Leaders in Brussels hailed the deal on a new German coalition government as good news for Europe. Martin Schulz, formerly president of the European Parliament, said Berlin would “return to an active and leading” EU role.
Former European Parliament president, current head of Germany’s Social Democrats (SPD) and the probable next German Foreign Minister Martin Schulz celebrated his party’s coalition deal with Chancellor Angela Merkel’s conservatives on Wednesday, saying it meant Germany “will return to an active and leading role in the European Union.”
For their part, European leaders praised Berlin’s grand coalition agreement, which still requires approval from the SPD party base.
EU Economics Commissioner Pierre Moscovici welcomed the coalition announcement via Twitter: “Coalition agreement in Germany: good news also for Europe!”
Manfred Weber, who chairs the European People’s Party (EPP) which includes Merkel’s center-right Christian Democratic Union (CDU) in the European Parliament, tweeted: “Good signal from Berlin to the people and whole Europe: the future German government is ready to contribute to a stronger and better Europe. This is a clear pro-European approach and an answer to populists.”
Schulz described the coalition agreement on Europe as “an end of forced austerity.” Speaking at a press conference on Wednesday with his coalition partners, Schulz said, “I think we have achieved what will be a new awakening for Europe and a new dynamic for Germany.”
However, the number of ministries — foreign, finance and labor — given to the SPD had some German commentators musing on what they saw as concessions from the conservatives: Julian Reichelt, editor of Bild, quipped, “This is the first SPD government led by a CDU chancellor.”
Merkel said the deal would form the basis of “a good and stable government.”
A European welcome
Martin Selmayr, the influential chief-of-staff to European Commission President Jean-Claude Juncker, welcomed the accord: “A 170-page agreement for four years, opened by a strong Europe chapter, numerous committed references to the EU framework in all sectoral chapters.”
Schulz said the key point was that the government was prepared to put more into the EU budget. Saying he has often spoken with French President Emmanuel Macron on the telephone, Schulz added that he wanted to work with Paris to champion: “A better and fairer Europe.”
Writing in the Frankfurter Allgemeine, former European Central bank (ECB) chief economist Otmar Issing said the coalition agreement represented: “A farewell to the idea of a European community aimed at stability.”
‘A new departure’ awaits SPD members’ approval
The prominently placed five pages on the subject of the EU in the coalition document were titled: “A new departure for Europe!” It called for the eurozone’s ESM bailout fund to be turned into a full-blown European Monetary Fund, and for funding to shield the eurozone from crises.
The SPD’s 463,000 members need to sign off on the deal in a special ballot expected by early March. The party’s standing in opinion polls has fallen to a record low of 17 percent after September’s election — its worst showing in a generation.
Parliamentary group leader Andrea Nahles is expected to take over the role of SPD leader if party members approve the coalition agreement and Schulz becomes foreign minister.
New finance minister
Government spending is expected to increase for education and infrastructure in Germany, supervised by the likely new Finance Minister Olaf Scholz, the current mayor of the northern port city of Hamburg. This was a key appointment after years of strict spending controls under former finance chief Wolfgang Schäuble, although Berenberg Bank analyst Florian Hense commented on Scholz: “He is a realist… within the SPD, probably the closest to ex-finance minister Schäuble.”
However, Commerzbank chief economist Jörg Krämer said: “Do not underestimate the impact of the SPD getting the influential Finance Ministry.”
“This marks a huge change from the policy of Wolfgang Schäuble regarding European integration, transfer of risks toward the peripheral countries,” Krämer said.
Merkel admitted the significance of the change: “After so many years in which Wolfgang Schäuble held the Finance Ministry, himself becoming an institution, it was hard for many of us that we couldn’t hold on to that ministry,” Merkel said on Wednesday.
Spending of €46 billion ($58 billion) over the next four years to increase investments and reduce taxes would be a key change in policy.
In January, International Monetary Fund director Christine Lagarde had said, “Germany can afford to spend and invest more.”