On Wednesday, December 8, the German Bundestag elected Social Democrat Olaf Scholz as Angela Merkel’s successor as chancellor. He received 395 votes out of a total of 707 and heads the new coalition government of three parties: The Social Democrats (SPD), the environmental party The Greens, and the pro-market FDP.

Three Partners Who Don’t Really Fit

The three coalition partners do not actually fit together. The two left-wing parties, the SPD and the Greens, would have preferred to govern together with Germany’s third leftist party, Die Linke (the former communist party that used to govern the GDR). This was not possible because the three parties did not win enough votes to secure a combined majority in the German parliament. The FDP would have preferred to govern with the centrist CDU/CSU. However, the CDU/CSU posted the worst result in its history and is currently leaderless.

Germany’s new coalition government is comprised of three very unequal partners. The SPD and the Greens campaigned for massive tax increases for the rich, while the FDP called for tax cuts for all. The result: nothing will change. The SPD and the Greens blocked tax cuts, the FDP blocked tax increases.

In many other areas, too, the parties’ completely different policy agendas ended up neutralizing each other. Take tenancy law, for example: The SPD and the Greens wanted to massively curtail landlords’ rights and ban rent increases. The FDP would have liked to liberalize tenancy law. The result: German rental law will remain unchanged—with just a little bit of tinkering around the edges. The free-market FDP on the one hand and the two left-wing parties on the other have effectively canceled each other out. The FDP has managed to impede many socialist-leaning policies, and for that the free-market-oriented voters will be grateful. Moreover, the FDP has pushed through its picks for two key ministries: The Ministry of Finance will be headed by the FDP’s Chairman Christian Lindner, while the Ministry of Justice goes to Marco Buschmann, who is widely regarded as an outstanding lawyer. This is reassuring for the German business community, which supported the FDP, while the staffing of other ministries is a cause for concern:

A New Direction for Germany?

The ministries of economics and foreign affairs will be headed by the Green Party’s dual chairpersons. Annalena Baerbock is set to take on the role of foreign minister, an appointment that could cause irritation in many countries. She can hardly deal with her opposite numbers in other countries as an equal. During the election campaign, it emerged that she had garnished her curriculum vitae, which included a number of falsehoods. In addition, she published a book during the election campaign that turned out to contain large sections of plagiarized text—she eventually had to withdraw the entire book, and it will no longer be printed. This had severely damaged Baerbock’s credibility and ended up costing her party a substantial number of votes.

The Greens are committed to a “hypermoral” foreign policy, which is likely to lead to problems with China and Russia, in particular. With regard to Russia, however, the SPD, which has spoken in favor of a Russia-friendly policy, will probably prevail. The situation is different with regard to China. The Greens don’t care about Germany’s economic interests. This could lead to a new approach toward China and a departure from the policies pursued by Merkel, who recognized the importance of healthy relations with China. Even before Baerbock’s appointment as foreign minister, she called for a ban on imports from the Chinese region of Xinjiang and refused to rule out a boycott of the Winter Olympics in China, which angered the Chinese.

The Greens have no concept of realpolitik; they want to gear German foreign policy to morality and ideology. One of their key demands is that Germany should have a “feminist foreign policy.”  The three parties’ coalition agreement explicitly specifies a ‘feminist foreign policy,’ whatever that is supposed to mean.

One can only hope that Chancellor Scholz will succeed in limiting the potential damage that Foreign Minister Baerbock could do and will set the main outlines of foreign policy himself.

What About NATO's “2 Percent Target?”

And what about Germany’s NATO commitment to spend two percent of GDP on defense? The SPD and the Greens oppose this target, while the FDP supports it. The parties have agreed the following compromise: “We want Germany to invest 3 percent of its GDP in long-term, integrated and comprehensive international action, thus strengthening its diplomacy and development policy and fulfilling its commitments to NATO,” reads the coalition agreement on page 144 under the heading “Multilateralism.” Sure, 3 percent sounds more than 2 percent, but the 3 percent includes all sorts of other spending, such as development aid.

Continuing the “World’s Dumbest Energy Policy”

Robert Habeck, co-leader of the Green Party alongside Baerbock, will lead the Ministry of Economics with responsibility for climate policy. Habeck is a philosopher and the author of numerous children’s books but has proven in several interviews that he doesn’t know the first thing about economics. The Greens want to subordinate all economic policy to the fight against climate change. This year, the last three German nuclear power plants will be taken offline and, over the next few years, they will be followed by all coal-fired power plants—without any other energy sources lined up to replace them! Even today, as a result of this policy, Germany has the highest electricity prices in the G20. The paradoxical result of this policy is that Germany will probably need to import even more nuclear power from France and other countries because the country can no longer supply itself with energy. The Wall Street Journal branded this the “World’s Dumbest Energy Policy”—and the Greens want to head down this wrong path even faster.

How Stable Is This Coalition?

Will the coalition of such unequal partners—SPD and Greens, on the one hand, FDP on the other—survive for four years? One point of conflict could be migration policy. Like Merkel, the SPD and the Greens want to base German migration policy primarily on moral principles. Merkel opened Germany’s borders in 2015—and was supported by the SPD and the Greens.

The FDP also wants immigration but wants to restrict migrants’ access to Germany’s welfare system and wants to prioritize migrants who will benefit Germany economically, in particular skilled workers. As all polls show, FDP voters oppose an open-borders policy. If the FDP surrenders to the demands of the Greens and the SPD on immigration, it could lose alienate large sections of voting base—again. At the same time, the SPD and the Greens are under pressure from their own representatives in the German parliament, the Bundestag, many of whom are very, very far to the left of the political spectrum. The SPD’s new secretary-general, Kevin Kühnert, is a hardline socialist who gained notoriety for proposing the expropriation of companies such as BMW and for saying that only the state should be allowed to rent apartments. Kühnert is known for preferring to work with Die Linke and rejecting everything the FDP stands for politically. Even though Scholz says he hopes to govern with the FDP beyond its initial four-year term, his party and the Greens think differently: In four years, they would prefer to form a coalition with the Die Linke, as they already have at a regional level in many federal states.

Rainer Zitelmann is a German historian and sociologist and the author of twenty-five books, including The Power of Capitalism.

Image: Reuters.