Who will Angela Merkel work with?

Who will rule Germany over the next four years? The quarrel has gone, and is still going. Nothing is clear, neither who becomes chancellor, nor which parties should be included in the government.

Three theoretical alternatives are on the table. One is a coalition between the Social Democrats, the Greens and the Free Democrats. But the leader of the Free Democrats, Guido Westerwelle, has stated that such cooperation is not relevant. The Greens' Joschka Fischer, for his part, has said that he is not interested in a coalition between the Greens, the Free Democrats and the Christian Democrats / Christian Socialists – and certainly not under Angela Merkel.

It has led some to speculate as to whether the Greens, who have so far worked with the Social Democrats, may be willing to change sides under a chancellor other than Angela Merkel. But it is unlikely. After all, it was the CDU-CSU that got the most votes in the election. And the party has not dumped its chancellor candidate.

If both the leaders of the wing parties stand on their positions, there will be no coalition on the left, alternatively on the right. The FDP probably knows very well that they have nothing to do with an alliance that does not introduce a full market economy, and the Greens will be crushed through a collaboration with the right – since the party's voters are so much further to the left than the party's leaders.

In that case, only one opportunity remains, since no one really wants to cooperate with the new left party. And there is a big coalition between SPD and CDU / CSU. But also it is extremely far inside. Only once before have the two major parties in Germany cooperated across the block boundaries, and that was in the 60's. Many fear stagnation and stagnation if the two parties go together in government.

Should have gone on rails

The elections in Germany have long been a given thing. The Christian Democrats under Angela Merkel would win by a large majority, and she would rule together with the market-savvy peacemakers.

But during the last few weeks before the election, Merkel managed to drop almost ten percentage points on the polls. It makes her a weak chancellor, no matter what coalition she ends up with.

With just 35 percent of the vote, Angela Merkel will have to work with two parties on the wings, not one, to get a majority in parliament. The Peace Democrats, with almost ten percent, naturally belong in such an alliance. The Greens may smell of such an opportunity, since they have already fallen out of regional governments and would like to retain ministerial posts centrally.

The Greens got 8.1 percent of the vote, and in that case will provide Merkel with a solid majority.

If Germany does not end up with a major coalition after this election, a government left by the peace democrats, the Greens and the CDU-CSU is the closest alternative.

But that doesn't mean Schröder has given up the fight to continue as chancellor, though no one really sees where he can pick up a majority. The most obvious variation along a classic left-right axis would be to collaborate with both the green and the new left.

The new left; Die Linkspartei, consists of ex-Communists from the former GDR led by Gregor Gysi, as well as frustrated Social Democrats in opposition to market reform, under former Finance Minister Oskar Lafontaine. They received 8.7 percent of the vote, and are the real winners of the election, along with the Democrats who also rose.

The SPD, the Greens and the Left Party will together have a majority in the new parliament, and will be able to form a so-called red-red-green alliance. But the Social Democrats will not cooperate with this blissful mix of Communists and apostate Social Democrats. That is why SPD leader Franz Müntefering is trying to form a coalition between the SPD, the Greens and the Peace Democrats, who also want a majority. The goal is to get Schröder as chancellor, still, without having to resort to either the CDU or the new left party as a partner.

Any attempt by the Social Democrats to stack a left-hand alternative would probably fail. Angela Merkel is and will be the political winner of the election, albeit by a small margin. Therefore, the outcome of the government negotiations will either be a right-wing alternative with the CDU-CSU, the peace democrats and the Greens, or a major coalition. And if the Greens do not sell the say, which they say they do not want, the only real alternative can quickly become a coalition between the two major parties in the country.

A little excited

The parties themselves, led by Schröder and Merkel, are not very enthusiastic about such a coalition, to say the least. But for the country as a whole; As far as the domestic political situation in Germany is concerned right now, such a broad alliance might be a good solution – after all.

The reason for this is the German voters. For they have not given any mandate to a new government to initiate large-scale reforms that set down social welfare schemes and create flexibility in working life.

The German people are divided in two, it is named after the election; one part that wants real market reforms, and another one that wants to maintain welfare, safety nets and job security.

But this is only partially correct. Most voters gathered around two major parties that both want, or say they want, to push through reforms that both secure job creation and at the same time preserve the social policy structure.

The Social Democrats have already started this work, with their Agenda 2010: large corporate tax cuts and high salaries, combined with less money for pensions and social security. The goal of the Social Democrats, as they outline them, has been to grow the economy and reduce unemployment. The aim has been to get people out of work, by raising the threshold for unemployment insurance.

It was the uncertainty and rage associated with these reforms that led the Social Democrats to lose the crucial state election in North Rhine-Westphalia this spring. It paved the way for the sudden re-election.

Paradoxically, it was Angela Merkel, an even more determined market liberalist, who won the popular frustration. But Merkel is no Margaret Thatcher either. Her plan is to increase VAT to cover lower labor costs for businesses. Full package market liberalism has not been her message so far.

Angela Merkel lost the brackish owner because she still went too far in suggesting a policy that would give the rich in Germany solid tax breaks. The suspicion was linked to a man named Paul Kirchhof; known for his ihuga confidence in flat tax. When Merkel made him her shadow finance minister, she gave Schröder a political meat bone he could take full advantage of. Merkel's "revelations" of the Social Democrats' planned welfare cuts came too late to save her own storming victory.

Why everything is: Angela Merkel and Gerhard Schröder may not have such great difficulty in agreeing on economic policy. The Social Democratic Party has got rid of the worst of its reform opponents, Merkel has got rid of Kirchhof, and large sections of the CDU-CSU are in any case unwilling to follow their leader towards a triumph of market liberalism. There will be a compromise at the center that can neutralize the resistance in society and move the German people towards a cautious acceptance of not too rabid reforms.

Whether this will help approximate zero economic growth, soaring debt, severe budget deficits and an unemployment rate of almost eleven percent is another matter.

Modus vivendi

It will be worse with foreign policy. But even here, the two main parties will be able to agree on a modus vivendi.

Gerhard Schröder has been nothing short of a revolution in German foreign policy, a revolution in which German national interests are again on the agenda. With Berlin as the capital and the country reunited, Schröder has stepped out of the heavy legacy of the Nazi era by emphasizing Germany's right to a normalized self-assertion.

Under Schröder, Germany has sent its troops into armed conflict in both ex-Yugoslavia and Afghanistan. Under Schröder, Germany has torn transatlantic ties in favor of a three-point axis with Paris, Berlin and Moscow as its main components. Under Schröder, Germany has re-established the German-French axis in the EU; a collaboration he first entered into fully after the destructive dispute between Paris and Berlin in the wake of the Nice Conference. Under Schröder, Germany has almost torn the EU apart as well, as the war in Iraq sent the two old giants of the union into clinch with "the new Europe."

Merkel is in a completely different place in foreign policy. That is not her strong point, it is said, but the fact is that the lady knows very well what she wants in this field: repairing the transatlantic axis, and re-balancing – rather than re-orienting – relations with the rest of Europe.

There may be a point of compromise here, because Schröder and his Social Democrats have also realized the need for a better relationship with the Anglo-Saxon dimension in the EU, and not least – a far better relationship with the United States. Both leaders pair such an approach with a strong Franco-German axis on important union issues.

Basically, there is only one question that really separates the two leaders and the two parties right now, and that is Turkey. Should the country join the EU or not? CDU-CSU says resoundingly no. The SPD says an equally resounding yes.

But both parties can live with the opening and ongoing negotiations between Turkey and the EU, because a Turkish membership is still not relevant until 2014.

The biggest problem in foreign policy is thus not necessarily specific issues, but that Germany will not be the dynamic engine of the union many had hoped the country would be under a mere Merkel.

Right

There are, as I said, other alternatives in Germany than a major coalition. It should be to the right, in that case. German voters have not really given Schröder any mandate to govern further. The right-wing confidence is somewhat greater, if not overwhelming. Merkel is the winner of the election but with a small margin.

A government ceased by the CDU-CSU, FDP and the Greens will go beyond the huge bend it is for the Germans to form a coalition across the block borders. This bend is not only political, but also cultural and historical. A major coalition may nevertheless be the compromise in the center that the voters have actually requested. A right-wing coalition may be its own compromise, since Merkel then has to balance between the anti-liberalists in his own party and the pro-liberalists in the FDP.