SWhile events in the U.S. may offer a silver lining, some commentators are speculating that Donald Trump’s reelection will focus attention, at least among mainstream European leaders. There is. In the face of a rapidly emerging new world order and with domestic far-right movements dictating the political landscape, their response has at times seemed slow and unconvincing. Perhaps the impact of Trump 2.0 will finally convey the fierce urgency of the moment.
The sudden collapse of Germany’s fractious SPD-led coalition government as the US election verdict became clear certainly signals a quickening political tempo. Olaf Scholz is known as a cautious and methodical politician, and is known for making ambiguous statements. Not last week. By immediately sacking Finance Minister Christian Lindner and triggering the Free Democratic Party (FDP) to leave power, Chancellor Scholz set in motion a chain of events that would lead to a snap election in the spring or earlier.
Scholz finally announced during crucial budget negotiations that Lindner, who leads the economically liberal FDP, reiterated his determination to block SPD and green aid spending aimed at rebuilding Germany’s moribund economy and aiding Ukraine. ‘s patience has reached its limit. At one level, this may be seen as a futile maneuver on a sinking election ship while an iceberg looms. Scholz’s fractured coalition government has become deeply unpopular. Opinion polls show it is at less than 5%, and in any case, the FDP is likely to have resigned before the federal elections scheduled for September.
But the impact of last week’s drama goes beyond the coalition’s internal politics. The immediate downside is clear and significant. Germany, like France, will likely face a period of instability under a weak minority government following President Emmanuel Macron’s midsummer miscalculations. This is less than ideal, as Trump has promised to reset Western policy on Ukraine and bully the European Union over trade. At a critical moment, the legendary French and German “engines” of European integration and unity are roaring to life.
In a multipolar world where old free trade orthodoxies are crumbling, Scholz’s bet also marks a fork in the road for a country that has remained true to economic ideals that look increasingly outdated. The aftermath of the Russia war, the rise of China as a threatening competitor, and the prospect of a more protectionist United States pose an existential threat to Germany’s crisis-hit industrial economy. Mr. Scholz’s Green Party deputy, Robert Habeck, called for the creation of a debt-financed investment fund to kick-start the economic recovery and cushion the impact of uncertain times on blue-collar voters.
Lindner instead advocated cutting welfare benefits, cutting taxes and relaxing the country’s climate goals to balance the budget. As finance minister of the EU’s largest and most powerful economy, he also sets the direction of policy in Brussels, but Germany’s opposition to the idea of a common EU borrowing mechanism has made it difficult to respond to challenges such as investing in the Green Deal. is being prevented.
Along with the fate of Ukraine’s resistance to Vladimir Putin and the rise of the far right, the future of Germany and Europe’s economic model will be key themes in the new Trump era. Historically, Berlin’s fiscal prudence has dominated this debate, but changing times call for a different approach. Whether Germany’s unexpected spring elections will yield results is another question, given Scholz’s position in the polls.
