Word of the day – Glyphosate. Hands up if you’ve heard it before. No one?
That’s not that surprising, so perhaps a little bit of background information is in order.
Glyphosate is a controversial weedkiller which has divided the agricultural industry over the potential health risks associated with its use. While the current license for the use of the chemical runs out on December 15th, a European Commission proposal to grant a 5-year extension garnered support from only half of the 28 member states.
One of those happened to be Germany, and that’s where the trouble starts.
German Agriculture Minister Christian Schmidt, in an apparent snub to Mrs. Merkel, voted in favor of the 5-year extension. That went directly against the declared position of the German SPD (Social Democrats), Mrs. Merkel’s erstwhile Grand coalition partners.
Had the German Chancellor been successful in her bid to form a government after the September elections, that would have been of little consequence. The simple fact is Mrs. Merkel didn’t manage to form a coalition, so the pleasure (or displeasure) of the SPD becomes a vital issue.
To avoid a minority government and potentially new elections in 2018, Mrs. Merkel needs to form a coalition government.
Having exhausted (and failed in) the potential of the so-called Jamaica Coalition, Chancellor Merkel has turned again to the SPD, led by Martin Schulz.
The September elections, saw the right-wing AfD (Alternative für Deutschland) take a 12.6 percent share of the vote and 94 seats in the Bundestag, making it the third biggest party.
That result prompted Mr. Schulz to reject any idea of re-forming the Grand Coalition with Mrs. Merkel’s CDU/CSU alliance. Doing that would have made the AfD the official opposition with all the associated privileges, something the SPD could not allow.
Outside of a coalition with the SPD, the options open to Mrs. Merkel are stark. A minority government or new elections in 2018. Minority government essentially means no government as Mrs. Merkel is only too well aware.
New elections in 2018 would probably see even more support for the AfD, something both the Chancellor and Mr. Schulz are unsurprisingly keen to avoid. Hence the resumption of discussions on the resurrection of the Grand Coalition.
Mrs. Merkel’s future as the leader of the CDU is far from assured. Increasingly loud whispers are calling for her to step-down, and the German Chancellor hasn’t recovered her old poise following her election failure.
German politics favor compromise. Possibly as a result of the lessons learned from the rigid one-party rule which ended in 1945, the German constitution is designed around compromise, so a minority government cannot be ruled out. However, it seems unlikely Mrs. Merkel would be the captain of that particular ship.
Germany is the EU’s powerhouse economy. There’s little denying that a weak Germany translates into a weak EU. The spread of right-wing extremism is alarming. Brexit is alarming. A weakened Germany goes beyond that. A weakened Germany calls the entire idea of European integration into question.
This article is for educational and informative purposes only and should not be considered as investment or trading advice.