Lesen Sie hier die deutsche Fassung dieses Gastbeitrags.
Joseph E. Stiglitz is a Nobel laureate in economics and former chief economist of the World Bank. Adam Tooze teaches at Columbia University and is the Director of the European Institute.
From the coalition negotiations in Berlin so far, two things are clear: The Traffic Light coalition – so named because of the colors associated with the parties involved – is the government Germany needs right now. The three parties – the center-left Social Democrats (red), the business-friendly Free Democrats (yellow) and the Green Party – balance reassurance and innovation. They can readily agree on a new language on language, on immigration, on rights. But, as many feared, the common denominator of the three parties is low. On climate, the message in the paper that emerged from the initial exploratory talks is alarmingly weak. The same goes for the promises on the digital backbone. The language on European policy is not promising either.
The risk is that, though the Traffic Light coalition seems doomed to succeed, it will be a weak government that struggles to meet the challenges of the moment. This means that who gets the top jobs matters. Strong ministers with good staff can make a big difference. The best demonstration of that is Olaf Scholz himself, who has served as German finance minister since 2017.
Under Scholz, who will end up in the Chancellery if the current coalition negotiations find success, the Finance Ministry went from being a brake block to being a driver of change. It delivered a substantial surge in public investment, beginning to make up for the deficits of recent decades. It opened the purse strings at the critical moment in 2020, enabling German society and the economy to get through the shock delivered by the coronavirus crisis. Scholz and his team should care about their legacy at the ministry. They made a huge difference. As the Greens must realize, there can be no serious climate policy without control of the Finance Ministry. It is the number 2 job in the government. As the number 2 party, the Greens should hold it. With Green party co-leader Robert Habeck as finance minister and his party ally Sven Giegold as parliamentary secretary of state in the Finance Ministry, they would have a plausible leadership team.
The Finance Ministry matters so much because unlike any other portfolio, it combines technical and political power, and domestic and international functions. Though Germany has a foreign minister, one should be under no illusions: The cabinet position other than the chancellor that matters most for Germany's day-to-day foreign relations is the Finance Ministry.
This dominance of finance in foreign relations is a matter of choice. If Germany chose to be a heavy hitter in defense, things would be different. But Germany has chosen to be an economic power first and foremost, and so the Finance Ministry is key.
It counts at three levels: in Europe, in the world at large and in trans-Atlantic relations with the U.S.
The construction of the eurozone is constitutionally incomplete. It lacks a fiscal policy to match monetary union. Democratic legitimation by way of the parliament is incomplete. And there does not seem to be the political will to complete it by means of full treaty change. This means that Europe's successful functioning is a matter of day-to-day management. Historic progress depends on tactful improvisation. Under Wolfgang Schäuble, who ran the Finance Ministry from 2009 to 2017, the Berlin Ministry became notorious as a driver of crisis in the eurozone. On Scholz's watch, the tension disappeared. In 2018, when populists made their breakthrough in Italy, Scholz maintained a reserved silence. It was by far the best thing he could have done. In 2019, when signs of momentum were urgently needed on unemployment insurance and banking union, the right noises came from Berlin. In 2020, the NextGen EU package – in large part the product of negotiations successfully led by the German Finance Ministry – was both an immediate solution to Europe's crisis and an open door to a common fiscal policy.
To be clear, Europe doesn’t need Germany to be a hegemon. Nor is this a matter of Germany making concessions as an act of altruism. Germany benefits hugely from its position in Europe. What Europe needs is a German finance minister who recognizes that countries with huge export surpluses need their partners to prosper. A finance minister, who recognizes that when it comes to financial sustainability, what matters is not just the debt in the top line, but the GDP in the bottom line. A finance minister who recognizes that respect is not just a matter for domestic voters, but must apply in European financial negotiations too. The greatest threat to European democracy is not Russian influence or any other influence from the outside, it is inappropriate and mis-timed fiscal discipline forced down the throats of a majority of Europe's voters by a minority coalition of "northern" states. It would be disastrous if Germany were to put itself at the head of that coalition, as the Free Democrats have promised to do. For the electoral chances of the nationalist populists in Italy, there would be nothing better than the prospect of a confrontation with the German Finance Ministry. That would be disastrous for Italy. It would be bad for Europe. And it would be bad for Germany.
Lesen Sie hier die deutsche Fassung dieses Gastbeitrags.
Joseph E. Stiglitz is a Nobel laureate in economics and former chief economist of the World Bank. Adam Tooze teaches at Columbia University and is the Director of the European Institute.
From the coalition negotiations in Berlin so far, two things are clear: The Traffic Light coalition – so named because of the colors associated with the parties involved – is the government Germany needs right now. The three parties – the center-left Social Democrats (red), the business-friendly Free Democrats (yellow) and the Green Party – balance reassurance and innovation. They can readily agree on a new language on language, on immigration, on rights. But, as many feared, the common denominator of the three parties is low. On climate, the message in the paper that emerged from the initial exploratory talks is alarmingly weak. The same goes for the promises on the digital backbone. The language on European policy is not promising either.
