Despite being hailed as winner of this election, Scholz faces a difficult situation as he has to negotiate with two more parties to form a Government

Germany’s federal elections have delivered the suspense promised by the polls: a close race between the two grand old parties (the Union, i.e., CDU & CSU combined and the Social Democrats, SPD) and a fractured mandate in which none of the political parties represented in the German Parliament (Bundestag) can form the government own their own. Although the winner of the elections, SPD, is currently an ally in Angela Merkel’s “Grand Coalition”, it has been traditionally as well as ideologically an arch political rival of the conservative “Union” — the party alliance of CDU (now commonly known as “Merkel’s Party”) and CSU which together stand as the second winner.

The SPD beat the Union by a slim margin of less than one per cent (25.7 per cent vs 24.1 per cent). Yet the difference feels monumental to Germany’s national political landscape: for the first time in almost 20 years, the SPD ended the race ahead of the Union.

The main reason for the result may be found in the loss of the “Merkel factor”. Her immense popularity among the vast spectra of voters from moderate to left led to the Union’s successive electoral victories. But with her departure as Federal Chancellor, this unifying factor vanished. And with it a certain cohesion within the party. Merkel herself did little to build a second line of leadership and empower a successor to lead the Union and win the upcoming elections. Her only endorsement went unsuccessful when Annegret Kramp-Karrenbauer succeeded her as head of party (CDU) in 2018 but did not stand up to the party’s expectations. She had to make way in early 2021 for the current chancellor candidate Armin Laschet.

The unclear mandate throws up three possible scenarios for government formation: A renewal of the incumbent Grand Coalition finds no friends within the parties nor the public and has since been ruled out. This leaves Union or SPD only the option of taking on board two of the smaller parties to form a governing majority in the German Bundestag. Any coalition with the right-wing populist party AfD had been ruled out beforehand by all four.

Both Union and SPD derive the equal claim to form the next government. It is not the 0.8 percent lead that gives the SPD the advantage in taking the reins. In the past days, the Union found itself increasingly engaged in negative debates about consequences from the historically bad election results while the SPD managed to reinforce its public perception of a winner. Their light improvement — still their third-worst result in the history of Germany’s post-war elections — lets the party and their chancellor-to-be Olaf Scholz shine.

Despite being hailed as winner of this election, Scholz faces a difficult situation as he has to negotiate with two more parties to form a majority government in the Bundestag.

The two parties that find themselves in a position as unusual as convenient are the Green Party and the FDP (Germany’s Liberal Party). The Greens emerged with their best ever result of a Federal Election, largely fuelled by their political stance on climate change. Conversely, the Liberals (FDP) openly favour the Union for a government as they see more ideological overlap with their economy-focused politics. It is this divergent ideological positioning, which led to FDP and Greens meeting first for initial talks to iron out differences and explore common grounds. There can be no Government without the support of these two smaller parties. All in all, Germany is readying up for a new era of three-party coalition.

Now the country witnesses that the CDU - stately centre of power for 50 years in the past --finds itself discussing internal consequences of their election result. Despite gaining almost the same number of seats as that of the SPD, the party faces calls from within that the disappointing result would not suffice as mandate to form a government and too, criticism of the common chancellor candidate, Armin Laschet.The party is sledging its own (elected) candidate while he is engaged in coalition talks with the Greens and Liberals.With the impaired bargaining position, the Union would find it challenging to deliver sufficient arguments to convince Greens and FDP to join a so-called Union-led “Jamaica Coalition” (dubbed for its colour combination of the black, green and yellow parties). Instead, the country is preparing for a so-called “traffic light”-coalition of Red (SPD), Yellow (FDP) and Green.

On last Sunday, both SPD and Green Party received the blessing from their respective party committees to go ahead with negotiations to form the next German Federal Government. The FDP is expected to follow suit. Seen as the “odd man out” earlier in the three way-coalition, their charismatic leader Christian Lindner was quick to pre-empt doubts about the party’s agreement to go ahead with the talks. This is seen as the main obstacle removed. The unanimity among the three new partners is not perceived without scepticism: in 2017, the FDP withdrew from three-way-talks (on a “Jamaica coalition” with CDU/CSU and Greens) at an advanced stage. This time, however, the Union of CDU and CSU does not seem to pose an attractive alternative anymore.

The ensued discussion initially centred around personnel: Public polls (before the election) displayed a considerably higher popularity of the CSU party head and Chief Minister of the Free State of Bavaria — Markus Söder — as compared to Laschet. Söder’s candidacy was rejected by the CSU’s much larger sister partyCDU (of which Laschet is a member). While many in the party expect Söder to run for Chancellor in 2025, the main focus is now on reconciliation, renewal and display of unity. At a party summit of the Union’s youth organisation, a new path was already declared before the new government is formed: Merkel’s party will accept the unusual role in opposition rather than risk the “experiment” of heading a potentially unstable three-party-government under a weakened leader. It would not befit the self-concept of a party whose roots of success lie in stability. It has now four years to shed off the weight of the Merkel persona. Sacrificing its top candidate Laschet, who is incumbent Chief Minister of Germany’s most populous state North Rhine-Westphalia, is a price the Union seems to be willing to pay.

The rift within CDU and CSU is an unwelcome damper for the Liberals’ hope to form a conservative-liberal government again after the Merkel II cabinet (2009-2013). It leaves the FDP with little hope to play a larger role in the upcoming government. Having scored 11.5 percent in the elections, the traditional role of providing the Deputy Federal Chancellor and Foreign Minister will fall to the Green Party - regardless of which party will lead the government.

Germany is a leader in the European Union (EU) and sees its future at the heart of it. Accordingly, other EU member states are eagerly awaiting the imminent outcome of the coalition talks. Larger decisions such as Free Trade Agreement negotiations may be postponed until then. Additionally, it might take months (as it did in 2017) for the parties to come to an agreement. With a general understanding among all three parties underway, Germany could have a new government and Federal Chancellor by Christmas.

(The writer is Resident Representative, Hanns Seidel Foundation India. The views expressed are personal.)