In bed with the far right

NO ALTERNATIVE?

The German capital’s political aorta almost burst this morning on news that the Christian Democrats in the state of Thuringia pushed through a property tax cut late Thursday with an assist from the far-right Alternative for Germany (AfD). 

Germany’s wurst führer: The development was all the more shocking given that the local AfD chapter in Thuringia (a region best known for its long variety of bratwurst) is comprised of the party’s most extreme hardliners (The AfD’s local leader, Björn Höcke, is so radical that a German court ruled a few years ago that protesters could call him a “fascist.”) 

No new taxes: Despite howls of protest from the state’s leftist ruling coalition, cutting the local property tax from 6.5 percent to 5 percent was deemed so urgent that it overshadowed such pedestrian considerations as the future of democracy in Germany. The pro-business Free Democrats, which are also in opposition in the state, also backed the measure. 

Firewall on fire: The CDU’s move comes amid a long-running debate within the party over whether and to what degree it can or should cooperate with the AfD. Party leader Friedrich Merz created significant confusion on this question in recent months by insisting that the CDU “firewall” to the far right remains intact, while also saying that there may be times on the local level when the AfD votes for measures tabled by the CDU. “We can’t make solving problems contingent on whether the wrong side backs the solution,” Merz said on Thursday before the vote. 

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Fake it till you make it: The question is whether the CDU really didn’t know the AfD would back the measure. Given the cozy nature of politics in the state and the small size of the chamber — the legislature has only 90 deputies — many critics find it difficult to believe the CDU was not counting on the AfD’s backing. Minister President Bodo Ramelow of the Left party called the move “a pact with the devil.” 

Fourth Reich taking shape? If that sounds like hyperbole, take a look at the regional polls in Germany’s eastern states. The AfD now leads in four of the five former East German states (Brandenburg, Thuringia, Saxony and Mecklenburg-Vorpommern) by as much as 12 percentage points.  With elections of three of the states where the AfD has a comfortable lead just a year away, Germany’s far-right lurch could get very real very fast. Also keep in mind, the party is polling second nationally at a record 21 percent. 

Voice from the grave: In a strange coincidence, most Germans received the news on the 150^th birthday of Otto Wels, the courageous leader of the Social Democrats who stood up to Hitler and refused to buckle under pressure in 1933 to endorse a bill that effectively killed German democracy and handed the Nazis unlimited power. Hitler won the vote anyway — with the support of the center right. 

DEATH OF A ZEITENWENDE

“Organize like you fight,” was the motto laid out in a strategy blueprint for the German armed forces endorsed by the military’s top general in 2021. The plan was to reposition the military so that it would be better prepared to fight a war on NATO’s eastern flank after years of concentrating on peacekeeping missions. The core of the strategy was to streamline the military into four areas: land, air/space, cyber and information. 

The initiative took on more urgency after Russia’s full-scale invasion of Ukraine in 2024. Yet like every other aspect of Chancellor Scholz’s Zeitenwende, or historic transformation of the military, the reorganization has proved too ambitious for the country’s battered military, our Die Welt colleague Thorsten Jungholt reports.

Bureaucratic battle: Defense Minister Boris Pistorius acknowledged this week that the ambitious reform was all but dead: “There will be some changes but nothing fundamental,” he said. Ok then. 

CRISIS OF CREDIBILTY

Vox populi: There’s nothing more entertaining than seeing a politician defend their policies in front of real people (journalists don’t count). This week the Bulletin witnessed a particularly revealing episode involving one of the leading lights of the German coalition (unfortunately the encounter occurred under the Chatham House Rule, so we can’t reveal the individuals’ identities). 

Much ado about nothing: When a moderator asked the politician about recent news concerning German pharmaceutical company BioNTech shifting its research activities to the UK, the politician argued forcefully that all the recent talk about German companies fleeing the country for greener pastures abroad and the economic tsunami moving towards Germany was an exaggeration. He also insisted that the BioNTech news had been overblown. Unbeknownst to the politician, there was a person in the audience with firsthand knowledge of BioNTech plans. This person proceeded to politely eviscerate the politician’s arguments with such skill that he all but fled the stage. 

The mask falls: The exchange illustrated that no degree of rhetorical gymnastics can hide the fact that the situation in Germany’s economy is much worse than the government will admit. Most regular people sense this, of course, yet it was still jarring to see up close just how weak the government’s defenses are.  

Power hungry: One of the main complaints of German industry is that domestic energy costs are exponentially higher than in other parts of the world (and as much as five times higher than in the U.S.). The coalition has been at loggerheads over whether to subsidize electricity for industrial companies, with Finance Minister Christian Lindner arguing that it would skew the competitive landscape by giving some companies an unfair advantage. But according to Handelsblatt, a compromise might be in the offing to use as much as 15 billion euros from a special “climate transformation fund” to finance the subsidy. But the big question is: what will Brussels say?

CLEAR AND PRESENT INCOMPETENCE: Did Germany’s counterintelligence fall for a double agent? It sure looks that way. A few years ago, a German investigation into Gerhard Sabathil, a former EU ambassador suspected of spying for China, caused a furor in both Berlin and Brussels amid increasing fears of Chinese infiltration. Yet after months of wiretaps and an investigation by German police and counterintelligence, the probe turned up nothing. The only tangible result of the authorities’ action was that it created a cloud of suspicion that put an end to Sabathil’s career. Investigative reporter Hans-Martin Tillack at Germany’s Welt am Sonntag uncovered new damning documents of German intelligence’s mishandling of the case for this fascinating long read.

POLLING SHOCKER: Another week, another poll showing Chancellor Olaf Scholz’s Social Democratic Party (SPD) in freefall. The party, which finished first with 26 percent in the last general election, has fallen to just 16 percent, according to a new poll by Infratest Dimap released Thursday. Meanwhile, the far-right Alternative for Germany remains within striking distance of the center-right CDU/CSU bloc, which leads the horse race with 28 percent.

Not looking much better in Hesse: Three weeks ahead of the election in the western German state, the SPD in Hesse — which is led by Scholz’s Interior Minister Nancy Faeser — is trailing at just 18 percent, only one percentage point ahead of the AfD, according to a new state poll. There was a time when Faeser wanted to become the new premier of Hesse. Now she needs to fight to avoid a humiliating defeat. She’s been fantasizing about replicating Scholz’s “traffic light” coalition with the Greens and liberal Free Democrats, yet given the dominance of the CDU in the polls, that’s likely little more than a pipe dream. 

CAMINO DE SANTIAGO: EU Finance Ministers are gathering this Friday and Saturday in Santiago de Compostela for their biannual informal meeting. Germany’s Christian Lindner has made clear that Berlin will remain strict when it comes to the application of EU fiscal rules — despite the fact that Germany itself has amassed a record shadow debt.

Fiscal hawk: Lindner told POLITICO during an interview that he won’t give in to demands from southern states like Italy to introduce a “golden rule” that would allow them to exempt certain investments — such as for the green transition — from the EU’s stringent debt rules. “I advise against this, because debt is debt,” Lindner said. “The capital markets do not distinguish between the noble or less noble motives for which debt is incurred and what it is invested in. They simply judge whether is it sustainable or not sustainable.”

Debt rules reform: The European Commission made proposals for how to reform the EU’s fiscal rules to allow more flexibility for countries with very high debt rates such as Italy, which has a public debt of nearly 144 percent of GDP. Yet Lindner stressed that, despite seeing some positive elements in the reforms, the criteria must be stricter. Notably, he wants a “common safeguard for the debt-to-GDP ratio to decrease every year.” Although there probably won’t be a deal this weekend, Lindner argued that Germany’s position was increasingly “understood” and “possibly also seen as wise.”

Shadowy debt: Germany’s federal audit court recently warned that Germany has a shadow budget of €869 billion consisting of special funds outside the regular budget. Although some of these special funds date back many years, a lot of of this shadow budget has piled up under Lindner’s oversight. However, the finance minister rejected criticism that Germany was flouting the rules and stressed that the special funds were part of the debt that Berlin declares at the EU level. 

A bit of homework: “Our debt ratio will fall to 65 percent in 2024,” Lindner said. He also argued that “only a part” of a controversial €200 billion special fund introduced last year to curb energy prices has been used. “As a result, our deficit, which was originally assumed at 4.5 percent this year, is expected to be at only 2.5 percent. That means we’re trying to achieve ourselves what we’re recommending [to others],” Lindner said.

DEFENSE SPENDING: Lindner also stressed that Germany would have to put more money aside in the coming years to meet its goal of spending at least 2 percent of GDP on defense. Concretely, Germany will need to spend at least €30 billion more on defense by 2027 or 2028 once the €100 billion special fund for bolstering the military runs out.

WEEK AHEAD

SLEEPLESS IN NEW YORK: Scholz and cabinet members like Foreign Minister Annalena Baerbock will attend the U.N. General Assembly in New York from Monday to Wednesday.

TANK TALKS: Defense Minister Boris Pistorius will head to the town of Évreux in Normandy on Thursday to meet his French counterpart Sébastian Lecornu. The meeting will likely be overshadowed by a continued Franco-German disagreement over a long-delayed project to develop a joint battle tank.

WISSING CRISTINA BARCELONA: Transport Minister Volker Wissing heads to Barcelona on Friday for an informal gathering with his EU counterparts.

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