It’s true that the eurozone economy has finally started to recover. Figures released last week suggest that the eurozone may grow at an annual rate of 3 percent in the final quarter of 2017.
Driving this recovery is Germany—its exports are booming. But there is a fly in the ointment—politics.
The federal elections in September showed that the neoliberal centre ground is being squeezed in Germany just as it is elsewhere in Western capitalism.
The two dominant forces in German politics, chancellor Angela Merkel’s Christian Democrat Party/Christian Social Union conservative bloc and the Labour-type Social Democrats (SPD), won 53 percent between them. It was their worst electoral performance since the federal republic was formed in 1949.
And the far right Alternative for Germany (AfD) broke through, winning seats in the national parliament for the first time.
SPD leader Martin Schulz immediately announced that his party would pull out of the Tory-SPD grand coalition it had served in since 2013. He reasoned that the SPD had become too closely identified with Merkel and needed to rebuild support in opposition.
So Merkel started coalition negotiations with two smaller parties—the Greens and the Free Democrats (FDP). Both are pretty venal neoliberal parties, but last week FDP leader Christian Lindner pulled out of the talks.
The FDP were a bit like the Liberal Democrats, but are increasingly eurosceptic.
What scuppered the talks was Lindner’s refusal to support any greater integration of the eurozone along the lines being proposed by France’s new centrist president Emmanuel Macron. Merkel wanted to be seen to be trying to accommodate Macron, but Lindner wasn’t having it.
Beyond this issue were more directly political calculations. The FDP were in coalition with the conservatives in 2009-13. They did so badly in the following elections that they lost all their parliamentary seats. Lindner wants to avoid being swallowed up by Merkel again.
Moreover, Financial Times columnist Wolfgang Munchau suggests he is trying to pick “disgruntled conservative Christian Democrat voters, unhappy with the compromises of permanent grand coalitions”.
Meanwhile, the hapless SPD put its head back in the tiger’s mouth. Schulz announced late last week that he would after all have coalition talks with Merkel. He was pressured by German president Frank-Walter Steinmeier and SPD backbenchers scared of losing their seats if Merkel carried out her threat to call a snap election.
If the SPD ends up in another grand coalition, it’s likely to see more of its electoral base crumble away. It’s under pressure from parties both right and left.
Both the SPD and Christian Democrats in office have served the interests of Germany’s great banks and industrial firms. This has meant economic restructuring and growing austerity, leading to a steady erosion of one of the strongest welfare states in the world.
Germany was much less badly hit than other economies during the eurozone crisis of 2010-15. But more and more working class people have been thrust into conditions of insecurity.
This is the background to voters’ growing willingness to vote for parties that present themselves as rebelling against the mainstream consensus represented by the CDU/CSU and the SPD.
It would be tragic if the likes of Lindner and the AfD were able to dominate this rebellion.
The left party, Die Linke, marginally improved its performance in the federal elections, winning 9.2 percent of the vote. But it has been too willing to allow the right to make the running against the EU.
This will have to change if Die Linke is to rise to the challenge of a fragmenting party system.