Who will be the German finance minister? This is the key to Irish interests
So Angela Merkel may have attended her last summit of EU leaders – unless, of course, she has to attend the next one, scheduled for December 16.
The “final summit” assumes that German coalition-building talks, which have been underway since the September 26 elections, can lead to a result within the next eight weeks.
Chancellor Merkel went to her first summit in December 2005, when she met, among others, Bertie Ahern.
In the nearly 16 years and over 100 summits since then, Merkel has served with a total of five taoisighs, four French presidents, five British prime ministers and eight Italian prime ministers. It’s hard to see this record be broken anytime soon.
These German elections almost a month ago dealt a blow to Ms Merkel’s former colleagues in the Christian Democrat CDU. Strange that we got to know the outcome of the election a few minutes after the polls closed, but a month later we know relatively little about the process of forming the coalition.
Last Thursday, a little-noticed announcement outside of Germany told us that the phase of “negotiating talks†had been passed and that formal coalition negotiations were now open between the anchor party, the social-SPD. Democrat, the Green Party and the Liberal Democratic Party FDP.
Twenty-two working groups have been set up to focus on the details of the making of this so-called “traffic light coalition” – combining red, green and yellow as the party’s signature colors.
A careful analysis by the German public service news agency Deutsche Welle strongly suggests three things: these talks are likely to be successful; it will take some time; and huge hurdles remain, especially with the chalk-and-cheese political philosophies of the Greens and the Liberals.
There are only a few drops in the wind as to the progress of the talks. There will be no tax hikes, which the FDP / Liberals will put on their scorecard – although no one else is calling for more taxes anyway.
The minimum wage, a relatively new thing in Federal Germany, could be on the verge of reaching € 12 an hour, compared to € 10.50 for Ireland unveiled in the budget, a change both promised by the SPD and the Greens in the midst of the electoral campaign.
The Liberals are delighted that there is unlikely to be a speed limit on highways, which the Greens would have liked.
However, a preliminary document on the state and EU’s future debt and investment approach for Covid-19 recovery and meeting the costs of climate change measures were completely unlimited.
The Greens and the FDP still have to get confused about their fundamental differences in approach. Greens want big government loans to invest in climate change and post-Covid measures. The FDP is a classic liberal party in continental Europe which advocates reduced taxation, frugality and the primacy of private enterprise.
A central part of this question is who will become Minister of Finance – something which will be of great interest to Ireland and the EU.
During the elections, the leader of the FDP, Christian Lindner, unambiguously claimed the post, making the price of the coalition. The Greens, with more votes than the FDP, also want it as a first for this party.
The incumbent certainly dictates a great deal of EU policy. In the Merkel governments from 2009 to 2017, it was the hardline Wolfgang Schauble who had a big say in the conduct of EU austerity in response to the 2008 crash.
More recently, it is the moderates Olaf Scholz, now Chancellor. He has hugely influenced the broader response of Germany and the EU to borrow and spend to the Covid crisis and played an important role in the OECD-led Global Business Tax Agreement, an interest vital for Ireland.
EU governments have just opened talks on when and how to replace the tough spending, deficit and debt rules that were suspended last spring to allow large public spending to deal with the pandemic .
France, Spain and Italy want a liberal debt regime to be maintained, but eight capitals in the north and east want a return to hard frugal orthodoxy as soon as possible. Germany’s position on this will be decisive for the entire EU.
