Germany's Merkel must unite with opposition Social Democrats

The most powerful woman in the world – as German Chancellor Angela Merkel is often called – is now going to have to bend a bit. Despite the very strong showing of her center-right Christian Democrats (CDU) in Sept. 22 elections, the CDU fell just short of a parliamentary majority, and will have to negotiate a power-sharing arrangement with one of the opposition parties. For the sake of a healthy Germany in a still-distressed Europe, let’s hope for another “grand coalition” with the main opposition, the center-left Social Democrats (SPD).

The two parties are meeting today to discuss a coalition; the CDU will meet with the opposition Greens, a smaller party, next week.

Grand coalitions are not the norm in German federal politics. The last one occurred in 2005, when traditional political party partners couldn’t form a majority. It was Ms. Merkel’s first term as chancellor, and she was forced to integrate her main adversary, the SPD, into her governing team. The situation is similar today, but this time the SPD is loath to enter into a coalition with Merkel’s CDU.

Four years of governing with Chancellor Merkel reduced the Social Democrats to junior status, and it is now questionable if the party can still call itself a catch-all party. Its base is not so eager to stand in Merkel’s shadow again. Merkel also knows that she and her party will have to concede a great deal to reconfigure a grand coalition – though she insists that her position on Europe’s fiscal crisis is not for sale. She has stood firmly for structural reform in debt-burdened countries such as Greece in exchange for financial help. But she has been criticized for focusing too much on austerity in these countries and not enough on stimulating growth.

In fact, both parties will risk upsetting their base because of the inherent compromise involved in forging a coalition agreement between the CDU and SPD, but Germans support just such a union. According to a recent poll, 64 percent of Germans think a grand coalition is a good solution for their country.

Indeed, several grand-scale problems on the horizon could quickly tip a relatively robust Germany into crisis. Therefore, in addition to the majority of Germans, Europeans and their allies are also keen to see these parties come swiftly together and begin to share the burden of problem-solving – regardless of whether a four-year term is eventually completed. The country had a grand coalition in place during the economic crisis of 2008, and the two political stakeholders could react quickly with stimulus packages to fend off the worst economic crisis in post-war Germany.

Among the looming problems is energy. Today unemployment in Germany is low at 5.3 percent and the country is the world’s third largest exporter. But structural fissures beneath the surface threaten the “Made in Germany” economic model. All eyes are on Europe’s largest market as it embarks on a path to replace nuclear power with green energy. Policymakers will have to get this tricky transition right, since Germans already pay the highest electricity prices in Europe.

A demographic decline also weighs heavily on future outlays for an aging society in the heart of Europe. The CDU and the SPD could enact social policies to welcome highly-skilled immigrants and encourage more mothers to take part in the workforce to preserve productivity.

Finally, growing income inequality in a reunified Germany could overturn the country’s emblem as a social market economy, a political platform common to all German political parties. Europe needs an economically strong Germany not just for transfer payments to the beleaguered periphery countries such as Greece, but to show the world that the continent’s mix of industriousness and social welfare has a place in the global marketplace.

Germany recognizes the value of the “European project” of an ever-closer union, and has profited immensely with the introduction of the euro currency in 2002. A grand coalition is best positioned to legislate on long-term decisions for Europe, such as a banking union and boosting growth in Europe’s periphery. Finding common ground between the right and left in Germany will send a strong signal to euro naysayers and lend credibility to a European Union as it negotiates a historic free trade agreement with the United States.  

German political foes have the chance now to shape decisions for future generations, with spillover effects that will have an impact on Europe and the world. They must find a way to work together.

Sudha David-Wilp is a senior transatlantic fellow at the German Marshall Fund of the United States’ Berlin office. She previously oversaw the Congressional Study Group on Germany in Washington DC, a program for lawmakers on Capitol Hill and in the German Bundestag (parliament).