Germany’s traffic light coalition gets stuck on red

Opinion: It all began with a selfie. Four beaming politicians captured their own optimism in the late German autumn of 2021. Annalena Baerbock and Robert Habeck of the Greens, Christian Lindner and Volker Wissing from the pro-business Free Democrats (FDP) projected unity and hope for Germany’s first three-party coalition since the 1950s.
The image went viral, with each politician posting it simultaneously with identical messages about building bridges across Germany’s political divides. German media celebrated this new style, contrasting it with the staid approach of Angela Merkel’s 16-year conservative chancellorship. It was the birth of the ‘Traffic Light Coalition’ of the Greens and the FDP with the Social Democrats under Olaf Scholz.
But what a difference three years make. Last Wednesday night, this experiment in three-party governance imploded spectacularly. Italy’s Corriere della Sera remarked that even Rome, with all its decades of governmental dramas, had never witnessed political theatre quite like this.
The timing could hardly have been more dramatic. On the same day, Donald Trump had won the US presidential election, threatening to upend the Western alliance. Now Germany, Europe’s largest democracy, was descending into chaos at the very moment it needed stability most.
Chancellor Olaf Scholz had prepared three speeches for the occasion – a detail his staff helpfully leaked to heighten the drama. At 9.22pm, he sacked his finance minister, Christian Lindner, the FDP leader, in front of the assembled press and live on TV, ending a coalition that had promised to modernise Europe’s largest economy.
But the coalition’s demise stems from Scholz’s own inability to lead. During the 2021 election campaign, he had promised that “whoever orders leadership from me will get it”. What followed instead was three years of drift and indecision.
His predecessor Angela Merkel may have been criticised for her cautious “step by step” approach, but at least she usually knew how to manage coalition partners. Scholz, by contrast, usually let his ministers fight publicly without intervention.
Meanwhile Germany’s challenges kept mounting. Its economic model, built on cheap Russian energy and exports to China, was crumbling. While other major economies have returned to growth, Germany’s GDP shrank by 0.3 percent last year. Its industry struggled with Europe’s highest energy costs, and its automotive sector lost ground in the transition to electric vehicles. The International Monetary Fund now projects Germany will be the worst-performing major economy in 2024.
Some may blame Russia’s invasion of Ukraine for the traffic light coalition’s failures. Yet the war actually gave Scholz his strongest moment in office. His Zeitenwende speech to parliament showed what leadership might have looked like. The term, literally meaning “turning of the times”, captured Germany’s pledge to rearm and take greater responsibility for European security.
But little followed from this historic declaration. The German military remains underfunded, its bureaucracy still impedes arms deliveries to Ukraine, and Germany’s promised €100 billion rearmament programme exists more on paper than in reality.
The Federal Constitutional Court offered another chance for renewal last autumn. Its landmark ruling against the government’s creative accounting practices exposed the coalition’s fiscal fantasy. Rather than confronting Germany’s fiscal challenges honestly, the government had relied on accounting tricks to circumvent strict constitutional debt limits.
The ruling forced a fundamental reckoning. Social Democratic spending ambitions clashed with Free Democratic fiscal conservatism. Green climate investment plans collided with both.
Ultimately, it was this fiscal dilemma that brought the coalition to an end. When Scholz demanded a declaration of a fiscal emergency to suspend Germany’s constitutional debt limits, Lindner refused, arguing it would violate his oath of office.
The coalition’s final hours then played out like a political thriller. As leaders met in the chancellery, coordinated media leaks built tension. Throughout Wednesday afternoon, politicians shuttled between offices, their faces growing grimmer with each passing hour.
By early evening, the atmosphere had turned toxic. Foreign Minister Baerbock’s unexpected intervention about Ukraine funding sparked more controversy. She revealed that promised military aid to Kyiv was now in doubt, sending shockwaves through European capitals. Shortly afterwards, Lindner proposed early elections. Scholz seized on this suggestion to dismiss him.
International reaction was swift. The Guardian warned of a “dangerous vacuum” in European leadership. Le Monde saw parallels with France’s political fragmentation. It worried that coming just after Trump’s victory and his threats to Nato, the timing heightened concerns about Western stability. Switzerland’s Neue Zürcher Zeitung called it a bizarre spectacle. It certainly was.
Yet even in defeat, Scholz once again demonstrated why he is so widely disliked in German politics. Rather than dissolving parliament immediately, which would be the cleanest solution, he plans to delay this until January, hoping a favourable result in his home state Hamburg’s election might improve his party’s position.
If Federal President Frank-Walter Steinmeier acquiesces, Germans will vote in March 2025 though opposition pressure for earlier elections may force Scholz’s hand.
The timing debate took a peculiarly German turn when Federal Election Commissioner Ruth Brand warned that early elections might face logistical challenges, including securing enough paper for ballots. That the world’s fourth-largest economy may struggle with paper supplies perfectly captured the state of the country’s governance.
A new government led by Friedrich Merz’s conservative Christian Democrats now seems likely, though forming a stable majority will prove difficult. The right-wing Alternative for Germany commands just under 20 percent in polls, and a new left-wing movement under former Left Party leader Sahra Wagenknecht further fragments the political landscape.
Incidentally, the coalition’s collapse brought one final, fitting twist. Transport Minister Volker Wissing – the very man who had held the camera for that famous group selfie – declared he would leave his FDP party but keep his ministerial post. The selfie-taker had become a symbol of his coalition’s disintegration, choosing his personal interests over party loyalty.
This experiment in three-party governance has thus come full circle. What began with a staged image of unity, ended with a piece of political theatre.
Between those two scenes lies the failure and disintegration of the Scholz government. Instead of leading a self-styled coalition of progress, he presided over an administration that never rose to the challenges posed by geopolitical instability, deglobalisation and domestic polarisation.
In the face of Trump’s election victory, Europe will need its largest economy to be an anchor of stability. Germany’s partners can only hope the next government in Berlin proves more capable than the one that just imploded in front of the cameras.
The New Zealand Initiative is a business-funded think-tank. Its members are listed on its website here