The German election result and what it means for Australia

By Professor Gabriele Suder, Melbourne Business School, The University of Melbourne. Prof Suder is also a German and French trade and investment advisor. She led some of the University of Melbourne’s and other higher education providers’ engagement work to access the EU’s Horizon 2020 funds, introducing in particular the negotiations for ERASMUS+ partnerships, and provides higher education expertise and advice to the Australian government.

Dr Angela Merkel will lead Germany as its Chancellor for an historic fourth consecutive term.

This is confirmation of the majority of German voters’ deep belief in democratic values; and is an encouraging sign in an international context in which Brexit, Trump, North Korea and Russia are major destabilising factors. But Germany has not been entirely spared from some moves towards the far right.

Dr Merkel is seen as pragmatic, analytical, fact-oriented, a good listener and someone who will not use her power erratically. The election result shows that most Germans continue to value these qualities highly.

And yet dissatisfaction with the status quo has also been voiced.

Firstly, Dr Merkel’s centre-right CDU/CSU did not perform as well as they’d hoped – winning only about 33% of the vote.

Secondly, the centrist-left party, the SPD, led by the Chancellor’s main rival, Martin Schulz, fared worse than expected. Although Schulz and the SPD share many similar values to the CDU and Dr Merkel, Mr Schulz was perceived by many as a ‘Eurocrat’ (a former bureaucratic member of the European Union given his leadership roles in Brussels).

Thirdly, for the first time since the Second World War, a nationalist, anti-immigration party has won its way into the Bundestag. The AfD, Alternative for Germany, has emerged as the third biggest party. This confirms a worldwide trend that is particularly shocking within the German context, particularly for many Germans who did not vote and those who voted otherwise.

Nothing used to haunt Germans more than the possibility that their country would go down the path of populism and xenophobia and its horrific consequences ever again. But there appears now to be a shift away from these fears, which have been present in German politics for more than 65 years and resulted in a desire for stability instead of big change.

The AfD has been able to gain advantage from the challenges of Dr Merkel’s ‘open door’ refugee policy and opposition to German economic contributions to Greece (the initial cause for the AfD’s creation); as well as general fears relating to international uncertainty.

The 630 parliamentarians in the Bundestag will now get to work. One of their first tasks is that of coalition building. What is rather unusual for Australia and would be seen as a ‘hung’ parliament is very common in the contemporary political history of Germany.

This coalition may constitute some arrangement for another ‘Grand Coalition’ with the SPD, although Mr Schulz has declared his party will return to opposition. The most likely outcome looks to be a coalition between the CDU/CSU, the Greens, and possibly the free market FDP (Free Democratic Party).

What if the AfD became a coalition partner? This is highly unlikely since Dr Merkel has ruled out forming a coalition with them. But the AfD may, nevertheless, exert pressure on matters such as diversity and the immigration policy.

What the result means for Australia

Notwithstanding this concerning aspect of the results, markets will expect the German economy to continue to grow, and that free trade negotiations (FTAs) will persist. This is crucial to Australia’s FTA agenda, and its ambition to double its FTAs in the next decade.

Germany is the world’s fourth-largest economy by nominal GDP and the world's third-largest exporter and importer of goods. It is a leader in international politics: a founding member of European integration, a powerful member of the United Nations, NATO, the G7, the G20, and the OECD. Germany is one of Australia’s main trading partners. The EU Single Market is Australia's third largest merchandise trading partner, our second-largest source of imports and fourth-largest market for exports. And Germany also remains a source of innovation, for example in the area of climate change.

On an EU level, Australian involvement in the EU's $A120 billion Horizon 2020 innovation program is one example of engagement. More than 80 Australian researchers are participating in programs worth more than $A300 million.  In addition, a first EU-Australia Leadership Forum recently brought leaders from all sectors together.

The already well prepared FTA negotiations are expected to start within the next two months. They will focus on reducing remaining trade barriers (eg in cheese, beverages, biosecurity, geographical indications, plants) and duties regarding cars. The negotiations will also relate to non-tariff measures and red-tape (for example, issues relating to students and researchers in the EU and Australia; EU investor screening by Australia; and better access to government procurement). Research confirms that on average, an FTA approximately doubles two members' bilateral trade after 10 years. The rise of the AfD is not expected to slow the momentum down.

The past three years of relations between Australia and Germany have brought great value to both. A progress report by the influential “Australia – Germany Advisory Group”, lists an increase in areas such as trade and investment; science and education cooperation; the exchange on diversity, migration, integration and refugees; and enhanced cultural and sporting links, among others.

With the help of Dr Merkel’s ongoing solid leadership of Germany, and President Emmanuel Macron’s ambitious agenda in France, the EU has a chance to gain new momentum.  With the support of these two influential European leaders, the EU also has the opportunity to strengthen democracy and democratic institutions at home and abroad, with strong partners including Australia. Australia benefits from a strong Europe, in what is its 65th year of formal diplomatic relations with Germany and beyond.

Banner image: Australia's Prime Minister, Malcolm Turnbull, and Germany's Chancellor, Angela Merkel, in July 2017. Credit: Wikimedia/Olaf Kosinsky.

Tagged:

economy; politics; immigration; election; policy Economy; Politics; Immigration; Election; Policy de-cdu; de-sdp; de-csu; de-left; de-greens; de-alternative; de-freedom Christian Democratic Union (CDU); Social Democratic Party (SPD); Christian Social Union (CSU); The Left; Alliance ‘90/The Greens; Alternative for Germany; Free Democratic Party