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Bless our heart, under authoritarian rule, loyalty is regarded as more important than competence....

Germany's new grand coalition has one vital job

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Tuesday, February 13, 2018

Bloomberg View

More than four months after German voters punished their coalition government at the polls, the two main parties have agreed to try again. If the Social Democratic Party's rank and file approve the proposed new pact with Angela Merkel's Christian Democratic Union, which cannot yet be taken for granted, Germany will be ruled once more by a "grand coalition."

It's a hopeful development — another chance for the country's leaders to show that pragmatic centrist government works better than populism and militant nationalism. Yet Merkel and her ministers have some pitfalls to avoid if they're to make GroKo, as the coalition is called, a success.

The composition of the new cabinet would tilt the coalition in the SPD's favor: The center-left party gets not just one of the powerful finance and foreign-affairs ministries, but both. On paper, this could be a good thing. Germany could use a little less of the CDU's stern fiscal conservatism and a little more of what the SPD is calling for — more public investment and bolder reform of the European Union.

The parties' policy agreement appears to tick these boxes. Putting it into effect, though, will be another matter. The more left-leaning mix adds to the risk that the promised increase in public spending will go too far, or be frittered away on unproductive programs.

It's to be hoped that the new finance minister, Olaf Scholz, can combine higher public investment with effective fiscal discipline. Greater emphasis on infrastructure would help. Germany spends a smaller share of national income on infrastructure investment than most other advanced economies.

The greatest threat, though, is that the coalition loses sight of the real prize — restoring faith in German centrism and leadership.

Coalitions are loveless marriages at the best of times. And the SPD, dismayed by its performance in the election, is divided against itself: The party even forced its leader, Martin Schulz, to drop his bid to become foreign minister. Sealing the pact is only the first step. Making it work will demand effort and restraint all round.

A coalition that squabbles and fails won't just hurt the parties' prospects in the polls next time. It will strengthen the insurgent far-right AfD, endanger Germany's record of economic dynamism, and lessen the prospects for making the European Union work better for all its members. A lot is at stake if and when GroKo gets down to work.

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