Scholz Alliance collapses, Germany plunges into political crisis

While the world is watching Washington, Germany is quietly slipping into political collapse.

It was a classic German crisis, involving alliance infighting and complex constitutional issues.

But behind the complex political wrangling, Europe’s most powerful economy is leaderless, economic growth has stalled, and EU leaders are nervous about the upcoming Trump presidency.

On Wednesday night, German Chancellor Olaf Schulz fired Finance Minister Christian Lindner of one of the three coalition parties. Two of Lindner’s three cabinet colleagues resigned immediately, effectively collapsing the coalition.

Scholz now leads a minority government until new elections are held, meaning normal business can continue.

But with he no longer having a majority in parliament, the chancellor now needs the support of the opposition to push through any new initiatives, including the crucial 2025 budget, which is expected to be agreed next week.

It will also be difficult to agree on new measures to help Ukraine or increase defense spending without help from the opposition parties.

The Social Democratic chancellor called on opposition conservative leader Friedrich Merz to support him in pursuing key policies, many of which the conservatives also agreed to, such as more support for Ukraine.

They met on Thursday, with Scholz calling for “constructive cooperation on issues of critical importance to our country.”

A victory for Donald Trump could mean less funding for Ukraine, and while Germany is second only to the United States in financial support for Kiev, Berlin may be obliged to increase aid.

Green Party Foreign Minister Annalena Berbock, who just returned from a visit to Ukraine, said the collapse of the alliance “is not a good day for Germany and it is not a good day for Europe”.

Scholz hopes to hold a parliamentary confidence vote on January 15, followed by elections in March, six months ahead of schedule.

But Merz, who hopes to become Germany’s next chancellor as leader of the Christian Democrats, does not appear to be involved.

He called for an immediate confidence vote and early elections in January, saying a series of decisions needed to be made within the EU and a well-functioning German government.

“We cannot afford to have a government without a majority for several months, followed by months of campaigning and then potentially months of coalition negotiations,” he said.

Other opposition parties have also called for early elections.

Whenever this happens, it’s clear that campaign season has begun.

The German president called for “reason and responsibility” to prevail, but it was an alliance collapse that had been months in the making. It’s all about money.

The uneasy three-way alliance is divided by two contrasting visions of how to stimulate Germany’s flagging economy.

Olaf Scholz’s center-left Social Democrats and the Greens want to use the debt to modernize infrastructure, shift to environmental energy and help industry as well as Ukraine.

But Christian Lindner’s free-market liberal FDP party is ideologically opposed to new borrowing and instead calls for lower taxes, cuts in social spending and delayed environmental targets.

Crisis talks came to a head this week when it became apparent that the two sides were irreconcilable.

The finance minister launched a scathing attack on his finance minister after talks collapsed on Wednesday night, describing Lindner as conceited and irresponsible because he was unwilling to compromise for the good of the country.

“He betrayed my trust too often,” the chancellor said, accusing Lindner of putting the short-term survival of his party over the well-being of the country.

Such public acrimony by the chancellor towards ministers and coalition partners is unprecedented in German politics. If this was a televised public statement, imagine what the mood would be like behind closed doors.

Ahead of the U.S. election, Scholz’s allies believe now is not the time for early elections and political instability in Germany.

But over the past year, the coalition has frequently squabbled over spending. The row has become unbearable for voters, meaning all three parties have seen their poll ratings plummet.

Some believe allowing a dysfunctional government to drag its feet for another year will lead to more instability and gridlock.

There are also concerns that mainstream parties are seen as incapable of governing, playing into the hands of the far-right Alternative for Europe and the new populist far-left Socialist Party.

Although the conservative Christian Democrats and their allies are far ahead in the polls, the Alternative for Germany regularly comes in second place.

The prospect of a Trump presidency has begun to focus on Berlin. It could harm the German economy through tariffs and undermine national security by reducing support for Ukraine.

Many have now concluded that Germany needs a united and effective government now more than ever.