For almost 40 years Germany has had only three chancellors. The fourth, Olaf Scholz, took office yesterday. He leads a government comprising Social Democrats, Greens and the centrist Free Democrats. Radical changes of policy are unlikely, but there are shades of potential difference from the approach of Angela Merkel, his predecessor. It matters for Britain and other western democracies that there should be decisive leadership in the European Union’s most populous and powerful state. Though Mr Scholz faces big challenges on public health, the economy and security, the auguries are so far encouraging that he understands their scale.
Mr Scholz’s accession brings to an end Mrs Merkel’s 16 years in office. Though her longevity is remarkable, her legislative achievements are modest. Her successive governments missed opportunities for European leadership. A more expansionary fiscal policy after the banking crash would have aided eurozone recovery, and Germany’s abandonment of nuclear power makes it harder to curb emissions.
Though nominally on the centre-left, Mr Scholz was in some respects the continuity candidate in September’s federal elections, having served as vice-chancellor under Mrs Merkel. His immediate priority is to combat Covid as Germany is in its fourth wave of the pandemic. Mrs Merkel explained how restrictions on civil liberties to combat the coronavirus are a necessary but temporary expedient. Polls show support for this approach, yet right-wing extremists and anti-vaccination campaigners have managed to put thousands of demonstrators on to the streets in protest. Mr Scholz will have to face them down.
As finance minister in Mrs Merkel’s coalition, Mr Scholz was instrumental in devising a €750 billion recovery fund for EU states in response to the pandemic. It was the right principle to help boost the tepid growth rates of the eurozone and support weaker members. Mrs Merkel had the opportunity to use Germany’s budget surpluses to try to mitigate some of the inherent design flaws of a currency union lacking a common fiscal policy, but proved reluctant. Mr Scholz shows willingness to rethink the eurozone’s fiscal rules to promote investment, especially in green technologies.
And then there is the question of external threats. Mrs Merkel, who grew up under communist oppression, rightly stressed that the alliance is as necessary today as it was in the Cold War, but her objective of raising German defence spending by only about 0.2 percentage points to 1.5 per cent of GDP by 2024 was scarcely ambitious.
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With renewed threats to Ukraine from Russia, the free world cannot skimp on defence capabilities. Perhaps surprisingly, Mr Scholz’s coalition partners have shown keen awareness of the need to contain the expansionist aims of Russia and China and to support repressed peoples and dissidents. The chancellor has urged an increase in the strength of the country’s armed forces.
These are important signals. President Putin has sought to divide the West by supplying natural gas to Germany through the Nord Stream 2 pipeline. Should he advance on Ukraine, having already illegally altered its boundaries by force, the new government in Berlin may have to choose between domestic convenience and alliance solidarity. There is reason to hope that Germany under its new government stands with its allies.
