Wed. Dec 1st, 2021


Less than two years ago, Olaf Scholz licked his wounds after the most crushing defeat in his long career – losing to two little-known left-wingers in the competition to lead Germany’s Social Democrats (SPD). His dream of one day becoming his country’s chancellor has been dealt an almost fatal blow.

But on Wednesday, he sealed one of the most remarkable returns in German politics. He was written off for months as an also-run, by a party that was getting into irrelevance, and stood in front of a packed hall as Angela Merkel’s presumed successor.

The occasion was the unveiling of the coalition agreement negotiated by the SPD, Greens and Liberal Free Democrats, the fruit of almost two months of intense negotiations after national elections in September that led to a narrow victory for the Social Democrats. .

Scholz said his government would usher in a “decade of investment” and “Germany’s greatest industrial modernization in more than 100 years”.

“We are united by the will to make this country better, to propel it forward and keep it together,” he said. “We want to make more progress.” The next government, he said, would “invest massively to ensure Germany remains a world leader”, transforming it into a “pioneer in climate protection”.

The agreement envisages aggressive action against climate change and major investments in improving Germany’s impoverished infrastructure. But it also entrenches key SPD demands: an increase in minimum wage, a commitment to stable pensions and more social housing.

The coalition brings together foreign bedfellows – a Green party campaigning to relax the country’s strict fiscal rules and invest billions in rejuvenating the economy, and an FDP calling for a speedy return to pre-pandemic economic orthodoxy. That such ideological differences have been bridged – and much faster than many expected – is proof of Scholz’s skills as a negotiator.

It also confirms the Scholz approach – a pragmatism and moderation that has often irritated leftists in his party. Many in the SPD were concerned that he was too close to Merkel and her Christian Democrats. Indeed, he has explicitly campaigned as the continuity candidate in this year’s election, claiming his long experience in government and down-to-earth, unideological manner has made him a worthy heir to Merkel.

The message resonated with a voting public concerned about Covid-19 and already misses the stabilizing influence of a chancellor who has ruled Germany for 16 years.

But Scholz may soon be forced by circumstances to adopt a different style. “If he really wants to. . . tackling the great tasks of our time, climate change, growing social inequality and digitalisation, he will be forced to do the opposite of what he has been known for so far: he will have to fight, and to fight with passion, ”Veit Medick wrote . in Der Spiegel.

In his youth, Scholz was much more passionate. When he joined the SPD in 1975, he initially identified with the more radical wing of the party and promised to “overcome the capitalist economy”. “I have definitely become more pragmatic over the years,” he said last August about his youthful belligerence.

A labor lawyer in the 1990s, he gradually climbed the ranks in the SPD and in 2002 became general secretary. In that role, he earned the enmity of the left for his strong support of then-Chancellor Gerhard Schröder’s controversial labor market reforms. He also earned his nickname “Scholz-o-mat”, a reference to his often robotic, monotonous delivery.

Olaf Scholz with Gerhard Schröder in 2002
Olaf Scholz with then Chancellor Gerhard Schröder in 2002 © Reuters

Scholz served as Merkel’s Labor minister during the 2008-’09 financial crisis and was elected mayor of Hamburg in 2011, a position he held for seven years. Although popular, his reputation was tarnished by violent clashes between anarchists and police during a G20 summit in 2017 that turned parts of the city into a battlefield.

When Merkel appointed him finance minister in her last cabinet, he meticulously adhered to the strict fiscal orthodoxy of his predecessor in office, Wolfgang Schäuble, which symbolized post-crisis austerity policies in Europe.

But that changed when the pandemic hit and Scholz helped put together a € 420 billion program of support for businesses and workers – one of Europe’s most generous first aid kits.

“This is the bazooka, and we will use it to do whatever it takes,” he said in March 2020, echoing the words of former European Central Bank President Mario Draghi during the eurozone debt crisis. 2012 reflects.

Scholz incurred large amounts of debt and suspended Germany’s “debt brake”, the constitutional restriction on new loans. He also played a key role in implementing plans for the EU’s recovery fund, which will channel loans and grants to countries to help them withstand the pandemic.

That extensive fiscal policy fascinated Scholz among once skeptical leftists in the SPD and in August 2020 he was nominated as the candidate for chancellor.

Few believed his chances: the SPD was declining by about 14 percent in the polls, far behind the Greens and Merkel’s CDU. But Scholz benefited from unforced errors by rival candidates and in the final phase of the campaign, the SPD continued. When the results appeared on 26 September, it was clear that the party had won a small victory – and that Scholz would be Germany’s next chancellor.

Scholz earned sincere applause from the Social Democrats on Wednesday, but the warmest praise came from a rival, Christian Lindner, the FDP leader. Scholz emerged in the coalition negotiations, he said, as a “strong leader, with the experience and professionalism to take this country into a good future,” he said. “He will be a strong chancellor for Germany.”

Coalition’s legislative priorities

Climate policy

  • Renewable energy will account for 80 percent of electricity production by 2030 (previous target was 65 percent)

  • Planning procedures for renewable projects must be expedited, red tape removed

  • New Ministry of Economy and Climate Protection

  • Phasing out coal will ‘ideally’ take place by 2030 (previous target was 2038).

  • Target of at least 15m electric cars on German roads by 2030

  • Set minimum CO2 price of € 60 / ton

    Income / welfare

  • Increase in the minimum wage from € 9.60 per hour to € 12

  • Pensions to be kept stable: there will be no reduction in pensions and no increase in the retirement age

  • ‘Basic income’ for children must be introduced

  • Cheaper energy for residential customers, thanks to the abolition of the renewable charge on electricity bills

    Housing

  • Germany will build 400,000 apartments a year, of which 100,000 will be subsidized by the state

  • Tougher rent controls, especially in large cities with high demand; increases limited to 11 percent over three years (previously 15 percent)

  • Creating a ministry for construction

    Social policy

  • Cannabis must be legalized for adults

  • The concept of ‘race’ will be deleted from the German constitution

  • Refugees will be allowed to bring their family to Germany.

  • Difficult curbs on video surveillance and storage of communication data.

    Security policy

  • Armed drones must be deployed to better protect Bundeswehr soldiers from foreign deployments

  • Germany to meet NATO’s target of spending 2 per cent of GDP on army

    Public finances

  • Constitutional debt brake, currently suspended, must be restored in 2023

  • Relief for municipalities with high levels of debt

  • State-owned KfW bank to promote investment in green and digital transformation

  • ‘Super depreciation allowance’ for green and digital investment in 2022 and 2023

  • Give state-owned companies like Deutsche Bahn more options to mobilize investments



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