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New Berlin coalition to prioritise affordable housing and greener industry.

Germany moved one step closer to the post-Merkel era on Wednesday with agreement on a programme for government that flags affordable housing and a green industrial transformation as urgent political priorities.

After a final late-night negotiation push, the centre-left Social Democratic Party (SPD) will present the plan on Wednesday afternoon with the Green Party and liberal Free Democratic Party (FDP).

In a final draft of their joint programme, seen by The Irish Times, the three parties promise to “improve people’s lives in a concrete way and offer security at a time of change”.

The text notes that “affordable housing is the social question of our time”, and promises to build 400,000 new apartments annually, a quarter of which will be social housing.

The new government will prioritise a “massive” investment in renewal energy and a transformation of Europe’s largest economy to ensure that “the climate-friendly solution is always the more simple one – for our firms as well as for everyday life of our citizens”.

Other priorities will boost child allowance and stabilise pensions, while pushing the digitalisation of the largely analogue German public public administration.

At a time of unprecedented upheaval – from the Covid-19 pandemic’s fourth wave to instability on the Polish-Belarusian border – Germany’s new government will have little time for a political honeymoon period.

Instead, if the deal is approved by the respective parties, they will get straight to work in an untested three-way coalition headed by the SPD’s Olaf Scholz as post-war Germany’s 10th chancellor.

The 63 year-old outgoing federal finance minister is expected to sworn in, along with his new cabinet, in the first week of December. That would leave outgoing leader Angela Merkel just days short of overtaking Helmut Kohl to become modern Germany’s longest-serving leader.

Balancing act

The September 26th election ended in a historical rout for her Christian Democratic Union (CDU), which is now heading for the opposition benches. Coalition talks in the last weeks have proven a delicate balancing act for the would-be partners, a taste of things to come given their diverse ideological perspectives.

The centre-eft SPD has co-operated with both its junior parties in government before — the FDP in the 1970s, the Greens for seven years until 2005 — but never at once.

The greatest riddle for the Scholz administration will be to present a convincing plan to manage a digital industrial transformation for Germany that is both economically and ecologically sustainable.

The leaked cabinet carve-up carries promise of significant change in the post-Merkel era, but also room ample for tensions.

The so-called “traffic light coalition” – based on the parties’ traditional colours – promises a series of co-ordinated measures across ministries to “strengthen Germany as a place of industry and innovation that secures good jobs in the long-term”.

As chancellor, Mr Scholz hopes to maintain a recent truce in his party between his own centrist camp and SPD leftists. The latter had hoped to team up with the Greens to push a big state investment programme on climate change, but those ambitions are likely to be pruned back by FDP leader Christian Lindner as finance minister.

As most senior member of the new government after Mr Scholz, Mr Lindner has promised Germany’s overdue transformation will take a small state, pro-business approach. In a similar way, anyone expecting big changes at EU level from a post-Merkel Berlin may be disappointed.

Mr Lindner, like Mr Scholz, remain sceptical of any large-scale expansion of the European Commission’s financial and fiscal competences beyond one-off emergency pandemic assistance.

Foreign policy

Even if Mr Lindner keeps a tight hold of Germany’s public finances, the Greens remain optimistic that their co-leader Robert Habeck can push through change in a new “super-ministry” that pools the economy, climate protection and energy portfolios.

Meanwhile Annalena Baerbock, the Greens’ other co-leader, is on course to be Germany’s next foreign minister – the first woman to serve as the country’s top diplomat.

Based on their campaign promises, the Green ministers could see Germany’s largest economy deliver an ambitious green pivot on industrial and energy policy. Foreign policy analysts say that, based on Green campaign promises, a more robust approach towards China and Russia than in the Merkel era can be expected.

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