Germans reel from an uncomfortable week politically and economically

Welcome back. It has been an angst-filled week for many Germans who have been simultaneously confronted with uncomfortable questions about the health of their political system and the viability of their economic model.

On Sunday, Alternative for Germany (AfD) won a regional election in Thuringia, in the former communist east, the first victory for the far-right in a state parliament vote in the postwar era. The AfD also came a close second in neighbouring Saxony. 

As Germany digested the results, they received another jolt when Volkswagen said it was considering shutting some of its factories in the country for the first time in its 87-year-old history, underscoring the problems afflicting the auto sector and industry more broadly.

The rising appeal of populism and an acute industrial competitiveness problem should not come as a surprise. But they underscore the weakness of Germany’s governing parties and its deep-seated economic problems — and the relationship between them.

I’ll be covering for Tony again next week and you can reach me at [email protected].

What’s the matter with eastern Germany?

One-third of voters in Thuringia and Saxony backed a party whose branches in the two states have been classified as extremists by the security services. A further 10-15 per cent across the two regions voted for the populist hard-left Sahra Wagenknecht Alliance (BSW), whose antipathy to immigration, so-called “woke” culture and German military support for Ukraine is similar to the AfD’s.

The three parties in Chancellor Olaf Scholz’s federal coalition were all hammered, with the Social Democrats sinking to 7 per cent in Thuringia, their worst tally in a regional election since 1945, while the Greens and Free Democrats failed to meet the 4 per cent threshold for regional parliament representation.

The populist surge this triggered led to soul-searching over three issues.

First, it reignited a debate among analysts and academics about whether the people of eastern Germany, more than three decades after the end of communism and reunification, are somehow predisposed to authoritarian opponents of liberal democracy, for historical, cultural and even psychological reasons. 

Constanze Stelzenmüller outlined the debate in her column in the FT, saying recent research “has sought to redress an analytical deficit, and to return agency to a much-belittled region”.

One of those thinkers Stelzenmüller cites is Ilko-Sascha Kowalczuk, an East Berlin-born historian. His new book on the subject Freiheitschock (Freedom Shock) is a riposte to Dirk Oschmann, who published a best-selling tirade last year arguing that eastern alienation was a product of western discrimination.

“The majority of people in the GDR had an illusory idea of ​​the West,” Kowalczuk explained in an interview with Tagespiegel this week. “Many saw it as a golden paradise. When it became clear that the reality was different, this adoration of the West turned into rejection, distance and finally into manifest hatred.”

Another leading expert cited by Stelzenmüller is Steffen Mau, a sociologist at Berlin’s Humboldt University whose book Ungleich vereint (United in Disunity) gives myriad reasons why eastern Germany remains different, including demographics, the weakness of civil society and a culture of street protest. German speakers can listen to interviews with Mau in the wake of Sunday’s elections here and here. 

A counter to the eastern exceptionalism argument is made by the UK-based German historian Katja Hoyer in the Guardian, who says east German voters simply felt their concerns over immigration, energy costs, the economy and the war in Ukraine were being ignored by the federal government.

Easterners are far from anti-democratic. There were lively public debates everywhere in the build-up to the elections. People discussed politics at workplaces and at the kitchen table. Turnout was at a record high, with three-quarters of people casting their vote. East Germans are neither fed up with politics nor with democracy. They are fed up with not being taken seriously.

Traffic lights on the blink

The second theme was whether Scholz’s dysfunctional red-yellow-green coalition can survive until federal parliament elections in one year’s time. The consensus appears to be yes, given the unpopularity of all three parties and the constitutional difficulty of bringing about an earlier vote. But the tensions among the three parties are likely to get worse as they move into campaign mode. 

“For us it’s going to be about asserting ourselves more strongly,” Kevin Kühnert, general secretary of the Social Democrats, said late on Sunday. “Not letting ourselves be led by the nose by parties that have just been kicked out of a state parliament.”

Policymaking is now so discordant that any coalition decision or achievement looks like a failure. Some politicians appear to have already given up. Green leader Omid Nouripour last month described it as a “transitional government”. 

Talks between the SPD and the opposition Christian Democrats on a drastic tightening up of asylum policy are bound to cause tension with the Greens, while the Free Democrats — led by finance minister Christian Lindner — are likely to continue picking fights with their partners. 

The new kingmakers

The third theme is the difficulty of coalition-building in a fragmented political landscape where one sizeable party, the AfD, is still treated by the others as a pariah. 

If Free Democrats and the Greens often seem ideologically incompatible, how about the Christian Democrats and Sahra Wagenknecht’s eponymous alliance? Those two are now in talks to form governments in Thuringia and Saxony with the support of the SPD. 

As Guy Chazan explains, Wagenknecht, a leftist demagogue “renowned for her jeremiads against Nato and capitalism”, has now emerged as the potential saviour of east German democracy as the only one who can stop the AfD’s rise to power. 

But that power-sharing prospect has triggered a backlash from some Christian Democrats who complain that Wagenknecht is completely antithetical to their values and an apologist for Russia’s Vladimir Putin. 

As the political scientist Marcel Dirsus observed, shoehorning political parties into ever more incompatible coalitions risks increasing the appeal of the AfD as the only real alternative. 

Writing in Frankfurter Allgemeine Zeitung, Jannis Koltermann says Germans have to get used to a “high level of internal conflict with the government” since it is a reflection of a more atomised society and is not going to change in the foreseeable future. Seen from this perspective, the coalition government is not doing so badly.

A handbrake turning point

The coalition would no doubt be doing better if the German economy were stronger. But the bombshell announcement by VW chief executive Oliver Blume that Europe’s largest car manufacturer might have to shut down some of its German factories — putting him at odds with the labour unions and VW’s state investors — suggests the economic pain might be about to get worse.

German has suffered economically more than its neighbours in the last two years because the cheap Russian energy and attractive Chinese market that were once huge assets have become big liabilities. Can it recover without a reinvention of its industrial model?

“The escalating industrial dispute in the Volkswagen Group is radiating to the entire republic,” Sven Astheimer wrote in FAZ. “The threat of management with plant closures and dismissals is a turning point for Europe’s largest car manufacturer. But it also stands for the situation in large parts of German industry.”

The FT’s correspondents in Frankfurt, Olaf Storbeck and Patricia Nilsson, report that the drop off in well-paid, high-skilled manufacturing jobs is more serious than headline jobs numbers would suggest. 

Carsten Brzeski, chief economist for Germany at ING, said one way for the coalition government to regain the political initiative would be to “push the economic policy reset button and announce a big investment programme”. However, he added, “this would require an enormous effort by all three parties, without knowing which party would eventually benefit from it”.

More on this topic

The proposal from the CDUs Friedrich Merz to reimpose border controls and turn back asylum-seekers entering Germany from other EU countries has caused controversy. Daniel Thym, professor of EU law at the University of Constance, makes the case in FAZ (in German) for a more fundamental rethink. 

Ben’s pick of the week