'Lack of leadership in the EU': 'Severe' situation for French-German economic 'engine'

1 year ago

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00:00Moving on, German Chancellor Olaf Scholz is expected to lose a historic no-confidence vote

00:05this Monday, paving the way, therefore, for the country to hold early elections next February.

00:11Scholz's three-party coalition collapsed last month when the Chancellor fired his Finance

00:16Minister, prompting the neoliberal Free Democrats to quit. It came after months of infighting over

00:23fiscal priorities and ideological differences that caused deep divisions within the country's

00:29first three-way federal coalition. Joining me now from Berlin is Markus Zehner,

00:34a fellow from the German Marshall Fund. Markus, thank you for your time.

00:38Germany, like France, is undergoing unprecedented political instability,

00:43so just take us through what led to today's vote.

00:48Yeah, as you already mentioned, the three-way coalition of liberals,

00:52Social Democrats and Greens faltered a couple of weeks ago because of differences they couldn't

00:59really solve. The neoliberal liberals, actually, they are more business-friendly,

01:06and while the other two parties wanted to give more money to the social sector,

01:12however, I think the main difference was the pace of the transition of Germany

01:19to a fossil-free kind of economy. I think this was the major issue because, as you probably know,

01:27Germany is experiencing a recession, the economy is not doing well, and so are the

01:34tax revenues for the state. So the government doesn't really have money to spend, and so

01:41Germany has to tighten the belt, and the big differences were really about where to tighten

01:45the belt, what to cut back, and how to spend the money that's available.

01:49And most are expecting Olaf Scholz to fail this no-confidence vote. So, Markus,

01:56what actually happens next? Well, as we speak, there is the vote going on in the German Parliament,

02:02and Olaf Scholz, the Chancellor, will lose this vote in order to go to the President and to ask

02:10President Steinmeier to call for elections. The elections will take place on February 23rd,

02:18that's what the parties have agreed on, and then we probably will be seeing a new Chancellor,

02:23because if polls are not completely wrong, the CDU with its chairman and candidate Friedrich Merz

02:31is way ahead of all the other parties, and it looks like it's going to be Friedrich Merz as

02:36the Chancellor forming a coalition together with the Social Democrats or the Greens or the Liberals.

02:42Now, you mentioned there that Germany is facing its deepest economic crisis

02:46in what I understand in a generation. So what's driving this economic instability?

02:53If you look at Volkswagen, the biggest European carmaker, and if you look at the troubles the

02:59company is going through, I think in a nutshell you can see what went wrong. Volkswagen misjudged

03:06the situation on the Chinese market. They have strong competitors there, and they lost a good

03:13deal of their market share in China. And so, for Volkswagen, a couple of things came together.

03:21A misjudgment actually of the market development, at the same time a change of attitude of people

03:27when it comes to electromobility or combustion engines, and a lot of bureaucracy in Germany,

03:36and in general a situation where an aging society is not providing the people that's necessary to

03:43keep the economy running, at least running at the pace we used to. So a couple of things happened

03:48to Volkswagen. I think that's also true for the economy at large, and this is what Germany is

03:54going through. A huge financial and economic crisis, while many demands are on the table,

04:02whether it's supporting Ukraine, whether it's investing more money into the German infrastructure,

04:08doing more for defence. So there's many needs, but very limited resources.

04:14Now, here in France, we're also dealing with political and economic chaos. So what does it

04:18mean for the EU to have two of its leading member states confronting such extraordinary turmoil?

04:27Yeah, there's a lack of leadership in the European Union, definitely, as we have seen.

04:33And I mean, there's this ongoing crisis in France, and the French-German engine was always

04:40of the essence when it was about keeping the European Union running and keeping the

04:46European economy running. So I think it's a very severe situation. In particular,

04:50when you look at what's happening in the United States with the advent of Donald Trump again as

04:56the president, who probably is going to table further demands and wants to have a Europe

05:03speaking with one voice, and which is needed, actually, to counter Donald Trump. I think that

05:09comes at a terrible time. On the other hand, one could argue and say, well, it's better that there

05:14was an ending to this old coalition in Germany, and to have the opportunity to form a new

05:20government, which probably then only will consist of two parties, and which will then

05:27have an easier task of governing. Marc-Christina,

05:29we're going to have to leave it there. Thank you so much.

'Lack of leadership in the EU': 'Severe' situation for French-German economic 'engine'

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