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Merkel’s future hangs in balance as Social Democrats pick new leaders

German Chancellor Angela Merkel's political future is up in the air as her floundering coalition partners, the SPD, elect new leaders on Saturday.

Published: 27 November 2019 08:54 CET

Merkel's future hangs in balance as Social Democrats pick new leaders

The SPD's Olaf Scholz and Chancellor Angela Merkel of the CDU in the Bundestag. Photo: DPA

The choice could determine whether or not the centre-left SPD will stay in the coalition until 2021, when Merkel is planning to step down and retire from politics.

The vote was triggered by the departure of the Social Democrats' previous leader, Andrea Nahles, after the party's poor showing in European Parliament elections.

For the first time since the party was founded in 1890, a male-female duo will take over the party's leadership – following a model adopted by the Greens.

Another novelty is that the vote is no longer reserved to the 1,000 delegates attending the party conference but is open to all of the party's 26,630 members, who have until Friday to vote online or by post.

The result will be announced on Saturday ahead of the party conference on December 6-8th in Berlin.

Despite its importance, the election has failed to generate much excitement and the centre-left party is currently vying for third place in the polls with the far-right AfD after Merkel's centre-right CDU and the Greens.

In the first round of voting, which whittled down the pairs to two, only 53 percent of members took part.

The second round sees Olaf Scholz and Klara Geywitz, who got 22.7 percent in the first round, go up against Norbert Walter-Borjans and Saskia Esken (21 percent).

Olaf Scholz and Klara Geywitz stand next to Saskia Esken and Norbert Walter-Borjans after a live stream debate for the SPD leadership race. Photo: DPA

Victory for the first pair would be a relief for Merkel, who has been chancellor for 14 years.

'Scholzomat'

Deputy Chancellor and Finance Minister Scholz and his running mate Geywitz want the coalition, which was put together with great difficulty in 2018, to stay.

Scholz lacks charisma and has been dubbed “Scholzomat” for his propensity to speak like an automaton but he has the full confidence of Merkel.

If the other duo wins, Merkel's fate is less clear.

Esken and Walter-Borjans have been highly critical of the coalition, although they have stopped short of calling for the SPD to pull out of it.

Conference delegates will in any case vote on whether to stay in the uneasy partnership after months of tensions.

The SPD scored a rare victory this month by getting the government to agree on the need to top up basic pensions.

But Esken and Walter-Borjans have called for an end to Scholz's “zero new debt” policies and the current government's timidity on battling climate change.

Esken and Walter-Borjans have the support of the youth wing of the party as well as the German branch of Fridays for Future, the environmental movement set up by Swedish teen Greta Thunberg which has a large following in Germany.

Young SPD-ers say Scholz, a former ally of Gerhard Schröder who later became mayor of Hamburg, hardly embodies the kind of renewal that the SPD needs.

But his rivals lack the kind of name recognition that could mean electoral success.

'Too rarely an alternative'

Whatever the result, the SPD's problems will not be resolved while the party is “in a bad state”, according to an editorial in the Spiegel weekly.

The SPD “offers no long-term political direction on the way in which it wants the society of tomorrow to function… on what the world of work will look like,” said Gero Neugebauer, a researcher at the Free University of Berlin.

Cut off from its “social roots”, the party seems “too rarely an alternative” to Merkel's CDU, he told AFP.

“The SPD cannot renew itself unless it is in opposition and has new people,” said fellow political expert Klaus Schröder.

After the next parliamentary elections scheduled for 2021, Schröder is predicting a coalition between the conservatives and the Greens.

By Mathieu Foulkes

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Output is expected to expand 0.3 percent this year, the economy ministry said, up from a prediction of 0.2 percent in February.

The slightly rosier picture comes after improvements in key indicators — from factory output to business activity — boosted hopes a recovery may be getting under way.

The German economy shrank slightly last year, hit by soaring inflation, a manufacturing slowdown and weakness in trading partners, and has acted as a major drag on the 20-nation eurozone.

But releasing its latest projections, the economy ministry said in a statement there were growing indications of a “turning point”.

“Signs of an economic upturn have increased significantly, especially in recent weeks,” Economy Minister Robert Habeck said at a press conference.

The ministry also cut its forecast for inflation this year to 2.4 percent, from a previous prediction of 2.8 percent, and sees the figure falling below two percent next year.

“The fall in inflation will lead to consumer demand — people have more money in their wallets again, and will spend this money,” said Habeck.

“So purchasing power is increasing, real wages are rising and this will contribute to a domestic economic recovery.”

Energy prices — which surged after Russia’s 2022 invasion of Ukraine — had also fallen and supply chain woes had eased, he added.

Several months ago there had been expectations of a strong rebound in 2024, with forecasts of growth above one percent, but these were dialled back at the start of the year as the economy continued to languish.

‘Germany has fallen behind’

But improving signs have fuelled hopes the lumbering economy — while not about to break into a sprint — may at least be getting back on its feet.

On Wednesday a closely-watched survey from the Ifo institute showed business sentiment rising for a third consecutive month in April, and more strongly than expected.

A key purchasing managers’ index survey this week showed that business activity in Germany had picked up.

And last week the central bank, the Bundesbank, forecast the economy would expand slightly in the first quarter, dodging a recession, after earlier predicting a contraction.

German Economics Minister Robert Habeck

Economics Minister Robert Habeck (Greens) presents the latest economic forecasts at a press conference in Berlin on Wednesday, April 24th. Photo: picture alliance/dpa | Michael Kappeler

Despite the economy’s improving prospects, growth of 0.3 percent is still slower than other developed economies and below past rates, and officials fret it is unlikely to pick up fast in the years ahead.

Habeck has repeatedly stressed solutions are needed for deep-rooted problems facing Germany, from an ageing population to labour shortages and a transition towards greener industries that is moving too slowly.

“Germany has fallen behind other countries in terms of competitiveness,” he said. “We still have a lot to do — we have to roll up our sleeves.”

Already facing turbulence from pandemic-related supply chain woes, the German economy’s problems deepened dramatically when Russia invaded Ukraine and slashed supplies of gas, hitting the country’s crucial manufacturers hard.

While the energy shock has faded, continued weakness in trading partners such as China, widespread strikes in recent months and higher eurozone interest rates have all prolonged the pain.

The European Central Bank has signalled it could start cutting borrowing costs in June, which would boost the eurozone.

But Habeck stressed that care was still needed as, despite the expectations of imminent easing, “tight monetary policy has not yet been lifted.”

In addition, disagreements in Chancellor Olaf Scholz’s three-party ruling coalition are hindering efforts to reignite growth, critics say.

This week the pro-business FDP party, a coalition partner, faced an angry backlash from Scholz’s SPD when it presented a 12-point plan for an “economic turnaround”, including deep cuts to state benefits.

Christian Lindner, the fiscally hawkish FDP finance minister, welcomed signs of “stabilisation” in the economic forecasts but stressed that projected medium-term growth was “too low to sustainably finance our state”.

“There are no arguments for postponing the economic turnaround,” he added.