Enough is Enough

Jeff Rathke

President of AGI

Jeffrey Rathke is the President of the American Institute for Contemporary German Studies at the Johns Hopkins University in Washington, DC.

Prior to joining AICGS, Jeff was a senior fellow and deputy director of the Europe Program at CSIS, where his work focused on transatlantic relations and U.S. security and defense policy. Jeff joined CSIS in 2015 from the State Department, after a 24-year career as a Foreign Service Officer, dedicated primarily to U.S. relations with Europe. He was director of the State Department Press Office from 2014 to 2015, briefing the State Department press corps and managing the Department's engagement with U.S. print and electronic media. Jeff led the political section of the U.S. Embassy in Kuala Lumpur from 2011 to 2014. Prior to that, he was deputy chief of staff to the NATO Secretary General in Brussels. He also served in Berlin as minister-counselor for political affairs (2006–2009), his second tour of duty in Germany. His Washington assignments have included deputy director of the Office of European Security and Political Affairs and duty officer in the White House Situation Room and State Department Operations Center.

Mr. Rathke was a Weinberg Fellow at Princeton University (2003–2004), winning the Master’s in Public Policy Prize. He also served at U.S. Embassies in Dublin, Moscow, and Riga, which he helped open after the collapse of the Soviet Union. Mr. Rathke has been awarded national honors by Estonia, Latvia, and Lithuania, as well as several State Department awards. He holds an M.P.P. degree from Princeton University and B.A. and B.S. degrees from Cornell University. He speaks German, Russian, and Latvian.

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jrathke@aicgs.org

Germany’s Coalition Breaks Up as It Prepares for a Second Trump Term

The re-election of former president Donald Trump sent a shockwave around the world, not least through European capitals. Less than 24 hours later, German Chancellor Olaf Scholz fired Finance Minister Christian Lindner, in a move that reflects an ongoing battle within Scholz’s fractious coalition but that also connects to the challenges Germany will face in a second Trump term. One after another, the leaders of the coalition parties gave public statements on Wednesday night, beginning to prepare for early elections and positioning their justifications in the larger context of Europe’s response to a Trump administration. This being Germany, the dissolution of the Bundestag will be planned in advance, with Scholz calling a confidence vote on January 15 and the earliest possible election date being late March 2025. In that scenario, the earliest a government might take office would be May 2025 after coalition negotiations. Whether significant German moves will be possible in the meantime to prepare Germany for relations with a second Trump administration is an urgent question, one that Scholz hinted at in the context of Ukraine and Germany’s defense spending.

The spark was a series of disagreements among Scholz, Green Vice Chancellor Robert Habeck, and Lindner about the 2025 budget and Germany’s economic policy. Each of them has launched new ideas, held high-profile events, and written detailed plans that are not mutually compatible and have given the clear impression of a coalition fighting among themselves rather than addressing Germany’s serious problems. The context is a stagnant economy with the worst performance among the G7 and a three-party coalition that has some of the lowest approval ratings ever recorded for a German government.

Trump’s election was therefore not the direct cause of Wednesday’s collapse, but it provided the framing in which Scholz described the urgency of the moment. According to Scholz, he proposed to Lindner on November 6 a series of measures to jump-start the economy, protect jobs (especially in the hard-hit auto sector), and spur investment. The chancellor also proposed an increase in German support for Ukraine, calling it an important signal, and indicated that Germany could invoke the emergency provisions of the constitutional debt brake to make it possible. This would be part of Germany “meeting its responsibility” in difficult times.

Lindner refused the proposal and suggested it would have violated his oath of office to agree to Scholz’s proposals—the FDP leader has been signaling for weeks that he would not accept any softening of the debt brake or invocation of the emergency exceptions to the borrowing limits. By bringing the matter to a head the day after the U.S. election, Scholz has positioned himself to hold the FDP politically responsible for difficulties in Germany meeting its obligations and responding to the anticipated demands of the Trump administration.

Germany has magnified the challenges it must deal with in the coming months—not only to adjust course in preparation for a Trump administration but to do so with a caretaker government in the midst of a high-stakes election campaign.

How Scholz will pass a budget for 2025 in these circumstances is unclear, but the chancellor expressed his intent to wrap up the legislative business by December 20. He indicated he will initiate discussions with opposition leader Friedrich Merz (CDU/CSU) about the possibility of cooperating in a statesmanlike way in the interim. Scholz mentioned specifically collaborating on measures to promote economic growth now and to strengthen Germany’s defense for years to come. This formulation suggests that Scholz might seek an opportunity with Merz to cut the Gordian knot on defense spending before the early elections. Germany’s special off-budget fund for defense, which was passed with a constitutional majority and allocated 100 billion euros through new borrowing in 2022, will be depleted by 2027. Germany’s defense and budget experts have been grappling with how to continue the significant defense investments after the special fund is empty, since it has been politically and budgetarily difficult to raise the regular defense appropriation.

An arrangement with Merz and the CDU/CSU would provide Scholz and the Greens with the necessary two-thirds majority (just narrowly) to pass another special defense fund. It would take some of the heat out of defense spending as a campaign issue in 2025 for all parties at a time when the left-nationalist Alliance Sahra Wagenknecht and the far-right Alternative for Germany are trying to play the “peace” card, already with some success in eastern Germany. Whether Friedrich Merz, the Union’s chancellor candidate for 2025 and the clear front-runner in the polls, will entertain this option in a time of turbulence for Scholz’s government is an open question.

In any case, Germany has magnified the challenges it must deal with in the coming months—not only to adjust course in preparation for a Trump administration but to do so with a caretaker government early in 2025 in the midst of a high-stakes election campaign. Germany, its European partners, and Washington will all be watching to see if Scholz’ gambit delivers.