Germany Sees Shift Towards Populism


The election results are in and Germany has chosen Angela Merkel to lead the country for a fourth consecutive term.  While on the surface it may seem like a case of ‘same old, same old’ in Europe’s largest economy, but looking more closely at the results shows a significant shift in voting patterns.

 

The election outcome dealt a huge blow to the large parties of the centre-right and centre-left, which have been governing together as a coalition for the past four years.  Merkel’s Christian Democratic Union (CDU) and its Bavarian ally the Christian Social Union (CSU) lost 8.5% of their support since the last election, while the Social Democrats (SD) attracted 5.2% fewer votes than in 2013.  Voters instead shifted their support to the smaller parties, with an emphasis on the right-wing nationalists of the Alternative for Germany (AfD) and the Free Democratic Party (FDP).

 

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The CDU/CSU coalition lost more than 1 million voters to the AfD, and even more than that to the FDP, but of the voters that abandoned the two major parties, the AfD was the big winner, bringing a far-right party into the Bundestag for the first time since World War II. Also interesting is the fact that, for the first time since the 1950’s Germany will have seven different political parties represented in the Bundestag, which will point to far longer debates before any new laws can be passed.

 

The AfD is a self-proclaimed right-wing populist, Euro-skeptic political party (see information box below for more detail on the party), whose top candidate, Alexander Gauland, has called for Germany to ‘reclaim its past’ and take pride in the military achievements of the Nazis.  Not surprisingly, France’s Marie Le Pen called Gauland to congratulate him on the party’s success.

 

The election results re-ignite the discussions of the movement towards populism and geo-centricity that we’ve seen in other countries such as the US and Australia.  Even within the AfD itself, there is a leaning towards an even stronger right-wing stance, evidenced by the resignation of the party’s co-leader and face of the party, Frauke Petry this morning.  She was on the moderate wing of the party but the far right voices have gained significant strength and the now party’s stated goal is to ‘act as a strong opposition in the Bundestag to the politics of Angela Merkel’. 

 

With a Euro-skeptic party with a growing support base now sitting in government, the challenges that Merkel and her now likely three-party coalition (vs a two-party coalition in 2013) will face in enacting legislation, will become even more difficult.  Merkel has long been seen as the most influential leader of the Eurozone countries, but she has been on the wires this morning stating that any further discussion on greater European integration will have to be put on hold, and future discussions will be influenced by the coalition partners she will be attempting to secure in the coming weeks. We expect that this will weigh on EUR as time goes on, and bring even more questions about the long-term viability of the Euro. The EURUSD is down 1.1% since the Friday as the election results became clear.

 

Who is the AfD and what do they want?

The youngest party in parliament, Alternative for Germany started in 2013 as an anti-euro movement and  on 4.7 percent in that year’s national election, just short of the 5 percent margin needed to win Bundestag  seats. After infighting over the party’s direction, Chancellor Angela Merkel’s handling of the refugee crisis  in 2015 saved the party from disintegration and gave it a new lease on life, according to Alexander Gauland, who co-led the AfD’s campaign. Sunday’s national result wasn’t a complete surprise: the AfD has won seats in 13 of Germany’s 16 state legislatures, including a 24.3 percent share of the vote in the eastern region of Saxony Anhalt last year.

The party’s platform calls for immediate closing of Germany’s borders to stop “unregulated mass  immigration,” including many “illiterates” who can’t be integrated into society. It wants Germany’s  liberal political-asylum rules reframed to serve the national interest, a referendum on leaving the euro and returning to the deutsche mark, and economic sanctions on Russia lifted. The EU should be organized more as a club of sovereign nation states and German culture must be protected against “Islamization,” according to the AfD.

 

Author: John Glover



 

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