Germany's Coalition Collapses, Hurling The Country's Politics Into Turmoil

After Germany's government coalition collapsed in a dramatic fashion when Chancellor Olaf Scholz fired Finance Minister Christian Lindner of the pro-business Free Democrats, Scholz said he would lead the country with a minority government, despite calls from opposition leaders on Thursday for early elections.

The chancellor said the minority government would be made up of his Social Democrats and the Greens until early next year — even as the leader of the biggest opposition bloc in parliament, Friedrich Merz from the center-right Christian Democrats, called for an immediate no-confidence vote and new elections.

Scholz stressed again on Thursday, that he does not want to call a vote of confidence before Jan. 15.
"The citizens will soon have the opportunity to decide anew how to proceed," the chancellor said, according to the German news agency dpa. "That is their right. I will therefore put the vote of confidence to the Bundestag at the beginning of next year."

A meeting with Merz and Scholz at the chancellery around noontime Thursday about a possible date for the next election ended after less than an hour with Merz leaving without commenting on the talks.
Later on Thursday, President Frank-Walter Steinmeier gave fired Finance Minister Lindner and two other Free Democrats officials who had resigned — Research Minister Bettina Stark-Watzinger and Justice Minister Marco Buschmann — their certificates of dismissal.

Transport Minister Volker Wissing, who is also with the Free Democrats, said that after talks with Scholz, he had decided to stay in office and instead leave the party. Scholz asked him to add the justice ministry to his portfolio.

Steinmeier also appointed Jörg Kukies, an economic adviser to Scholz, as finance minister. Agriculture Minister Cem Özdemir from the Greens agreed to take on the research ministry.

Scholz had announced late Wednesday that he would seek a vote of confidence on Jan. 15 that he said might lead to an early election, perhaps as soon as March. The vote had otherwise been due next September.
After firing his finance minister, the chancellor had accused Lindner of breaching his trust and publicly calling for a fundamentally different economic policy, including what Scholz said would be tax cuts worth billions for a few top earners while at the same time cutting pensions for all retirees.

"That is not decent," Scholz said.

The chancellor hopes that his minority government — Scholz's left-leaning Social Democrats with the remaining coalition partner, the environmentalist Greens — will get the support from Merz's Christian Democrats in parliament in the coming weeks, to pass important legislation and plugging the billion-euro hole in the 2025 budget.
However, Merz on Thursday vehemently rejected Scholz's plan to wait to hold a vote of confidence until January.

"The coalition no longer has a majority in the German Bundestag, and we therefore call on the chancellor ... to call a vote of confidence immediately, or at the latest by the beginning of next week," Merz said.
"We simply cannot afford to have a government without a majority in Germany for several months now, and then campaign for several more months, and then possibly conduct coalition negotiations for several weeks," Merz added.

Since Scholz's government doesn't have a majority in parliament any longer, he would likely lose the vote. In that scenario, Germany's president could dissolve parliament within 21 days and an early election could then be held as soon as January.

"During these 21 days, we will have enough time to find out whether there are any issues that we may have to decide on together," Merz said, offering his party's cooperation with the minority government. "We are, of course, prepared to hold talks ... we are also prepared to take responsibility for our country."
Achim Wambach from the Leibniz Center for European Economic Research cast doubt that a prolonged period with a minority government would help Germany's economy get back on track.
"Germany's problems are too big to tolerate political gridlock," the analyst said.

"The government set out to reconcile the transformation towards climate neutrality with economic growth and social security," Wambach added. "It has not lived up to this claim. The economy is stagnating and investments are failing to materialize."

"This daunting task was compounded by geo-economic tensions: wars in Europe and the Middle East as well as economically damaging interventions through tariffs and national subsidy policies," he added. " The election of Donald Trump has exacerbated these problems. Europe must do more for its security and will have to reckon with increased tariffs."

The collapse of the coalition came after weeks of disputes among the coalition partners over ways to boost the country's ailing economy.
Lindner's pro-business Free Democrats had rejected tax increases or changes to Germany's strict self-imposed limits on running up debt. Scholz's Social Democrats and the Greens wanted to see major state investment and rejected the Free Democrats' proposals to cut welfare programs.