this going?
Dr Christian Odendahl
Yeah, so, I think the German economy has been in trouble since about 2018. That was, sort of, the endpoint of Germany’s manufacturing boom of the golden decade, if you want. It didn’t – it was a bit unnoticed, I guess, because it was, you know, maybe seen as something temporary. Then came COVID and then came the energy crisis and so forth. So, this has been ongoing for a while and of course, German businesses during that time did not sit on their hands, but tried to explore new technologies, new markets and so forth.
So, this adjustment of the German economy underneath the surface has been going on for about seven years now, and in that sense, some of the work has already been done. So, you can see that services sectors are growing, you can see that green technologies are growing, you can see defence and aerospace now, where Germany is relatively strong, booming. And so, there are, you know, moves out traditional sectors that we associate with Germany, steel, chemicals, cars and so forth. They are in trouble, in part, because of high energy prices as a result of the Ukraine War, and it is a – let’s say there is an element of, sort of, managed decline, right?
So, this has happened to other parts of German businesses before, where the competitive threat from outside was too large and the German economy readjusted. And there is, to that extent, not that much that policymakers can do there, right, except for helping to manage that transition. Ideally, not just to, sort of, pluck holes later, but, sort of, actively try to work with regions where some of these suppliers and firms are concentrated to build different business models and so forth.
The energy shock, of course, was a big one, which came at a time where the German economy was already struggling. So, even without the energy shock, right, the German economy was going through a bad patch. But as you mentioned, sort of, the green transition, I mean, this is something where Germany has made decisions decades ago of how it wants to transform its energy system and suddenly, one part of it broke away, which was, sort of, the transition period with cheap gas. And now, of course, the pressure is on any government to make more progress on the green transition, on the grid buildout, on hydrogen and so forth.
And I think there the parties largely agree that this needs to be quicker. So, in 2022, for example, not just the traffic light government, where the Greens were part of, but also all the state governments, where the CDU was present, agreed on an – on a big package of deregulation of planning rules and so forth, to speed up the green transition. At the same time, though, you know, Germany was never really the most progressive in climate policy in Europe, but I think now, it’s not going to be progressive at all. Because it has seen, sort of, the potential dangers from its industry, from a green transition that goes slightly off course, not because of the green transition per se, but because of other policies that affect energy prices and so forth. And so, I would expect this government to be very careful on the green transition going forward, and being, you know, hesitant to implement anything that may hurt its industry going forward.
So, this is a bit of a danger. The good thing, of course, is that most of the big things in terms of the green transition in Europe have already been set on track and in part, is already legislated. So, it’s – but you will see the, sort of, the pushback against the end of the combustion engine, for example, right? This is, you know, how can I put this politely? Is a populist take on, sort of, the green transition in the car industry and the CDU has been vocal on, sort of, wanting to delay this, even though the German car industry is not necessarily in favour of this themselves, right? When it comes to tariffs on Chinese EVs, the German Government is hesitant because of its overall trade openers, but is aware that, of course, the Chinese EV production is a threat to the German economy.
And so, there – I think there will be a very, sort of, careful approach of trying to manage this industrial reorganisation, which is happening since 2018, to manage this further and to, at best, avoid anything that could add to the pressure on businesses. And one of the things, of course, is a massive boost to domestic investment, right, which could also be a demand push for German firms. And there, of course, Germany’s own fiscal straightjacket, which we called the ‘debt break’, right, which was introduced in 2009, is a problem.
And as we speak, sort of, the parties are trying – scrambling to fix it before this old Parliament has to dissolve, because the new Parliament, the main parties, the Greens, the Social Democrats and the Christian Democrats, do not have a two thirds majority, and so they cannot change the constitution anymore. And that has changed German – how Germans think about the constitution quite fundamentally. Because previously, the grand coali – you could always count on the – until 2021, since the Second World War, the two main parties always had a constitutional majority. So, basically, whatever you put into the constitution was not meant to be in there forever, but it was meant as a let’s put that in there so we can only change it if we both agree.
It was a, basically, a grand coalition proviso and not, sort of, meant as something permanent, and now they realise not only has the – does the grand coalition no longer have a two thirds majority, but not even including the Greens. And so, now, they are quite a bit more urgently trying to find a way to fix this, and our – my expectation is that they will fix this in the next couple of days, or weeks, to make sure that this old Parliament, where they still have a two thirds majority, can change the constitution quickly before the new govern – Parliament takes over. This is something which is unprecedented, which is, in terms of democratic and legal understanding of how this is supposed to work, unorthodox to put it mildly…
Dr Patrick Schröder
Hmmm hmm.
Dr Christian Odendahl
…right? But the situation is so dire, also in terms of defence, that even the CDU said, “Okay, we can’t have this anymore.”
The question, of course, is how will this now be implemented in practice, right? The CDU will probably push for a one-off, I don’t know, defence fund or whatever, and the Greens and the Social Democrats will make pretty clear that they will need fully fledged reform of that straightjacket, because it just doesn’t fit to the new challenges that Germany faces.
Dr Patrick Schröder
Yeah, no, thank you, Christian. The explanation on the debt break, so that’s definitely a space to watch over the new few weeks.
Dr Christian Odendahl
Yeah.
Dr Patrick Schröder
And it also leads us to the next topic that we would like to hear a bit more about, and you partly mentioned it as defence spending, Ukraine. Thu, I was wondering if you could – because debt break reform will be necessary to achieve that spending on defence, as it’s been discussed. So, yeah, could you explain a bit more how you see now Germany’s foreign and security policy…
Dr Thu Nguyen
Hmmm hmm.
Dr Patrick Schröder
…evolve in relation to Ukraine, but maybe also, then, looking again at the US – German-US relationship?
Dr Thu Nguyen
Yes. Can I – I’d just like to add two things, perhaps, on what Christian said and what Nicolai said on the debt break reform. I think this will be very, very interesting to watch. I think unorthodox describes it perhaps very mildly, and I think it’s important to say that this is not the only choice, right? There is – the left ha – so, differently. CUS [inaudible – 33:18] and Greens need the left to reform the debt break. The left is not opposed to reforming the debt break. They want the debt break reform for different purposes. They want more investment in infrastructure and social policies and climate, they’re opposed to more spending for military for the Bundeswehr. The CDU wants the opposite, basically.
So, I think there is the question of do you try to get a compromise in the new Parliament that has just been elected, that might be possible, but would be very, very difficult, or do you try to circumvent that difficulty by trying to introduce the reform with the old Parliament after the election? After actually, you’ve had the opportunity to do this before the elections whatso – right? The CDU was in Parliament. There was a majority before the elections to do this. They didn’t want to do it. A side comment on that.
And the other comment on what Nicolai said about liberal democracy in Germany and the EU, and what worries me a bit there is absolutely what Nicolai said about the question of the firewall of the AfD, but this whole situation that we had before the elections on the migration question and voting with the AfD. Was also that what was voted, so the content of the package that was voted, was in breach of European law. And there was this apparent instinct by the Conservatives to say, “This is so important to us.” And I hope this was electoral campaign related, in the heat of the campaigns, but there was a tendency to say, “We want to do this, we want to do this on migration. European law does not allow us to do it. We don’t care, we’d rather do it in breach of EU law because this is so important.” Of course, that is not how EU law works. Their argument was that “The rules don’t work, other member states do not adhere to the rules, so we do not have to adhere it either.”
And again, I hope – I think this was an exception, but once Germany starts to consider European law or international, any kind of law, really, to be optional in case that it does not suit them, I think that becomes very, very, very dangerous, not just for Germany, but for Europe as a whole, because it makes a difference. It is different, whether it is Germany that considers EU law to be less binding, or if it is Hungary. And again, I hope this was exceptional, but I think it was an episode that worried a lot of people from a European law perspective and worried me a lot, and I hope that this is not something that we will see more often. But I agree with Nicolai that the pressure coming from the AfD and from the right will be immense on the CDU and I hope that they can, sort of, withhold that pressure. No, that’s not the right word, but you know, stand – withstand? Withstand the pressure.
On policy shifts on foreign and security issues, I think one of the biggest question would be defence spending, and I think this is also one of the questions that the campaign simply failed to prepare the voters on. That this will be a big question and that there is, of course, a question of whether it really is possible to ramp up defence spending as much without it being fed by the population on anything else. And the question of the debt break reform is, I think, now the most urgent one, as we’ve also seen on the debates in Germany and I think this is why they are trying to move so quickly within the next 30 days.
Overall, we – I think Merz has always been hardy transatlanticist. So, he has been very much in – a supporter of a good relationship with the US. We’ve seen this change very recently. After the election, he said that “Europe needs to prepare to become independent from the US in case that the US withdraws from NATO.” I think now we have to see what that really means. I think it relates to the question of ramping up defence spending and the debt break.
On China, he’s, I think, been a bit more hawkish than the last government. So, he also sees the need, or he has expressed the need for Europe to also become more independent. At the same time, I think there is this instinct, also, of Germany first, or German interests first, in the CDU. So, we will have to see whether they would, for example, vote for European tariffs against China. The last government did not. Where we will see a difference, I think, is, sort of, in the rhetorics and how the next Chancellor or – and if he becomes Chancellor, but the next Chancellor, sort of, talks about security and defence, right? So, we will see a shift away from this peace Chancellor campaign that Scholz very much had. So, he campaigned as the Freedoms Councillor, so also, much more cautious approach, and I think this we will not see from Merz.
So, there will be very, very much a difference in how he will talk about security, talk about foreign policy and talk about support in Ukraine. Nonetheless, of course, he will have to work in a coalition with the SPD and that is, to me, it’s a little bit unclear how much of the party of the SPD follows Scholz’s more cautious approach and how much of the party does not. I think the very popular Defence Minister, Boris Pistorius, is much more – is much less cautious than Scholz, for example. So, I think there is also some space for the SPD to move, but of course, this is also an area where Merz, as a Chancellor, can make quite a difference simply in how the government itself approaches the question. So, I think this is definitely an area where we will see a difference.
Dr Patrick Schröder
Okay, great, thank you, Thu. We’re almost to the Q&A, so if you already have some questions, get ready to raise your hands. But one last question to Nicolai, and I think we wanted to ask a question how the UK-Germany relationship might develop. Will there be more partnerships? What are co-operation opportunities under the new CDU-led government?
Nicolai von Ondarza
Yeah, so, to be frank, the relationship with the UK is not on the top of people’s minds in Berlin, after the election, but I would say there’s generally a goodwill, a goodwill to deepen the relationship. You might know that the last government was working together with the UK on a friendship treaty. They already signed the so-called Trinity House Agreement on deeper defence co-operation. This was more the political agreement and then, they planned to – before they – the government collapsed, they planned to have a treaty agreed by Christmas. And as far as we know, from the public, most of that treaty is, basically, ready to be signed and there’s a clear intention, also, from the CDU, to progress on that. And so, I would expect this treaty to come back to the agenda when the government is formed, and I am quite confident that it will be signed, if both sides are willing, this year.
I think the more interesting question is about the European security architecture. Friedrich Merz is often speaking about the idea of a, sort of, Ukraine contract group of Germany, France, Poland, Italy, Spain, plus the United Kingdom. So, this idea to involve the UK very strongly in European security and all of the, sort of, emergency summit, emergency trips to the US that Macron and Starmer are doing, I think here is something where Friedrich Merz will be very interested to keep working with the UK, and also find a way for the UK to keep working with the EU on security. And so, I think the goodwill is there. However, maybe last sentence on that, the fundamental position, I think has not changed from the German Government, that it’s interested also in areas of youth mobility in the EU-UK relationship and that for closer economic partnership, there also needs to be movement from the UK on its red lines.
So, I think the economic position has not changed on security. Defence, I think there’s more openness to work together on an EU level and then, thirdly, the ambition for the bilateral treaty.
Dr Patrick Schröder
Okay, fantastic, yeah, thank you, Nicolai. And then – yes, now, over to you, please. You can raise your hand and then, please state your name and your affiliation, and the microphone will come to you. Who has got a question? Yes, over here. Okay, you start.
Sophia O’Brien
Hello, good morning, and my name’s Sophia O’Brien. I’m a master’s student at the War Studies Department at King’s College. My question is back to, we were talking a little bit about the transatlantic relationship, and I was surprised to see Friedrich Merz in some of his first public statements, talking about a shift in – almost like a decoupling, from the United States. I was just wondering, in your opinion, what that could look like. Like, is this just rhetoric, or could this actually – could we see concrete steps towards that, and what would that look like? What should we be looking for? Thanks.
Dr Patrick Schröder
Okay, thank you for the question. Any other questions? Right, yeah, the gentleman just there. Yeah.
Euan Grant
Thank you very much. Euan Grant, UK Defence Forum, although my question reflects personal views. I worked in the Ukraine several times on European Commission programmes. I saw the dark side of the Commission there. They made very, very major mistakes, which are extremely costly. How do you see, following on from the lady’s point, co-operation by Germany, perhaps with the UK membership of the JEF, the Joint Expeditionary Force, to tidy up and tighten up defence and security in order to assist Ukraine and assist Europe, beyond Pious words, to pac – practical nitty-gritty co-operation, particularly in intelligence and surveillance? Because, of course, we’re still heavily dependent on the US there.
Dr Patrick Schröder
Great, thank you. Maybe – yeah, maybe one more question over there, and then we do a round of responses.
Neal Skinner
Thank you. Neal Skinner for Fiduciam. Just a question on the European Political union that was very driven by Emmanuel Macron. I’d just appreciate some views on Germany’s attitudes towards that and whether it’s something they want to actively participate in or not. Thank you.
Dr Patrick Schröder
Thank you. Okay, shall we start now?
Dr Christian Odendahl
Is that for those?
Dr Patrick Schröder
Okay, so we have three questions, one on potential US-Germany decoupling, closer UK or, like, Germany-UK co-operation in Ukraine on security issues and then, German perspectives on the EU Political union. I think I might – maybe Thu, do you want to get started? No? No? Hard questions, so, right.
Dr Christian Odendahl
Okay, I could start with the transatlantic …
Dr Patrick Schröder
Yeah.
Dr Christian Odendahl
…at least as…
Dr Patrick Schröder
Okay.
Dr Christian Odendahl
…regards to the economic side. So, Friedrich Merz’s comments, I think, largely reflect, sort of, a realisation in Germany that this protective relationship between Germany and the US is in serious trouble. It is still – I was probably as surprised as you were that this is something that he chooses to say less than a few hours after the election results came out, before he has agreed a coalition agreement, before he had formal summits with major European partners. Because it seems to be a very decisive shift in 80 years of German foreign policy, right? My sense is that it reflects more on Merz as a Politician then it reflects on, sort of, that Germany is ready to make that shift properly, because he has a history of, you know, going out there with ideas that he hasn’t fully war gamed, let’s say that.
I think for Germany, the relationship is particularly tricky to manage because Germany depends on a global trade order, which the US protected, because Germany has economic interests in countries that the current US administration considers adversaries. And so, the pressure on man – the – managing that relationship is probably the single most difficult issue for any German Government. And so, I was surprised as you that he would, basically, do a policy announcement, sort of, in a talk show, right? So, that – it’s more like something you would announce at a Chatham House speech, right? So…
Dr Patrick Schröder
Yeah, we’ll get him here for his next statement, maybe, yeah.
Dr Christian Odendahl
There you go.
Dr Patrick Schröder
Okay, then – great. Maybe then over to Nicolai. Do you want to take any of the other two…
Nicolai von Ondarza
Yeah, maybe…
Dr Patrick Schröder
…questions?
Nicolai von Ondarza
…to add a couple of thoughts. First, on Ukraine and co-operation with the UK and the Joint Expeditionary Force, I think it’s fair to say that Merz’s position on the Ukraine War is closer to the UK’s position than the last Chancellor’s was, and so, there’s willingness to co-operate deeper. But the question is how quickly that can become a reality and how far that will go. I think we haven’t yet mentioned the fact that at least for a UK audience, it’s important to know that these coalition talks take a long time. So, the last grand coalitions all took over 70 days to negotiate and there’s usually a scoping phase, and then there are severe coalition talks on a 100 plus pages document and then there’s internal party ratification, sometimes with a members’ vote. And so, even if Merz now says he wants an agreement by Easter, I think that would be very quick for German standards.
So, would – don’t be surprised if Germany doesn’t have a full functioning government until May or even June. And that means by that time, a lot of core decisions on Ukraine will have been taken, and this is quite hard for Germany. What role will Olaf Scholz now play, for instance, at the Emergency Summit of the European Council next week? What role will he play in the negotiations with Macron, Starmer and so on? And Merz will be in contact with them. He has, for instance, talked with Macron on the phone before he travelled to Washington, but he obviously can’t play that strong role yet, and so, I think there will be a careful managing.
And the second point is I wouldn’t overestimate the complete switch. So, there are still constraints on Merz. So, for instance, if we are now talking seriously about a deployment of European troops in Ukraine, this is something that would need the vote of the Bundestag. There’s a very strict mandate, usually, and a much more difficult discussion in Germany than is likely to happen in the UK or France. And so, I would more think that we see a gradual change here for Merz than a radical one.
Maybe specifically on the Joint Expeditionary Force, I don’t think Germany is on the verge of joining that format, but they are certainly thinking about, sort of, closer co-operation, specifically with the Nordic and Baltic countries. And this is an area where UK-German security/defence co-operation could come into play.
Finally, on the European political community, in Berlin, you actually only ever hear it mentioned either by French or Brits, and the German Government has never really found the big use for the format. So, the Chancellor, you hear, likes it for bilateral meetings with other Heads of States in Government, but that is often done over the European Union and NATO and so on. Anyway, so the format is less useful for a German Chancellor than, let’s say, for the UK. And then, there was also – always scepticism in Berlin whether it’s really an alternative to enlargement or to the Council of Europe and what it would actually achieve.
And so, I don’t think this will change with the next government, so if there is an upcoming summit from the European Political Community, Merz will go there and have the meetings and engage in the format, but it’s not something that Germany is really strongly pushing for. I think there you will see more movement of Merz has also been a supporter of enlargement of the Western Balkans, and Ursula von der Leyen has, yesterday, and this was another statement that made me curious, said that she believes Ukraine enlargement could be possible before 2030. And I would imagine to be the much more, sort of, wrangling in Berlin whether and how that was actually possible and how to deal with Ukraine and all these different strands, than much enthusiasm for the European Political Community.
Dr Patrick Schröder
Thank you, thank you, Nicolai. There’s one point you made about the length it normally takes to put together a coalition agreement. There was something interesting I picked up, again, in a talk show. It seems a lot of policies – politics is now made in German talk shows, but there was discussion about having, like, a ten-point plan for the next year, with action points that could be agreed on very quickly, and then, we would have a new coalition by Easter. So, that could be some interesting innovation but remains to be seen. But Thu, did you want to add to any of this?
Dr Thu Nguyen
No, I think this is the big discussion, also, in terms of how detailed should the coalition agreement be, and can we also perhaps make yearly coalition agreements? And I think this also draws a bit from the experience of the last coalition agreement, which was very detailed, took a very long time and then, the Ukraine War started and basically, everything had to be thrown over and renegotiated, or it didn’t matter so much anymore. So, I think there is – there are thoughts and discussions considering the urgency of the situation, globally, whether it would make sense, as well, to go – move a bit away from very detailed agreements and now get a government in place quickly.
Perhaps one aspect to watch on this is that the SPD will, in all likelihood, put any coalition agreement to a vote, to its members, right? This not only would take some time, so if Merz really wants a government by Easter, this coalition agreement has to be – has to stand by March. But the danger is, of course, if the agreement looks in a way that the SPD members do not agree to it, because traditionally, also, they have not been huge fans of grand coalitions because it doesn’t help them very much afterwards, we don’t really have an alternative, right? So, this is actually a coalition and a coalition agreement that needs to stand and that needs to be approved by SPD members. Otherwise, we will be here after Easter with no government alternative, and I think that would be the worst case. So, there is this balancing of how detailed, how fast, but also, how acceptable will it be?
Dr Patrick Schröder
Hmmm, okay, yeah, thank you. There’s quite a few questions online. Actually, quite a few questions around the AfD. So, maybe we can have some more – like, another round of comms on that. People – there’s one question, “How – now the AfD seems – looks, sort of, established as a mainstream party, we might see some transformation of the AfD, similar to what we’ve seen in Italy.” There’s also some questions relating, again, about the split between East and West Germany in terms of AfD voting. And so, then a question about the firewall, “Will the firewall drive voters away from or towards the AfD?” So, a mix of complicated questions.
Dr Christian Odendahl
So, they’re…
Dr Patrick Schröder
Who – do you want…?
Dr Christian Odendahl
…too complicated for me. This is something for Nicolai and Thu to answer.
Dr Patrick Schröder
Right, okay, over to maybe Nicolai, for you. There you are.
Nicolai von Ondarza
Okay, I can try to start. So, first, the question on whether the AfD could change now that it’s a bigger party. I don’t see a path to moderisation under the current leadership and – because I mean, they were successful with their radical programme and they were most successful in Eastern Germany, where they are most radical. And so, there’s no, sort of, incentive whatsoever for them to become more moderate. And then, thirdly, they have established for their voters a, kind of, alternative media landscape, where they dominate the narrative and where they reach these voters with a different narrative that I don’t see the incentive for them to become more moderate.
And of course, there is a discussion to be had about the firewall and the Brandmauer, or the cordon sanitaire, how it’s often said in European discussions. Whether if you now allow the Af2 – AfD to become part of regional governments, or something like that, whether they – that would make them more moderate. I personally think they have been – become so radical that in their current state, that would be a danger to German democracy and would speak highly against that. But there’s no doubt that this allows them to be everything to everybody without paying any kind of electoral costs for that.
So, for instance, they are now the strongest party amongst, sort of, old workers, so what used to be the SPD, sort of, electoral group, but their party programme, economically, is highly to the benefit of rich people. And so, if they actually would implement their programme, it would be to the detriment of most of their voters, but they can just promise everything to everybody in the most radical way because they know they don’t have to take only – any responsibility. But ultimately, I think as long as they are so radical, I personally would be highly sceptical of any attempts to include them into even regional government in Germany, but it’s hard to see that firewall completing holding if they rise further in the polls during the next legislature, which it’s not unlikely to happen, let’s put it this way.
Dr Patrick Schröder
Okay, thank you, Nicolai. We’re almost up to the time. Maybe some concluding remarks from you, Christian, or Thu, anything that we haven’t touched upon, is there…?
Dr Christian Odendahl
No, I mean, the – what Nicolai said just now there, that the AfD may still have more potential to rise further. Maybe this speaks, sort of, to the initial disagreement that Nicolai and I had, sort of, whether this coalition, because there is so much pressure to solve really big issues for Germany at the moment – so at the breakdown of the global order and which Germany, of all countries in the world, probably depend it on the most, to mention just one. There are many on the economic side, as well. Whether that pressure leads this government to become a bold reformist coalition, or whether, on the other side of the spectrum, sort of, this coalition, you know, one year in, having to implement tough reforms, having to implement spending cuts, because not all of that can be debt funded, right? Having to manage a decli – an industrial – a partial industrial decline over the next couple of years, while the economy restructures. And then seeing, sort of, the BSW rise in the polls again, AfD rise in the polls. The temptation then to make migration, again, a topic and so forth.
So, there is a danger that this coalition, sort of, starts off trying to tackle the big issues and then gets sidetracked because the polls are terrible, and then, you know, they lose their compass. And so, I’m slightly more worried, I guess, than Nicolai, that this may yet happen, which is why I’m a bit, you know, I’m a bit hesitant to be very optimistic because the task for this new – next government is enormous.
Dr Patrick Schröder
Okay, thank you, and Thu, any final words?
Dr Thu Nguyen
I mean, I fully agree with Christian. I think Friedrich Merz also actually, sort of, started this campaign with the thought that he needs to contain the AfD, right? So, Germany, or parts of Germany, or parts of the CDU is looking at 2029, as Macron has been looking at 2027. So, the way that Macron wanted to stop Le Pen from coming into office in 2027 is, sort of, how the CDU and Merz look at 2029, when it comes to the AfD, that they need to stop the rise of the AfD within this legislative term. Otherwise, it will be too late. I think there are divergent views on how to – how this is better approached, whether there’s a necessity to become stronger on migration, on issues on which the AfD is strong, or whether there is a need to really distance yourself from far-right positions. And I think this is also something that will be, sort of – had to be – has to be figured out in the next years, but I am also quite worried.
I’m also worried with regard to the land and the regions, right? The AfD is, as Nicolai strong in especially East Germany and I think it would be very difficult for the CDU at federal level to contain a regional CDU if they really want to enter into government with the AfD, especially after they have voted with it – with the AfD. So, we will have to see, and I think, really, just hope that Merz’s strategy to contain the AfD by 2029 works out, not just for Germany, but I think also for Europe. Because I think it is very important that liberal democracy in Germany holds up in – especially now and in the next years.
Dr Patrick Schröder
Yeah, thank you, Thu. I mean, yeah, it’s good to close on these words of caution, so slight optimism, but still very cautious on what will happen. So, we’re at the hour. Let us, together, thank our panellists. That was a great discussion, thank you for joining us today [applause].
