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Olaf Scholz replaces Angela Merkel as Federal Chancellor

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Federal Chancellor Angela Merkel (R) and Federal Finance Minister Olaf Scholz will take part in a cabinet meeting at the Federal Chancellery in Berlin on August 19, 2020.

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In Germany, after almost two months of talks following the unsuccessful federal election in September, a coalition agreement was announced.

Olaf Scholz, the candidate of the center-left SPD, will be Germany’s next Chancellor, replacing Angela Merkel, who has led Germany for 16 years.

With the agreement between the SPD, the Greens and the FDP, they govern for the first time together in a three-party coalition. The alliance was referred to as the “traffic light coalition” based on the traditional colors of the parties.

According to the deal announced on Wednesday afternoon, the head of the business-friendly FDP, Christian Lindner, will be the next finance minister, on which the various parties will now vote. The two group chairmen of the Greens, Annalena Baerbock and Robert Habeck, are to take over the offices of foreign minister and economics and climate minister.

“The first traffic light [in Germany] was built in 1924 in Berlin on Potsdamer Platz. Back then it was still an unusual technology. ‘Can it work?’ People asked skeptically, “said Scholz at a press conference in Berlin on Wednesday, according to a Reuters translation.

“Nowadays, the traffic light is indispensable when it comes to regulating things clearly, providing the right orientation and ensuring that everyone can move forward safely and smoothly. As Federal Chancellor I want this traffic light alliance to play a similarly groundbreaking role for Germany, ”he added.

The debt brake remains

The draft coalition agreement encompasses a broad spectrum of climate policy measures – including the adoption of a climate protection program by the end of 2022, the use of all suitable roofs for solar energy and the intention to align the expansion of the power grid with a new renewable energy target.

Germany will try to use 2% of its land area for wind power infrastructure and will continue to exclude nuclear power from its energy mix, a policy that differs from that of its neighbor France. The agreement also stated that Germany would stop promoting renewable energies after the coal phase-out.

It was said that immigrants should be able to apply for German citizenship after five years in the country, and Scholz confirmed on Wednesday that Germany will maintain its constitutional debt brake – this essentially forces the heads of state and government to keep households with no structural deficits or a very limited deficit to submit.

The new coalition announced that it would launch a parliamentary investigation into the evacuation operation in Afghanistan. According to the agreement, the country will remain part of the NATO nuclear deal under the new government, and the Greens have the right to nominate the country’s EU Commissioner if the President of the EU Commission is not from Germany, as is the case it is currently the case with Ursula von der Leyen.

“Ampel” coalition

The parties have promised to modernize Germany, the largest economy in Europe, with priority given to transforming it to a greener, more digitized economy and investing in infrastructure.

German companies are excited to see what this transformation will actually mean for them in terms of energy prices and operating costs.

The conservative alliance of the outgoing party leader Angela Merkel, CDU and Christian Social Union, will now go into opposition.

Holger Schmieding, chief economist at Berenberg Bank, described the alliance as a “continuity coalition”.

“New faces don’t have to mean a major change in policy. We expect the new government to continue the gradual trend towards more government spending on pensions and investments and a green transformation that have reigned the hallmarks of the last eight years of Merkel’s 16th year as chancellor, “he said in a statement on Wednesday.

Like Merkel’s “grand” coalition of the center-right CDU-CSU and the center-left SPD, the new government includes parties from both sides of the political divide.

“In terms of numbers, the center-left (SPD and Greens) in the new government is much stronger and the center-right (FDP instead of CDU / CSU) much weaker than before. The FDP has often advocated a harder line than Merkel. We have therefore always expected the compromises between the new coalition partners to be similar to what would have been a continuation of the old government. “

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