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KEY POINTS: What Germany’s three parties in coalition talks have agreed

Here's what the parties hoping to form Germany's next government are planning on tax, climate change, autobahn speed limits and pensions.

Annalena Baerbock from Bündnis 90/Die Grünen, Christian Lindner, head of the FDP, Olaf Scholz from the SPD in Berlin on Friday.
Annalena Baerbock from Bündnis 90/Die Grünen, Christian Lindner, head of the FDP, Olaf Scholz from the SPD in Berlin on Friday. Photo: dpa | Kay Nietfeld

German Finance Minister Olaf Scholz took a step closer to succeeding Angela Merkel as chancellor on Friday, as his Social Democrats, the ecologist Greens and liberal FDP announced a preliminary deal to form a new government.

The three parties have been holding talks since Scholz’s centre-left Social Democratic Party (SPD) won the general elections on September 26th with Merkel’s conservatives in second place as she prepares to leave politics.

“Overall, we can sense here that a new beginning is possible, brought about by the three parties that have come together here,” Scholz told reporters.

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No tax hikes

The three parties aiming to form Germany’s next coalition government promised Friday to maintain the no-new-debt rule and not introduce any tax hikes, continuing the country’s familiar path of fiscal rigour, according to an initial coalition agreement.

The centre-left Social Democrats, the Greens and the liberal FDP pledged massive investments to make Europe’s top economy greener and more digital, but “within the framework of the constitutional debt brake”. The text also vowed not to introduce new taxes or increase existing ones.

In their initial agreement, they agreed to maintain the so-called debt brake limiting new borrowings to 0.35 percent of output per year.

Minimum wage

The Social Democrats secured their electoral promise of raising minimum wage to 12 euros ($14) “from the first year” from the current 9.60
euros.

Lower voting age

All three agreed to lower the voting age to 16 – something likely to favour the Greens and FDP which have younger supporters as opposed to Angela Merkel’s conservatives, who are largely backed by Germany’s army of pensioners.

Lower electricity costs

​​The SPD, Greens and FDP want to reduce electricity costs for private households and businesses.

“In the course of the legislative period, we will end the financing of the EEG levy via the electricity price as quickly as possible,” reads a joint paper presented by the three parties on Friday. “In this way, we will reduce electricity costs for private households and businesses.”

Billions of euros in levies under the Renewable Energy Sources Act (EEG) are currently used to subsidise green power.

The subsidies for wind and solar partly explain why Germans pay the highest electricity bills in Europe.

READ ALSO: Germany slashes electricity surcharge as prices surge

Quicker end to coal

Germany will aim to bring forward its exit from coal energy to 2030 from the initially planned 2038, according to an initial agreement.

“To meet targets on climate protection, an accelerated exit from coal power is necessary. Ideally, that should be achieved by 2030,” said the text agreed on between the Social Democrats, Greens and the liberal FDP.

No speed limit

The SPD, Greens and FDP do not want a general speed limit on Germany’s famous autobahns.

“We want to make Germany the leading market for electro-mobility and, to this end, massively accelerate the expansion of our charging station infrastructure. There will be no general speed limit,” the joint paper said.

Green Party leader Robert Habeck said conceded that “we were not able to push through the speed limit.” The Greens had pledged at 130 km/h limit in their manifesto.

READ ALSO: Will Germany soon introduce a speed limit?

No new combustion engines after 2035

The paper states that the EU’s “Fit for 55” climate program should be supported.

“According to the EU Commission’s proposals, in the transport sector this would mean that only CO2-neutral vehicles would be registered in Europe in 2035 – with a correspondingly earlier impact in Germany.”

No increase in pension age

“There will be no pension cuts and no increase in the statutory retirement age,” the paper says. The paper foresees “partial capital coverage” for future pensions – ie an investment fund to run parallel to the current Generationsvertrag.

“To this end, in a first step we will inject a capital stock of ten billion euros into the German pension insurance scheme from budgetary funds in 2022,” the paper says.

Sovereign Europe

Foreign policy was dealt with in broad strokes in the initial document.

The parties however emphatically said they “want to raise Europe’s strategic sovereignty” — likely to please the continent’s second biggest power France, which has made this a priority of its EU presidency beginning 2022.

The transatlantic relationship will remain a “central pillar” for Germany, and NATO is an “indispensable element” for the country’s security, the text said.

And potentially grating to Poland or Hungary – the parties want “an EU which protects its values and rule of law internally and externally”.

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POLITICS

Ditherer or deal-maker? Jury’s out on Scholz’s tank brinksmanship

Despite accusations of cowardice and dithering, Chancellor Olaf Scholz has stood firm on taking his time to weigh up a decision before finally announcing on Wednesday that Germany would supply Leopard tanks to Ukraine.

Ditherer or deal-maker? Jury's out on Scholz's tank brinksmanship

The brinksmanship has won plaudits from some who argue that by holding out, the German leader managed to get the United States to reverse its stance and send Abrams tanks — bringing about a bigger win for Ukraine.

But other analysts warn the weeks of delay may have left a deeper mark on Scholz’s international reputation, while also hurting Kyiv’s chances against Russian troops on the battlefield.

“The SPD chancellor has achieved one of his biggest aims: delivering battle tanks only in step with the Americans,” wrote Die Zeit weekly.

READ ALSO: Fact check: How much help has Germany given Ukraine?

Scholz’s “unusual and risky move… worked”, it added.

Conservative broadsheet Die Welt called it a “coup” for the chancellor. “Scholz has managed to get the US to change course,” it said.

‘Won’t be pushed’

In recent weeks, as allies and Kyiv alike harangued him for tanks, Scholz stressed the need for international coordination and ruled out going it alone on the heavy military equipment.

With an eye on public opinion, Scholz has been careful not to appear to be hawkishly leading the charge when it comes to military supplies to Ukraine.

Fielding questions at the Bundestag following Wednesday’s announcement, Scholz pointedly avoided playing up the powerful Leopards’ capabilities and how they could affect the outcome in Ukraine.

READ ALSO: What difference could Germany’s Leopard 2 tanks make in Ukraine?

Rather, he repeatedly underlined that it was and is “right that we did not let ourselves be pushed into this but that we rely on and also continue on
close cooperation”.

It was perhaps not a coincidence that Scholz’s announcement came after public opinion shifted slightl in favour of sending tanks, with 46 percent for and 41 percent against on January 19.

Directly addressing fears of Germans, who have favoured treading lightly around conflict zones since World War II, Scholz pointedly said he would ensure that any support for Ukraine would be provided “without the risks for our country growing in the wrong direction”.

Asked later on ZDF public television whether his hesitation had led to a “loss of trust” among allies, Scholz rejected the criticism.

“Everyone knows we are making a big contribution, also compared to other countries, in terms of support for Ukraine — not only financially and with humanitarian aid but also with weapons.”

But some analysts said his concern for domestic politics may have cost Ukraine on the frontlines.

‘Embarrassing’

In the meantime, “several months” had been lost in the defence of Ukraine, while Scholz was “more concerned with domestic politics” and an issue he did not see as a “big vote winner”, Chatham House analyst John Lough told AFP.

Fears that moving too rashly would lead to an escalation in the war were exaggerated, too. Even without tank deliveries, “the Russians have escalated anyway”, for example by targeting critical infrastructure in Ukraine, Lough said.

Amid the ruckus, particularly with neighbouring Poland accusing Scholz of dithering, analysts point to the damage done to Germany’s reputation.

Bild daily piled on the pressure at home, accusing Scholz of cowardice. But a day later, a high-profile defence ministers’ meeting of Ukraine allies last Friday still failed to break the deadlock on tanks.

The delay was “embarrassing for the German government”, said Lough.

READ ALSO: Germany gives greenlight for Leopard tank deliveries to Ukraine

Olaf Scholz

German Chancellor Olaf Scholz (SPD) comments on the Russian attack on Ukraine during a press conference at the Chancellery on February 24th, 2022. Photo: picture alliance/dpa | Michael Kappeler

Sudha David-Wilp, director of the German Marshall Fund’s Berlin office, said moving in lock-step with the United States gave Scholz the “political cover he needed” to say “yes” to German tank deliveries.

But his short-term win was not “necessarily good for Germany because it has lost a lot of trust” with key partners, David-Wilp said.

The way the tank drama played out “clearly shows that the US needs to play a leadership role in Europe” and its security, while German leadership remained “elusive”, she said.

Yet, for all the apparent damage to Scholz, there might be a winner.

The unexpected US tank commitment means that officials in Ukraine have “all kinds of different kit now”, David-Wilp added.

By Sebastien Ash

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