German ‘friendly hawks’ oversee record debt, may need more – POLITICO

Press play to listen to this article

BERLIN — Christian Lindner always knew he wouldn’t get “a lot of applause” even for the German finance minister. He claimed he didn’t even want that kind of accolade, recognizing that he wasn’t “applying for a hammock place.”

he was right

Lindner, the charismatic 43-year-old leader of the financially conservative Free Democratic Party (FDP), has repeatedly had to defy his campaign promises just seven months into office. internal left-leaning coalition government.

In fact, instead of reinstating German debt rules, Lindner has overseen a record accumulation of debt since taking office.

Of course, his promise was made before war returned to Europe, before an energy crisis hit the continent, before runaway inflation, and before the panicking whispers of a looming recession as a result of the pandemic. Germany’s accumulated €240 billion in debt under Lindner was used to combat these crises, boosting its chronically underfunded military and protecting businesses and citizens from economic hardship.

Lindner told parliament in late spring that “things were unpredictable” and defended his decision amid fierce criticism from the conservative opposition.

But now things look a little more predictable. And it doesn’t look good for Lindner and FDP.

Russia on Thursday resumed only limited gas supplies to Germany, forcing the government to announce emergency plans amid fears of a wider recession. This means putting pressure on Lindner and the government to financially protect homes and businesses. Economy Minister Robert Hubeck said on Thursday that “most people in the federal government” support measures to help citizens more if energy prices rise.

That likely means the death of Lindner’s recent pact. Schuldenbremsse, or “debt brake” — by next year. Party leaders led by German Chancellor Olaf Scholz have already rejected such a return.

The end result could be a further drop for the FDP. The FDP has recently fallen after rising in the polls just a year ago. Already, the party has suffered two painful defeats of him in recent national elections, forcing the opposition in both places.

“So far Lindner hasn’t delivered much on his campaign promises,” said Uwe Jun, a professor of political science at the University of Trier. [last year] I don’t think we are represented by the policies of the current government. “

descending

For the FDP, two state-level losses came as a shock. Notably, in Germany’s most populous state of North Rhine-Westphalia and Lindner’s home state of North Rhine-Westphalia, the party lost almost half its support since the last election, dropping to 5.9%.

That humiliating defeat recalled the fall of a decade ago when the FDP collapsed in the 2013 general election after joining the federal coalition in 2009 and failing to enact several election promises. . In the end, the party couldn’t even clear his 5% hurdle needed to win a seat in the German Bundestag.

There is now concern within the FDP that the recent elections are a warning sign that history may repeat itself.

German parliamentary election poll

For more poll data from across Europe, visit Politico Opinion poll poll.

Public opinion polls fuel these concerns. After winning 11.5% in last year’s general election, the business-leaning FDP now polls between 6-8%. Meanwhile, one of his left-leaning parties, the Green Party, jumped from 14.8% to over 20% in the polls. And the Social Democrats (SDP) hover around 20% of her.

Lindner knew these problems would arise even before he joined the Coalition. He never got bored during the campaign pointing out how his FDP was “very far” from the Greens and his SPD on key issues.

Still, Lindner played the role of kingmaker after the election, realizing that the SPD and the Greens needed the FDP to form a coalition. Lindner also came under pressure not to relinquish his strong government role after he rejected a proposal to his administration in 2017.

An official at Lindner’s Treasury Department said: “Mr Lindner has always made it clear that he will only enter into a coalition with the FDP that respects the debt brake, refrains from raising taxes and curtails expansionary fiscal policy across the board. He said.

Lindner’s control of the Treasury Department is “critical to keeping these promises to voters,” the official said, citing the more generous spending behavior of the FDP’s two left-leaning coalition partners. added.

Lindner did not provide direct comment for this article.

low visibility

One of the FDP’s problems is that it has chosen an almost invisible government portfolio during the current global crisis. Besides finance, the party has acquired her three ministries of justice, digital and transportation policy, and education and research.

Many FDP liberals look with envy at the Green Party, which heads the foreign and economic ministries at the center of the war and energy crisis.

“None of us could have imagined what would happen when the coalition was negotiated,” said Marie-Agnes Strack-Zimmermann, a senior FDP member who chairs the Congressional Defense Committee.

Needless to say, Strack-Zimmermann has received more attention in recent months than her colleagues at the FDP, who run ministries, because she works on defense issues. She used her position to regularly pressure Scholz to increase military support to Ukraine.

German Chancellor Olaf Scholz and Finance Minister Christian Lindner chat before the weekly government ministerial meeting.Sean Gallup/Getty Images

“If we could have had a fifth ministry, it would have been clear, of course, that we would also have ventured into the international arena.” didn’t happen.”

Strack-Zimmermann argued that in the long term the FDP’s oversight of issues such as digitization and education will receive more attention. The Communist Party has also begun touting efforts to adopt popular programs to cut public transport costs amid soaring fuel prices.Lindner on Tuesday offer Increase rebate schemes that allow commuters to deduct travel expenses from their taxable income.

Importantly, Scholz himself wanted a quick victory to reassure the party that the FDP was profiting from joining the coalition, according to people familiar with his ideas. It is said that it recognizes that it needs to be contained. Scholz wants to minimize the risk of Lindner dropping the coalition deal, they added.

need to win

So far, the FDP’s biggest achievement in government has been winning an internal tug-of-war over how quickly Germany should lift coronavirus restrictions, giving government less state intervention and shifting to more personal responsibility. I persuaded him to do so.

And the party may have some small victories on the horizon.

The government this week moved cautiously toward potentially extending the life of Germany’s nuclear power plants. This is due to concerns about gas shutoff. This is a request made by Mr. Lindner to Green’s opposition. Lindner has also served as a bulwark against his SPD’s repeated calls for higher taxes on the wealthy.

There are other FDP efforts to garner voter support. As expected, the energy tax cut failed to bring fuel prices down. And now, German antitrust authorities are investigating whether oil companies are colluding to keep prices high and reap the savings from tax cuts.

Lindner also suffered setbacks when he made a big show trying to stop the government from planning to phase out the internal combustion engine, a symbol of Germany’s auto industry. .

But the most important battle for Lindner is how he will tackle Germany’s biggest fiscal policy dilemma: debt.

This year, the Finance Minister has approved €138.9bn of new debt. This is the second highest level in the country’s history. Adding to that figure is his €100 billion fund allocated by the government to rapidly upgrade the German army.

Looking ahead, however, a Treasury official told POLITICO that it was a “constitutional” obligation to reapply Germany’s debt brake. It rejected recent reports that the government had already agreed to lift the debt brake again in the event of a crisis.

Christian Lindner attends a gathering called ‘Collaborative Action’ of economic sector and trade union representatives at the Chancellery on July 4, 2022 | Kuenhof/Getty Images

In an interview with German news broadcaster NTV on Wednesday, Lindner rejected calls for more government help from businesses and citizens this year. “The era of pandemics that acted according to the ‘bazooka principle’ is over,” he said.

Konrad Stockmeier, FDP MP for EU affairs, stressed the importance of fiscal restraint to stop the rampant inflation plaguing Europe as a whole.

“If you ask people what their biggest concern is now, the answer is the loss of purchasing power,” he said. “So I’m sure the public is aware of how important fiscal policy is to keep inflation in check.”

on the European stagefriendly hawk“It has recently taken a tougher tone, calling on other countries such as Italy to reduce their debt and not exempt them from EU fiscal rules.

Lindner Treasury is now drafting a document on the future of EU debt rules and is expected to favor small adjustments to stimulate more investment, but is pushed by southern EU countries. Officials say they will refuse a kind of lenient forgiveness for the new debt.

However, if Germany and Europe were to experience a true economic and energy crisis, this trend would be difficult to sustain. In that case, finance ministers will need to find “persuasive and clear arguments” to justify deviations from rigid fiscal targets, said Jun, a professor of political science.

Jun pointed out that he could take a lesson from the Greens. Since entering government, the Green Party has changed key principles, only to see their support grow.

“They have successfully constructed the argument that more coal-fired power plants need to be used in the short term to overcome Russia’s dependence on gas, even though it goes against the party’s climate goals.” said Jun.

“Obviously,” he added, adding that the party leader’s explanation “won’t be so bad for green voters.”

When Lindner recently told German public broadcaster ZDF that difficult times were ahead, he probably took a step towards preparing the German public for a move away from its fiscal policy target. will be split.

“There is a risk of a very severe economic crisis,” he said. “My concern is that in the weeks and months it could be a very worrying situation.”