German governing coalition collapses, adding upheaval in uncertain moment

German governing coalition collapses, adding upheaval in uncertain moment

Chancellor Olaf Scholz fired his finance minister and announced a confidence vote that is widely expected to fail and pave the way to early elections in the spring 

German Chancellor Olaf Scholz, left, fired Finance Minister Christian Lindner on Wednesday. (Christof Stache/AFP/Getty Images)

The Washington Post November 6, 2024 By Kate Brady

BERLIN — Germany’s governing coalition collapsed Wednesday, as Chancellor Olaf Scholz fired his finance minister and announced a confidence vote that is widely expected to fail and to pave the way to early elections in the spring.

The news from Europe’s largest economy added a huge jolt of uncertainty on a day when much of the world’s attention was focused on the outcome of the U.S. election.

“I would have liked to have spared you this difficult decision,” Scholz said at the chancellery Wednesday night. “Especially in times like these, when uncertainty is growing.”

Federal elections have been held early on only three occasions in Germany’s postwar history. And this rare event is coming as Europe prepares for a second presidency of Donald Trump, who has threatened tariffs that could severely wound the export-dependent German economy and who has raised doubts about continued U.S. support for Ukraine and European security.

Scholz’s center-left government was the first to be formed after the retirement of Chancellor Angela Merkel, who anchored European politics for 16 years. Scholz’s “traffic light” coalition — named after the colors of his Social Democrats (SPD), the Greens and the neoliberal Free Democrats (FDP) — has been in power since 2021.

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Scholz’s Social Democrats will continue as a minority government with the Greens, which will require finding parliamentary majorities on a case-by-case to pass any bills. Scholz said that parliamentary action on all but the most urgent bills would be postponed.

But it was precarious from the start. After a short-lived honeymoon on sparse common ground, ideological divisions emerged. The parties have been engaged in months of infighting — while the German economy stagnated, the coalition parties sank in public opinion polls, and the far-right Alternative for Germany (AfD) party drew historic gains in state elections.

It was a budget fight that ultimately brought everything down.

To fill big gaps in next year’s budget, Scholz’s SPD and the Greens have favored state- and debt-financed policies. The FDP, though, is an ardent proponent of the “debt brake.” Enshrined in the constitution, designed to force balanced budgets, the debt brake can be suspended only in exceptional circumstances — most recently in response to the coronavirus pandemic and Russia’s 2022 invasion of Ukraine.

Scholz said Wednesday that FDP leader and Finance Minister Christian Lindner had been dismissed after rejecting economic proposals.

“The finance minister shows no willingness to implement the offer for the good of our country. I do not want to subject our country to such behavior any more,” Scholz said, visibly irritated.

“There is no basis of trust for further cooperation,” he continued. “Serious government work is not possible like this.”

Scholz alleged that “Lindner only cares about the survival of his own party.”

Speaking soon after, Lindner shifted blame to the chancellor.

“Olaf Scholz has played down the economic concerns of the citizens,” he said. “His counterproposals are dull, unambitious and do nothing to combat the weak growth.”

Lindner said he could not agree to Scholz’s demand to suspend the debt brake and had proposed fresh elections, which Scholz “brusquely rejected.”

Scholz said publicly Wednesday that he would submit to a vote of confidence in Germany’s lower house of parliament on Jan 15.

“Members of the Bundestag can then decide whether to clear the way for early elections,” he said.

But with his personal approval ratings at rock bottom, Scholz’s chances of gaining sufficient parliamentary support for continued leadership are slim.

If the confidence vote fails, Scholz would then be in position to formally ask President Frank-Walter Steinmeier to dissolve the Bundestag within 21 days, after which elections must be held within 60 days.

Elections in March or early April would be half a year earlier than planned.

The German government now enters a period of near paralysis. Scholz’s Social Democrats will continue as a minority government with the Greens, which will require finding parliamentary majorities on a case-by-case to pass any bills. Scholz said that parliamentary action on all but the most urgent bills would be postponed.

Ahead of the breakup, Economy Minister Robert Habeck of the Greens said it would be the worst time to let the coalition collapse, in view of the U.S. election and the war in Ukraine.

But patience among voters has also worn thin. A poll last week by Infratest dimap on behalf of German broadcaster ARD found that 54 percent of people surveyed would like to see early elections. The same survey also found that 85 percent of respondents were “little” or “not at all satisfied” with the government.

In national polls, Scholz’s Social Democrats are in third place around 15 percent, behind the conservative Christian Democratic Union (CDU) and far-right AfD, with the Greens in fourth position around 11 percent. If elections were held today, Lindner’s FDP might not even make it over the 5 percent threshold required to hold seats in parliament.⍐

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By Kate Brady

Kate Brady is a researcher and reporter based in The Washington Post's Berlin bureau. She has been at The Post since early 2023 and has been reporting from Germany for the best part of a decade

No-confidence vote topples French government, plunges country into chaos

The support of Marine Le Pen’s far-right lawmakers was key to the motion, which made this the shortest-serving administration in the modern French republic.

By Ellen Francis

 and 

Anthony Faiola 04-12-2024 The Washington Post

A no-confidence vote in the French parliament on Wednesday triggered the collapse of the government, plunging the country into political chaos and stoking anxiety about the euro zone’s second biggest economy.

Prime Minister Michel Barnier’s administration becomes the shortest-serving government in the modern French republic and the first in six decades to be toppled by a no-confidence vote. Although the motion was put forward by a leftwing alliance, the swing votes of Marine Le Pen and her far-right lawmakers, wielding unprecedented influence, were key to its passage. The measured was adopted with 331 votes, more than the required majority.

The trouble is, there’s no obvious cast of characters who could form a stable government. New legislative elections that might alter the political dynamics can’t happen before summer. And without a government in place, France couldn’t address the gaping hole in its public finances or resolve uncertainty that has the potential to spook markets and weigh on other euro-zone economies.

“We have reached a moment of truth and responsibility," Barnier said during Wednesday’s parliamentary debate ahead of the vote. “This reality will not disappear by the magic of censure motions."

🌎  The crisis came to a head this week over the government’s budget-cutting plans. But it goes back to French President Emmanuel Macron’s gamble on early legislative elections, which kept the far-right National Rally party out of government but gave Le Pen, its leader, a kingmaker role in a bitterly fragmented political landscape.

The turmoil in France — just weeks after the collapse of the German government — threatens to leave two of Europe’s most powerful nations rudderless, as European officials warn they must prepare for a blow if President-elect Donald Trump unleashes a trade war or slashes aid for Ukraine.

How France got here

French President Emmanuel Macron

The crisis came to a head this week over the government’s budget-cutting plans. But it goes back to French President Emmanuel Macron’s gamble on early legislative elections, which kept the far-right National Rally party out of government but gave Le Pen, its leader, a kingmaker role in a bitterly fragmented political landscape.

In France, the president’s pick of prime minister must win lawmakers’ approval. From the outset, Le Pen said her party would oppose any candidate from the left-wing alliance that had garnered the most seats in the July election, though short of a governing majority.

Barnier — a traditional conservative and the European Union’s former Brexit negotiator — was selected as a veteran politician who could navigate the minefield and secure Le Pen’s tacit support. But his government has been under a near-constant threat of collapse since taking office in September, with its fate in the hands of Le Pen.

She managed to secure significant concessions in budget talks. Barnier, though, was intent on hefty spending cuts to regain control of France’s spiraling deficit and debt burden. On Monday, after he bypassed the lower house of Parliament to force through a budget bill, both Le Pen’s party and the left-wing alliance called for a no-confidence vote.

During Wednesday’s debate, Socialist lawmaker Boris Vallaud accused Barnier of having “locked himself into a humiliating tête-à-tête” with the far right.

Le Pen’s calculus

Marine Le Pen

The budget fight has allowed Le Pen to flex her political muscles and publicly stand up for populism. In a fiery address during Wednesday’s debate, she said her decision to back a no-confidence vote was about stopping a budget that "takes the French hostage, and particularly the most vulnerable, low-income pensioners, sick people, poor workers, the French considered too rich to be helped but not poor enough to escape the tax bludgeoning.”

But the timing of her move has raised questions.

The leader of the Euroskeptic, anti-immigrant National Rally is known to have the French presidency in her sights. The country’s next presidential vote isn’t due until 2027, and Macron said as recently as Tuesday that he would serve out his elected second term “with all my energy until the last second to be useful to the country.” But some analysts say Le Pen may hope a crisis would corner him into resigning early.

Le Pen is also facing the complication of a trial accusing her, and members of her party, of embezzling millions of euros of European Parliament funds. Prosecutors have sought a five-year ban on public office that would prevent her from running for president in 2027. A verdict is expected in late March.

Under Le Pen’s leadership, National Rally has sought to distance itself from its origins on the neo fascist fringes and show voters that it is a broadly appealing party that could govern responsibly. But many French politicians are convinced that the trial “has derailed her strategy to make herself and her party appear constructive and capable of making the compromises needed in government,” said Mujtaba Rahman, managing director for Europe at the Eurasia Group consultancy.

🌎  The turmoil in France — just weeks after the collapse of the German government — threatens to leave two of Europe’s most powerful nations rudderless, as European officials warn they must prepare for a blow if President-elect Donald Trump unleashes a trade war or slashes aid for Ukraine.

What happens next

The government collapse could push the country deeper into uncharted territory.

Macron could ask Barnier’s government to stay on in a caretaker role, while the president tries to find another prime minister who wouldn’t immediately be censured by a majority of lawmakers. That’s no easy task.

Meanwhile, the country faces an end-of-the-month deadline to sort out its budget and avert a government shutdown.

Under French law, a government can seek legislative approval to roll a previous year’s budget into a new year, temporarily keeping public workers paid and operations running until a new budget can be adopted. But there are debatable legal questions about what powers can be used by an overthrown government in an interim role. A move by the caretaker government to push a budget through, or a move by Macron to invoke the president’s exceptional powers to impose a budget, would trigger a political and constitutional mess.

What could the economic fallout be?

🌎   France’s debt-to-GDP ratio is over 110 percent of GDP — the third-highest ratio in Europe.

The political crisis in France is stirring fears of a financial one, as investors fret over the fate of a series of curative measures meant to address the country’s woefully high budget deficit — which, at above 6 percent of gross domestic product, is far above the E.U.’s 3 percent guideline.

France saw a buildup in its debt and deficit after spending generously to protect incomes during the covid era and shield people from the rise in energy prices that followed Russia’s invasion of Ukraine. Now, a budgetary morass would take a growing toll on France at a time when Europe is facing other economic headwinds, including a weak German economy next door.

In a symbolic moment on Monday, French bond yields — the interest paid on debt — even surpassed those of the euro zone’s former problem child: Greece, the same country that sparked a region-wide debt crisis in the aftermath of the 2008 global financial crisis.

French government spokeswoman Maud Bregeon, in an interview with Le Parisien, described the risk of “a Greek-style scenario.” Such talk, for now, appears to have been largely a negotiating tactic. France’s debt-to-GDP ratio is over 110 percent of GDP — the third-highest ratio in Europe. But the French situation differs starkly from Greece’s at the time of its debt crisis, which saw a debt-to-GDP ratio above 200 percent at its peak.

Adam Posen, president of the Peterson Institute for International Economics, called a financially catastrophic French default a “remote” prospect and said there is low risk of France’s woes spreading to other European countries anytime soon. But should the country’s political crisis and budget impasse continue, it could drive up the cost of the country’s debt and have a dampening effect beyond France’s borders, while ratcheting up a tense debate in Brussels over fiscal responsibility.

In the meantime, France is constrained on long term solutions. Its already-high tax rate gives it limited room to raise revenues and address its budget woes, while deep cuts in public benefits could trigger social unrest and boost populists on the far-right and far-left.

“There are couple of switch points in which things could blow up in the next two to six months, but probably they get through it,” Posen said. “The issue is more in the two- to three-year horizon.”⍐

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By Ellen Francis

Ellen Francis is The Washington Post’s Brussels bureau chief, covering the European Union and NATO.

By Anthony Faiola

Anthony Faiola is Rome Bureau Chief for The Washington Post. Since joining the paper in 1994, he has served as bureau chief in Miami, Berlin, London, Tokyo, Buenos Aires and New York and additionally worked as roving correspondent at large.