Germany’s government collapses into chaos as Chancellor sacks minister

The German government has collapsed after the chancellor sacked his finance minister. German chancellor Olaf Scholz cited persistent disagreements with finance minister Christian Linder for the breakdown of his centre-left coalition.

Mr Scholz’s adminstration has been the head of a so-called ‘traffic light coalition – which include his Social Democratic Party (SPD), the Greens and the liberal Free Democratic Party (FDP) – since 2021. However, the quarrelsome government has stubbled from disagreement to disagreement ever since then with Mr Linder and Mr Scholz often at loggerheads over how to tackle Germany’s economic woes.

Now finally their disagreements have reached a boiling point and after a ‘make or break’ meeting the coalition has collapsed. Euronews reported that the chancellor said Mr Linder ‘has broken my trust too many times’. He added that there was ‘no more basis of trust for further cooperation’ because the minister was ‘more concerned with his own clientele and the survival of his own party’.

Mr Scholz is expected to cobble-together a minority government with the Greens in order to pass legislation before a parliamentary confidence vote in his government on January 15. This could pave the way for early elections in Germany which would likely be bruising for the former coalition partners.

Scholz’s SPD are currently polling third behind the conservative CDU and the right-wing populist AfD. Meanwhile, the FDP polling at below the five per cent threshold to even enter parliament. The government crisis comes at a critical juncture for Germany, with a flatlining economy, aging infrastructure and an unprepared military.

A political shake-up could fuel growing frustration with Germany’s mainstream parties to the benefit of younger populist movements, including the anti-immigrant AfD. With France also facing political uncertainty after snap elections this year, turmoil in the European Union’s two largest economies could hamper efforts to deepen the bloc’s integration at a time when it is facing challenges from east and west.

The move comes a day after the election of Republican Donald Trump as US president, with Europe scrambling to form a united response on issues from possible new U.S. tariffs to Russia’s war in Ukraine and the future of the NATO alliance. Many members of the coalition had hoped that in the aftermath of the US election internal strife could be put aside to focus on the geopolitical challenges ahead.

But the result across the Atlantic was not enough to crush disagreements to one side. The coalition has been at odds over how best to rescue Europe’s largest economy, which is facing its second year of contraction and a crisis in its economic model after the end of cheap gas from Russia following its 2022 invasion of Ukraine and amid increasing competition from China.

Mr Scholz said he had proposed capping energy costs for companies to bolster Germany’s appeal as a place to do business. He wanted a package to help save jobs in the ailing auto industry, as well as increased support for Ukraine. The FDP had proposed public spending cuts, lower taxes and less regulation as the answer to the malaise. It also wants to slow Germany’s shift to a carbon-neutral economy.

Speaking after the chancellor, Mr Lindner said the chancellor had tried to strong-arm him into breaking a constitutionally-enshrined spending limit known as the debt brake, a move that Mr Lindner, a fiscal hawk, refused to support. ‘ Olaf Scholz refuses to recognise that our country needs a new economic model,’ he told reporters. ‘Olaf Scholz has showed he doesn’t have the strength to give his country a new boost.’

The SPD and the Greens, while at odds on some issues, agree that targeted government spending is needed. Mr Scholz said Mr Lindner was focused on the short-term survival of his own party. ‘Especially today, one day after such an important event as the U.S. elections, this kind of selfishness is utterly incomprehensible.’

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