Failed talks

Business swings at Free Democrats while Social Democrats mull options

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So you listen to me for a change. Source: DPA

It’s not always easy being the leader of a pro-business party, especially when the business community isn’t always on your side. Christian Lindner, the chairman of the classically-liberal Free Democratic Party (FDP), has been taking some hard punches from business leaders after pulling out of negotiations to form a new coalition government with Chancellor Angela Merkel’s conservative bloc and the left-wing Green Party. The smart, well-groomed politician is looking a bit bruised and unamused these days.

An unexpected attack came earlier this week from a business group that typically sings the FDP pro-market song: the Confederation of German Employers’ Associations (BDA). President Ingo Kramer discarded his typically diplomatic style and hit out at Mr. Lindner at a conference for employers in Berlin. Mr. Kramer, himself an FDP member, told the party’s leader that his behavior was a “disgrace” and that he should have “taken responsibility for the country.” Visibly taken aback by the verbal attack from the usually placid businessman, Mr. Lindner responded: “I’ll take responsibility for the country, but not for this room.”

Mr. Lindner attempted to justify his decision, saying the negotiations would not have led to a change in policy, but would instead have resulted in a new kind of grand coalition plus a few “dangerous ideas from the Greens.” He said he didn’t want the party to make old mistakes and abandon core FDP demands such as investing in education, promoting digital transformation, lowering taxes and controlling immigration.

“I'll take responsibility for the country, but not for this room.”

Christian Lindner, FDP chairman

His explanations earned him sparse applause from business representatives. Many business owners, it turns out, favored the so-called “Jamaica coalition,” named after the colors of the three parties of the Jamaican flag that match the party’s official colors: black for Chancellor Angela Merkel’s conservative bloc with her Christian Democratic Union (CDU) and Bavarian sister party, the Christian Social Union (CSU); yellow for the FDP; and green for the Green Party.

Business leaders are concerned about the threat of a shift to the left if the center-left Social Democratic Party (SPD) forces concessions from Ms. Merkel to form a new coalition government. In an interview with the Rheinische Post, a regional newspaper, Mr. Lindner warned the Christian Democrats of being milked by the Social Democrats. “The SPD will demand a very high price” to enter into another government with CDU, he said.

Whether that alliance happens remains to be seen, however. On Friday, a day after meeting with Ms. Merkel, CSU leader Horst Seehofer and German President Frank Walter Steinmeier, SPD leader Martin Schulz refuted media reports that his party was ready to start grand coalition talks, but stopped short of a categorical “no.” While calling the rumors “simply false and unacceptable,” he left the door open to a new partnership, telling reporters there was “a broad consensus about not closing down any options concerning the formation of a new government.”

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You don't have to go home but you can't stay here: SPD chief Martin Schulz, center, leaving Bellevue palace, home to Germany's president. Source: AP

Mr. Kramer is hardly the only one to criticize the FDP chairman. Many prominent business people have called his withdrawal from talks a mistake and have accused him of weak leadership, irresponsibility and a lack of professionalism. Among them is Nikolas Stihl, chairman of the supervisory and advisory boards of German chainsaw manufacturer Stihl. “I’m disappointed that the FDP has abandoned exploratory talks,” he told Handelsblatt. “[A Jamaica coalition] would have entailed fewer burdens on the German economy than a new version of the grand coalition.” The previous coalition was “big on spending,” he warned.

The FDP has dipped in the polls since withdrawing from the talks, currently at 10 percent compared with 10.7 percent at election time. In a survey conducted among guests at the employers’ conference, just under 52 percent voted in favor of a Jamaica coalition. Martin Erfurt, a partner at wallpaper manufacturer Erfurt & Sohn, said that a Jamaica coalition would have been an interesting alternative that would have opened up new prospects in economic policy. It was worth an attempt, he added.

A continuation of the previous grand coalition scares many businesses. They are concerned about the SPD’s demands to abolish private health insurance and replace it with a universal health insurance scheme, to significantly raise the minimum wage and the top tax rate, and to freeze pensions at their current level.

In fact, the fear that a grand coalition could shift to the left is so great that some industry representatives favor a minority government. “We should abandon this almost pathological fear of a minority government,” Dieter Hundt, honorary president of the BDA, told Handelsblatt. “In this situation, a minority government would be a better solution for Germany.” He called a repeat of the grand coalition “dangerous.” This view is in line with the CDU’s economic council, which on Thursday called on the party’s leadership to investigate a minority government, while warning against another grand coalition.

Members of Mr. Lindner’s own party are complaining that he has made it difficult for himself to demand a debate on issues such as digitalization or educational reforms, as he could have helped shape these policies as part of a coalition. He will now have to hope for a grand coalition in which he can establish himself as the opposition leader, and that will take time. Mr. Lindner has repeatedly emphasized that the FDP is not afraid of fresh elections. Even within the FDP, however, it has not been agreed what prospects the party plans to use to convince its own voters to choose it again.

Handelsblatt editors Sven Afhüppe, Thomas Sigmund and Katrin Terpitz and John Blau from Handelslbatt Global collaborated on this story. To contact the editors: afhueppe@handelsblatt.com and blau@handelsblatt.com

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