Here's Germany's new coalition agreement

This is what lies in store from German politics over the next four years.

It’s here folks! 177 pages of tantalizing government pledges you’ve no doubt been waiting for weeks on tenterhooks for.

I received a ping on my phone early this morning informing me that the Ampel (traffic light) parties were making a big announcement at 3pm this afternoon. That was as good as a double espresso.

So, here it is. The new Germany, Olaf Scholz’ brave new world - one that’s a little bit green, a little bit liberal, and a little bit social.

The Koalitionsvertrag, which outlines the government programme for the next four years, was given the name “Risk more progress.”

Digitalization

The Vertrag leads in on the digital revolution and the first big pledge is an old favourite of German coalition agreements: “Our goal is nationwide broadband coverage and the latest in mobile communications standards.”

Is the mobile Funkloch known as Brandenburg about to disappear? We shall see.

Energy sector

The Greens have left their footprint on the section on energy. The agreement sets a target of 80 percent of electricity being produced with renewables by 2030.

There will be no shock return for nuclear energy and coal plants will be closed “ideally” by 2030. At the same time the parties commit to an “openness to technologies” in order to achieve carbon neutrality by 2045.

Renewable energy will no longer be subsidized via our electricity bills. From January 2023 onwards the EEG surcharge, which has made German electricity the most expensive in Europe, will be abolished.

Wages & welfare

The minimum wage is going up to €12 an hour.

What they Ampel say:

"We want to enable everyone to have as secure an employment history as possible and maintain employability through qualification and good work. Every job deserves respect and recognition."

They are also going to abolish the controversial Hartz IV welfare payments which were introduced by the last Social Democrat government two decades ago. A new Bürgergeld (citizen’s money) will replace it.

What the Ampel say:

“The Bürgergeld should respect the dignity of individuals, enable them to participate in society and be accessible in a digital and uncomplicated way.”

How much the Bürgergeld is just a repackaging of the old system with a nice new name remains to be seen. I got a bit bamboozled by all the jargon in the agreement, but found no mention of an actual increase in the size of payments.

Pensions

Pension contributions are to stay stable for the next four years, the parties promise. At the same time, the pension level won’t be cut, nor will the retirement age go up.

Read my recent piece on Germany’s pension black hole for more background on this very expensive problem.

The Ampel say they want to make their pledges “generationally fair” by creating a new pension fund that will invest around the globe. This has the fingerprints of the FDP, who reckon that the best way to solve the pension conundrum is to let bureaucrats start dabbling in stock and shares. They are starting with a pot of €10 billion that will be invested next year.

Living and renting

Good news on rent prices: the coalition wants to maintain the ‘rental brake’, which controls rents according to average prices in the neighbourhood, until the end of the decade. It will be tightened in areas where rents have been going up quickest.

They also say it’s their goal to see 400,000 new apartments built every year. 100,000 of those will be built with public money.

Defence

This was the commitment which caught my eye - it certainly won’t go down well among Green party members: the new government wants to arm the Bundeswehr with weaponized drones.

The SPD have previously been against giving the German army this capability, so it's a surprise that it made it into the plan of a centre-left coalition.

The Ampel’s justification: “Armed drones can contribute to the protection of soldiers on foreign missions.” The drones will be used according to “binding and transparent conditions while taking into account ethical and security policy concerns.”

Migration

Another commitment that may raise some eyebrows. The parties want to start a “deportation offensive” for illegal immigrants. They have committed to “reducing irregular migration while increasing legal migration.”

Given the recent change in the mood among social democratic parties in Scandinavia on this issue, Germany’s SPD is perhaps taking a leaf out of the election-winning playbook of peers in Denmark and Sweden.

The plan for a points-based migration system, which made it into the pre-talks paper, has disappeared.

Other curiosities

Cannabis is going to be legalized, with licenced premises being given permission to sell the drug.

The parties want to lower the voting age to 16, but will need to change the constitution to achieve this (they’ll need a two-thirds Bundestag majority).

A new law will allow people to decide on their own sex/gender - all they will need to do to change it is to fill out a form at their local Standesamt.

Initial reaction

Stefan Aust, publisher of the conservative Die Welt newspaper, gave the agreement his thumbs up:

“Olaf Scholz (SPD), Christian Lindner (FDP) and Robert Habeck (greens) made a good impression [at the press conference] and were able to explain in a very clear way what they had agreed upon and how the leitmotif ‘risk more progress’ fits in with this,” he said.

The Frankfurter Allgemeine Zeitung, likewise conservative, is suspicious of various aspects of the agreement, believing that it hides all kinds of new debts and subsidies:

“Anyone who wants to pursue such a pension plan without accounting for demographics will have to reckon with a significant increase in the federal subsidy. Financial realities lie in wait for the Ampel parties.”

The liberal Süddeutsche Zeitung was gushing in its appraisal under the headline “a first big step.” Here’s an outtake:

“More equality, more diversity, but diversity as an asset and not as a threat - what the three parties from the Ampel have set out breaks with many things that the Christian Democrats have been unwilling to do for many years.”