(Bloomberg) — Olaf Scholz held nothing back as he told stunned reporters in the halls of Berlin’s Chancellery on Wednesday why he had just decided to fire Finance Minister Christian Lindner and to hide his tripartite organization.
“Whoever enters the government must act seriously and responsibly,” said the centre-left leader. They should not disappear when things are difficult. They must be prepared to sacrifice themselves for the good of all citizens. But that’s not what Christian Lindner is talking about.
The personal attack was the culmination of a split that, according to Scholz’s aides, began late last year with a bad budget ruling by Germany’s highest court. However signs of trouble in the so-called “progressive coalition” between Scholz’s Social Democrats, Lindner’s Free Democrats and Robert Habeck’s Greens were visible from the start, as the parties came to power with different goals’ and no shared vision of Germany’s future.
Although he took office during the Covid-19 crisis, Scholz’s first term was cut short by the government’s decision to return 60 billion in pandemic-related funding for climate change. and other special projects. That allowed each of the members of the corporation a way to pursue their goals. For Lindner, that meant not raising taxes and sticking to the German constitution’s restrictions on debt; for Scholz, protecting the welfare state and raising the minimum wage; and for Habeck, funding climate projects and expanding renewable energy.
However the honeymoon came to an abrupt end a few months later when Russia invaded Ukraine and the realization that under former chancellor Angela Merkel, Germany had become too dependent on Russia for strength. In the days after the January 2022 attack, the coalition was able to create a special debt-backed fund of 100 billion euros to increase defense spending and meet NATO’s 2% target first after decades. However as the war continued in the east, severe winter problems looming, and the urgent need to increase military spending, the first cracks in the alliance began to appear.
These were announced in the spring of 2023 when the first version of the planned heating revolution was presented in Bild, Germany’s largest magazine. This legislation, spearheaded by Habeck, was designed to encourage a shift away from fossil fuels and toward electric-powered heat pumps. However, as Bild claims, it was an attempt inspired by the Greens to force expensive renovations on homeowners. Once the proposal was announced, the FDP took every opportunity to dilute it.
The conflict between the FDP and the Greens marked the beginning of open coalition conflict as the party’s plans began to undermine government work. The FDP, which won 11.5% of the vote in 2021, was already falling short of the 5% threshold needed to ensure representation in the Bundestag, making it the weakest and most vulnerable member of Scholz’s coalition.
Things would only get worse from there. The breakthrough came last December, when Germany’s highest court in Karlsruhe ruled that 60 billion euros in a special financial fund set aside for pandemic costs cannot be returned. for climate projects, which resulted in the government suspending its debt ceiling. seek to save more money in all its sectors. The decision raised questions about many similar funds set up under Merkel, and caused yet another corporate crisis.
Money was the glue that held the deal together. Once that was over, things started to fall apart. By consolidating his political fortunes on insisting that Germany stick to the debt ceiling – a law established under Merkel to prevent a repeat of the bank bailouts that followed the global financial crisis – Lindner he made himself an obstacle to deal with Germany’s financial needs. By refusing to compromise on policies that would benefit wealthy FDP candidates, he became something of a surprise.
Since Scholz was reluctant to intervene, the signs of discord became more apparent. After weeks of negotiations last summer, the coalition finally settled on an unusual way to close the 2025 budget gap by converting grants into loans. Now, after the deal was allegedly confirmed, Lindner suddenly raised the question of whether the settlement was legal. That raised a surprising objection from Scholz, who was on vacation, and who did not forgive Lindner for this fraud.
For his part, Linder also accused Scholz and his cabinet of breaching his trust. At the beginning of the year, the men secretly made a handshake agreement to agree to find a solution to the dispute related to the pension law. Although Lindner thought the talks would stay between the two, he was dismayed when he saw a report about them later appear in Bild.
In late October, during the government’s trip to New Delhi, Scholz and Habeck both said they had left Lindner, who was then at an IMF meeting in Washington. Scholz openly criticized the Minister of Finance, not bothering to hide his frustration, and Habeck told reporters that Lindner is willing to leave the corporation and is looking for an honorable way out.
Finally, three weeks before the coalition collapsed, war broke out into the open. Scholz announced a meeting of industry representatives and clearly did not invite Lindner or Habeck. The finance minister responded by organizing his opposition meeting, and organizing it a few hours before Scholz.
Lindner made matters worse in early November by circulating a policy paper that questioned Scholz and Habeck’s significant efforts. Others saw it as a response to a paper Habeck had published a few weeks earlier, in which he called for billions in aid for German companies – knowing that the proposal was out of step with the situation. of the corporation. At this point, trust among the coalition members was gone, and the question seemed to be who would leave first.
As Scholz contemplated a future working relationship with Lindner during Wednesday’s meeting, according to a person familiar with his thinking, he was reminded of a lesson from his youth.
As a child, the prime minister was a keen swimmer and later became a lifeguard. In that job, he learned that sometimes the only way to save a drowning person is to pull them out.
Although Wednesday’s outcome may have seemed inevitable, the decision to fire Lindner was not set in stone. Scholz’s speech was preceded by a coalition meeting where members of the cabinet discussed how to close the hole of about 15 billion in the 2025 budget. Depending on the outcome, Scholz asked ‘ His chief spokesman to prepare three separate speeches: one if the politicians reached an agreement, one in the event of Lindner’s sudden resignation, and the third Scholz fired Lindner with himself.
During the meeting, Scholz demanded that Lindner agree to the suspension of another loan – a request that the finance director strongly rejected. A heated exchange followed, according to those present, which ended with Scholz saying, “Well, dear Christian, I no longer want you in my cabinet – and tomorrow In the morning I will ask the Federal President to fire you.”
After a long silence, Scholz added, “well, that went badly.”
–Courtesy of Chris Reiter.
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