Grand Coalition governing agreement reached in Germany

German Chancellor Angela "Frau Fritz" Merkel and her CSU/CDU party have negotiated a coalition deal with the Social Democratic Party (SPD), chaired by Sigmar Gabriel. (Deal reached on new government for Germany under Merkel BBC News 11/27/213) A CDU/CSU/SPD coalition is known as a Grand Coalition. This would be the second Grand Coalition with the SPD that Frau Fritz has headed. The SPD base still has to approve of it in a referendum.

Klaus Stuttmann in this 26.11.2013 cartoon catches the political essence of the deal very well:

That's Angie, of course, as the crocodile and SPD Chairman Sigmar Gabriel celebrating being dinner.

The official coalition agreement just concluded, Deutschlands Zukunft gestalten, deals with EU issues in Chapter 6, 12 out of 185 pages. Basically, the SPD agreed to support Angie's catastrophic austerity policies for the eurozone and the EU, which they backed in Parliament anyway when they were a nominally opposition party.

"Das europäische Einigungswerk bleibt die wichtigste Aufgabe Deutschlands," it says. ("The work of European unity remains Germany's most important task.") I guess we can give them credit for a dark sense of humor, since the austerity policies are wrecking the prospects for the continued existence of the euro and the EU.

This is the key element of the Grand Coalition's eurozone policy (p. 157):

Damit Europa dauerhaft einen Weg aus der Krise findet, ist ein umfassender politischer Ansatz erforderlich, der Strukturreformen für mehr Wettbewerbsfähigkeit und eine strikte, nachhaltige Haushaltskonsolidierung mit Zukunftsinvestitionen in Wachstum und Beschäftigung in sozial ausgewogener Weise verbindet.

[So that Europe can find an enduring way out of the crisis, a comprehensive political approach is necessary, one that binds structural reforms for more competitiveness and a strict, enduring consolidation of budget with future-oriented investments in growth and employment in a socially equitable manner.]

Short version: austerity and more austerity, austerity in good times, austerity in bad times.

Meanwhile, Portugal is imposing new austerity measures. Spain's economy continues to stall. The EU is pressing for new austerity measures in Greece, where the OECD is predicting debt-to-GDP ratios of 160% or more until 2020, far beyond what is considered sustainable, and even farther beyond the 60% EU Fiscal (Suicide) Pact requires. The Very Serious People have declared Ireland a success story for austerity (again!) based on pretty much nothing but the declaration itself.

This will not end well.

There may be some hope in the fact that the SPD has agreed to a referendum among the SPD base before the final approval on the coalition pact. (Mitgliederbefragung: SPD-Basis muckt gegen Große Koalition auf Spiegel Online 24.11.2013) The party leaders will of course bring tremendous pressure for a "yes" vote. But rejection is a possibility.

Tags: angela merkel, austerity economics, eu, euro, european union, greece, ireland, portugal, spain