Europe watches while Merkel plays the waiting game in coalition talks

Post-election negotiations are not expected to finish before December

 German chancellor Angela Merkel with colleagues in Berlin yesterday.  Photograph:  Tobias Schwarz/Reuters

German chancellor Angela Merkel with colleagues in Berlin yesterday. Photograph: Tobias Schwarz/Reuters


Seven weeks after Germany’s federal election, Berlin’s government quarter resembles the land that time forgot. When the German people spoke, they left Angela Merkel’s Christian Democratic Union (CDU) just short of an absolute majority. She is still talking with her ostensible rivals in the Social Democratic Party (SPD) about forming a second grand coalition.

The negotiations are likely to continue until the end of the month. After that SPD leaders have promised to put any final deal to rank-and-file members in a postal vote. A result is not likely until mid-December.

For the rest of Europe, that means no real progress likely until next year on pressing EU projects, such as outstanding details of banking union. At this rate Ireland is likely to have exited its EU/IMF programme long before any meaningful talks on outstanding bailout business occur – in particular what happens with its nationalised bank debt. “There’ll be no agreement on any of that before the new government is sworn in,” said one CDU negotiator yesterday.

Things are progressing so slowly and smoothly that the news-parched Spiegel Online website pleaded with the prospective coalition partners yesterday: “Please just have a row!”

While politicians elsewhere in Europe grapple with crisis- driven political problems, German political priorities are in a parallel universe. For instance the biggest concern of the Christian Social Union (CSU), Dr Merkel’s Bavarian allies, is a toll for foreign motorists on German motorways.

With Bavarian roads a popular corridor for western Europe traffic to the Alps and Italy, this vote-winning promise helped the CSU to secure an absolute majority in September’s state election there. Failing to deliver will cost the CSU dear, but neither the SPD nor CDU are enthused.

The most likely way to implement the levy, and stay within European law, is to toll all motorists who use the autobahns and then give German drivers a rebate on the motor tax. The trouble with this model is that the bigger your car – and thus your road tax – the more you are likely to save on a write-off, sending a dubious environmental signal. Another problem is that the only feasibility studies, all favouring the project, were written by the company likely to collect the toll.

Women’s pensions
While the CSU frets over tolls, CDU leader Merkel toils over her pension promises. On the campaign trail, she vowed to end a situation where older women who raised children, and missed out on making retirement payments, now have lower pension entitlements than younger women.

The CDU insist it is a matter of social justice, but critics suggest the promise was a way to buy votes. More than half of over-70 German women, those set to benefit from the reform, voted for the CDU. Now Dr Merkel has to deliver on a promise with an estimated annual cost of €6.5 billion, half of what Germany’s education and research ministry spends in a year.

The SPD, standing firm on its demand for an €8.50 statutory minimum wage, has pension demands of its own. It wants to see workers who have worked 45 years retire as early as 63 years of age without losing pension payments. Add up all these pension promises and you top €20 billion annually in a country where the demographic timebomb is ticking.

Some coalition agreement has been reached so far: a limit on rent increases in urban areas; a law to close Germany’s 20 per cent gender pay gap; lower subsidies for renewable energy and slower progress building off-shore wind parks.

But the messy work, such as divvying up cabinet posts, lies ahead, as does the financing of their political largesse: the SPD wants tax cuts for top earners; the CDU/CSU disagree. Yesterday one CSU negotiator said ominously: “Nothing’s agreed until everything’s agreed.”

The longer talks drag on, the less attractive the idea of a grand coalition is to German voters. Almost 60 per cent liked the idea on election night, now just 44 per cent approve; a third of voters are turned off, up from a quarter in the same period.

And all the while, Germany’s talks inch forward.