How did the coalition in Germany collapse, and what are possible scenarios?

Germany has experienced an internal political upheaval as Europe is focused on the US election and Donald Trump’s impending return to the White House. In Berlin, the “traffic light coalition,” so named for the colors of the three member parties, has collapsed.

The political crisis has opened up the possibility of holding early elections in Germany in the spring instead of next fall as planned.

Political analysts predict that the elections will end Olaf Scholz’s rule and install Friedrich Merz, the leader of the Christian Democratic Union, as the new chancellor.

For a long time, the most unpopular coalition in German history was on the verge of collapse. Parties with radically different political views formed the coalition, which was the main cause.

The German economy, the largest in the eurozone, has been stagnating for two years, reaping the consequences of the coronavirus pandemic and Russia’s full-scale invasion of Ukraine, which has led to higher energy prices and the need to sharply increase defense spending and supporting hundreds of thousands of Ukrainian refugees (who fled from Russia’s war).

The crisis, which had been unfolding for months, culminated in a falling out between Chancellor Olaf Scholz and a key minister in his government, Christian Lindner, which German media described as “unprecedented.” 

It resulted in the dismissal of Finance Minister Lindner, the resignation of ministers from the Free Democratic Party, and the collapse of the coalition. 

The opposition referred to the Minister of Finance’s economic proposals as a “divorce document” during a crisis meeting of the three parties on November 6, which was considered the last opportunity to save the coalition.

The Free Democrats wanted to show voters they were principled on their issues. This could have aided the party in maintaining its current low ratings and accumulating more support to surpass the 5% threshold in the event of an early election.

However, this proposal, along with the ultimatum from the Free Democrats, caused the coalition to collapse.

In the meantime, Scholz has already found a replacement for Lindner and chosen the name of a new finance minister, Jörg Kukis, a key economic adviser to the chancellor. Volker Wissing, the Free Democratic Party’s Minister of Transportation, will continue to work in government. He has left the party after it broke with the coalition.

What is the Scholz government’s next move, and does this imply that early parliamentary elections are imminent? The chances of this are very high.

Olaf Scholz has announced that he wants to hold a vote of confidence in his now minority government of the Social Democrats and the Greens on January 15, 2025, the first day of the new Bundestag session.

Friedrich Merz, the leader of the Christian Democratic Union and the likely successor to Scholz, stated that the vote should take place no later than next week. Opinion polls show that German citizens are ready for early elections in the short term.

Given the rapid development of events in Berlin, we can soon find out when Germany will be set to get a new government.

It seems that Germany is plunging into domestic political problems. This is occurring against the backdrop of Donald Trump’s feared return to the White House in the United States.

From the geopolitical point of view, the internal political instability is plaguing two of Ukraine’s main donors and partners, posing new challenges for Kyiv as Russia intensifies its military pressure. Therefore, the current German and American governments may need to ensure that Kyiv receives the necessary military aid to withstand and repel Russian attacks.

Germany can provide most of Ukraine’s 4 billion euros even if the 2025 budget is not approved in time after the coalition government collapses, according to Reuters‘ sources in the parliament’s budget committee.

According to the four sources, these funds are mostly earmarks and can therefore be allocated under the interim budget management if the budget is not adopted.

German aid to Ukraine dropped from about €8 billion in 2024 to €4 billion in 2025, according to the draft budget for 2025.

Germany had hoped that Ukraine would be able to meet most of its military needs with $50 billion in loans from the proceeds of frozen Russian assets approved by the Group of Seven.