How Olaf Scholz and the SPD could lead Germany’s next government – New Statesman

When Olaf Scholz became the chancellor candidate of the Social Democratic Party of Germany (SPD)in August 2020, his bid to succeed Angela Merkel at the rudder of Europes largest economy looked like the dictionary definition of a lost cause. So robotic and uncharismatic was his public persona that he had long been known as the "Scholz-o-mat". Nine months earlier he had not even managed to win the SPD leadership, losing to a rival candidacy fromits left wing. His selection as would-be chancellor looked to many like the desperate choice of a party with no alternatives.

After all, the SPD itself arguably Europes most storied and venerable political force, the party of August Bebel, Friedrich Ebert, Willy Brandt and Gerhard Schrder had slumped to third place and around 14 per cent in the polls. Long years as junior partner to the soothingly, almost apolitically moderate Merkel, under whom Scholz has served since 2018 as vice chancellor and finance minister in a grand coalition, had stripped the SPD of definition and confidence. The party epitomised the crisis of European social democracy.

But skip forward a year, to a rainy afternoon in late August 2021. Scholz is giving a speech on the Bebelplatz, an elegantly restored square in central Berlin named after the man who co-founded the SPD in 1869. In white shirt and suit trousers, behind a banner proclaiming Scholz gets stuck in, the SPD chancellor candidate is uncharacteristically pumped up: Its moving that so many citizens trust me to be the next chancellor of the federal republic, he says to cheers, applause and wavingSPD flags. He calls for more respect in society, and for a 12 minimum wage. Kevin Khnert, the young star of the SPD left, is not onlypresent to support Scholz but is acting as master of ceremonies. The tableau speaks of that rare thing in contemporary European politics: a social democratic party with wind in its sails.

Germany's federal election campaign heats up

New Statesman analysis of the latest polls

Angela Merkel is not runninginthe federal election on 26 September. And as polling day nears, the SPD suddenly has the momentum. In the New Statesmans poll tracker it overtook the Greens on 18 August and passed Merkels Christian Democratic Union (CDU) and their Christian Social Union (CSU) allies to take first place on 30 August. The latest poll by the agency Insa puts the SPD lead at five points, the largest since July 2001. Scholzs own popularity has soared: one poll shows 49 per cent of Germans want him as chancellor, compared with 17 per cent for the CDU/CSUs struggling Armin Laschet and 16 per cent for the Greens Annalena Baerbock. He was easily the winner in snap polling after the first TV debate of the election on 29 August, with even the conservative Bild tabloid deeming it a clear victory for the 63-year-old Social Democrat.

49% of Germans want the SPD's Olaf Scholz as next chancellor

PolitBarometer ZDF poll

It is looking increasingly possible that Scholz will end up as chancellor at the helm of his preferred centre-left coalition: a three-party traffic light formation (so-called as the colours would be red-green-yellow) of the SPD, the Greens and the conservative-liberal Free Democrats (FDP). Such a result would be historic. The CDU/CSU has led the federal republic for the past 16 years and in total for 52 of the 72years since its foundation in 1949. It would bring together an improbable mix of political outlooks and styles in Germanys first three-party federal government. It would make Europes social democrats the continents preeminent political family for the first time in decades, tilt the political balance in the EU and perhaps inspire parties elsewhere.

Luck will have played a major role. Both Laschet and Baerbock have made avoidable mistakes that have greatly benefited the SPD. But such an outcome would also be a product of Scholzs strengths ones honed over a long political journey, from the hard left of politics to a heterodox position closeto its centre and a particular set of theories he has developed about the SPD, social democracy and Germanys future. To understand that journey is to understand the man who now has a better chance of becoming the next German chancellorthan anyone, even a matter of weeks ago, thought possible.

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Bornin 1958, Scholz grew up Grosslohe, a north-eastern suburb of Hamburg studded with post-war housing blocks, and joined the SPD at 17. He spent the 1980s immersed in left-wing politics: serving as deputy leader of the Jusos (Young Socialists, the SPDs youth organisation) and vice president of the International Union of Socialist Youth; joining the Stamokap grouping that argued that world capitalism was in a final pre-revolutionary phase; and writing for the SPW (Magazine for Socialist Politics and Economics), a tribune of the SPD left. His articles live on as artefacts of Scholz as the angry young man, calling for triumph over capitalist economics, railing against the aggressive-imperalist Nato and decrying West Germany as the European stronghold of high finance.

Then came the 1990s and what Scholz today refers to as his political detox. He built his career as a labour lawyer, representing tradeunions, cooperatives and worker councils including workers in the post-communist east in cases against the Treuhand agency tasked with winding up old East German state industries. And he pulled back into local politics in Hamburg.

[See also:German election TV debate win adds to Olaf Scholzs momentum in the race to succeed Angela Merkel]

Germanys wealthy second city sits on the Elbe River, close to its North Sea estuary its economy is dominated by its harbour, and services industries like media and finance. Historically part of the Hanseatic League, its citizens still pride themselves on Hanseatic values of reason, restraint and reliability; the saying goes that a Hamburg handshake is as good as a signed contract. Cooperative relations between the Kaufmannschaft (merchant class) and the Arbeiterschaft (working class) mark the local SPD, the citys preeminent political force. It was long personified by Helmut Schmidt, the former SPD federal chancellor who in his later yearsbecame a mentor to Scholz, and whose most memorable maxim was: those who have visions should go to the optician.

His practical experiences as a lawyer and his spell in local politics in Hamburg tempered Scholzs politics. He joined the Bundestag as an MP for Hamburg in the 1998 election that put the SPD leader Gerhard Schrder into the chancellery at the head of a coalition with the Greens. In the same year, Scholz married his wife Britta Ernst, a fellow SPD politician and today a minister in the state government of Brandenburg.

Unlike certain others of his generation Scholz made his name in Berlin not by aligning himself with a particular SPD tribe but by moving between them;rather like Angela Merkel in herrise throughthe CDU. He was not heavily involved in any of the three main factions in the party, says Michael Miebach, chair of the centre-left think tank Das Progressive Zentrum: Scholz was seen in recent years as a centrist within the party. This flexibility helped position Scholz to become SPD general secretary in 2002, in which role he doggedly defended Schrders liberalising labour reforms while also cultivating relations with the party left and advocating a minimum wage (then not yet mainstream even within the party).

Gerhard Schroeder and Olaf Scholz in 2005 in Hamburg, Germany. (Image credit: Andreas Rentz/Getty Images)

The reforms helped lose Schrder the 2005 election, ushering Merkel to power at the head of a grand coalition with the SPD, in which Scholz served first as the partys chief whip and then as labour minister. But when the SPD crashed out of government entirely at the 2009 election he returned to Hamburg.

The partys struggles in the city whose politics it once dominated reflected the gloomy national picture. It had been out of power in Hamburg for nine years and looked set to lose the 2011 election, too. Thus began the defining experience of Scholzs career. He took charge of the local party and led an energetic bid for the votes of moderate CDU voters pledging to make a popular shipyard boss economy minister, running ads encouraging non-SPD voters to back him and delivered a landslide so big that the party was able to govern alone. The Hamburg SPD and its target voters have always been on the conservative, pragmatic end of the social-democratic spectrum, recalls Hamburg-based analyst Martin Fuchs: Scholz looked like a convincing representative of this tradition.

Scholz inherited an array of problems. For all its wealth, Hamburgs public finances had long been in unhanseatically poor shape. Its schools languished at the bottom of the German league table. Housing was becoming ever less affordable. A vast new quayside concert hall, the ship-like Elbphilharmonie, was several years overdue and many times over budget. Scholz rolled up his sleeves. It was impressive to watch, says Axel Schrder, Hamburg reporter for Deutschlandfunk. Ill never forget how amazed I was when, in an informal discussion with journalists, he revealed how he had managed to completely rework the Elbphilharmonie contracts.

[See also:How the SPD is narrowing the gap in the German election campaign]

Scholz balanced the citys budget. He pushed for the dredging of the Elbe to improve the harbours competitiveness, a classic case of Kaufmannschaft-Arbeiterschaft common ground. Scholz isnt in the wrong party, though, cautions Schrder: he is clearly a social democrat. He cites initiatives to help school leavers without qualifications find work, the introduction of free childcare from birth to school age, and a series of deals with developers, housing associations and district authorities to accelerate house-building, another classic example of Scholz as a political craftsman. On law and order, too, Scholzs policies were broadly third-way (Im liberal, but not stupid, as he once put it). The reward was resounding re-election in 2015.

It says something of Scholzs popularity that he was able to weather the debacle of the G20 Hamburg Summit in 2017, which saw clashes between police and anti-capitalist protestors so violent that even residents of the citys alternative St Pauli and Sternschanze quarters were left shaken. He made a public promise that the [summit] would cause little more disruption than the annual harbour-side fair, recalls Schrder. That these promises defied intelligence warnings was, he adds, indicative of Scholzs tendency to overestimate himself. Today the G20 disorder is not the only blemish on Scholz's reputation for competence: he has also faced questions (though no suggestions of wrongdoing) over his contacts as mayor with Warburg, a Hamburg bank subsequently caught up in a tax fraud scandal, and about his responsibility as finance minister for regulatory failures in the collapse of Wirecard, a payments technology company.

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Scholz took over the finance ministry and the vice-chancellery in 2018. Merkels attempt after the 2017 election to form a Jamaica coalition with the Greens and the FDP (so-called as three colours match the countrys flag) had collapsed when the FDP flounced out of talks. After fraught negotiations and resistance from the SPDs left, the SPD joylessly trudged back into yet another grand coalition. Despite some notable achievements in the 2013-17 government, including the introduction of a national minimum wage, the party had fallen to 20.5 per cent, its lowest result in post-war history, and had been pushed back to old strongholds such as Hamburg and the industrial Ruhr valley.

Those gloomy circumstances, say Scholz confidants, plunged him into a period of reflection on the centre-left in Germany and internationally. He studied the woes of the British Labour Party and the US Democrats, and read widely. Didier EribonsReturning to Reims(2009) and JDVances Hillbilly Elegy (2016), both accounts of fractured societies of winners and losers, urban hotspots and provincial backwaters, particularly affected him. So too did the works of the Harvard philosopher Michael Sandel on justice and meritocracy, the Serbian-American economist Branko Milanovi on inequality and the Turkish economist Dani Rodrik on globalisation. That reflection, following his experiences in Hamburg, forged in him a unified approach to politics Scholzism, if you will that deserves at least a share of the credit for the SPDs current revival.

Roughly sketched, Scholzism has three pillars. Pillar one is to restore social democracy as a bridge between middle-class progressives, the old working class and the emergent precariat. That means combining a third-way affinity for what works with a theory of social justice that goes beyond social mobility. Social democracy was never an elitist project telling everyone they need to do an Abitur [academic school leaving certificate] and go to university, explains Miebach. Its revival depends on it being once morethe guarantor of the chance to live a decent life, the respect and dignity that a good job provides, as Scholz put it in his 2017 book Hoffnungsland [Land of Hope]. Respect here is the keyword, and it permeates the current SPD campaign, its rhetoric and its literature (out of respect for your future, a society of respect, respect for you).

Pilar two comprises what might be called wedge policies. The SPD has long been a byword for fractiousness it has gone through eight changes of leader since 2004 but Scholz has presided over an inter-factional truce. When in 2019 he and his moderate running mate lost the partys leadership election to the left-wingers Norbert Walter-Borjans and Saskia Esken (both backed by the influential Khnert), he moved immediately to find common ground. That helped lay the foundations for his selection as chancellor candidate the following year and for the partys key electoral pledges: the minimum wage hike, stable pensions, the construction of 400,000 homes a year. Such policies help unify the SPD and put the CDU/CSU on the wrong side of important voter groups (another example was Scholzs abolition of the solidarity surcharge, a tax to pay the costs of reunification, for all but the top 10 per cent of earners).

An election billboard showing Olaf Scholz promoting the party's 12/hour minimum wage policyon 23 August 2021 in Berlin. (Image credit: Maja Hitij/Getty Images)

Pillar three is a belief in a strong, activist executive. If you ask for leadership, youll get it, Scholz warned the Hamburg SPD in 2009, and as mayor from 2011 he drove policies from his desk in City Hall: for example, personally hosting naturalisation ceremonies as part of a migrant integration push. He has taken that get-on-with-it style into the federal government: He prefers something urgent done 8/10 immediately than 10/10 in two years, observes Wolfgang Schmidt, state secretary at the finance ministry and Scholzs closest ally. In his three years running Berlins most powerful ministry Scholz has pushed through Germanys generous Covid-19 stimulus package, German support for the EUs historic 750bn debt-backed Next Generation EU fund and most recently the international agreement on a minimum corporate tax rate of 15 per cent. Hes an experienced negotiator; Hes a fan of the John Rawls theory of justice, where you have to see conflicts from the others point of view, explains Schmidt.

To be sure, there are points where Scholzs own adherence to Scholzism is debatable. A reinvigorated German social democracy would benefit from the abolition of the onerous debt brake, which restricts public investment but to which Scholz, the hard-nosed Hanseat and political realist, remains committed. A strategy putting the SPD on the right side of important debates should surely involve more climate ambition, yet the partys policies envisage coal power stations belching emissions until as late as 2038. Cases like the G20 riots dent Scholzs claim to be the embodiment of competent leadership.

And it would not do to overstate his achievements. Scholz has been extremely lucky in his timing and opponents. Merkels departure was always going to create a huge gap in German politics. A strong CDU/CSU candidate might have filled it, but Laschet is weak and gaffe-prone; on 17 July, he was filmed laughing while Germanys president gave a sombre speech about the lethal floods in western Germany. Next up might have been Baerbock and the Greens, who soared in the spring but have struggled under pressure. That leaves the SPD. Its recent rise arguably owes most to the mistakes Scholz has has not made. It also deserves some historical perspective: 23 or 24 per cent in the polls may look good today but would have seemed disastrous in the heydays of Brandt, Schmidt or Schrder.

[See also:Germanys CDU/CSU alliance is on course for its worst election result in postwar history]

Yet Scholz and Scholzism do deserve credit. He did not force the errors made by others, but did position himself and his party to benefit when they occurred. The SPD went into the campaign impressively united, with unexpectedly good relations between Scholzs team and the party leadership under Walter-Borjans and Esken; indeed, a common reflection in SPD circles these days is that the ideological differences at the top of the party, by being well-managed, have actually strengthened it by giving the whole party a sense of ownership of the campaign and its messages.

Scholz himself has turned out to be his partys greatest asset. The surest proof of that is his emergence as a sort of continuity Merkel. Germanys outgoing chancellor remains the countrys most popular politician; her calm solidity fundamentally appeals to a relatively comfortable country that has long prized stability. That style comes naturally to Scholz, the dry, mild-mannered, restrained Hamburger. But he has also deliberately cultivated it in recent years. After interviewing him for the Economist in 2018 I wrote: Mr Scholz seems to be styling himself as a reassuring father of the nation, a Vati (dad) to the chancellors Mutti (mum).

In recent weeks the effort has become more explicit, Scholz performing Merkels trademark steepled-fingers pose, and running ads with strapline: Hes got what it takes to be Madame Chancellor. In the TV debate on 29 August he performed the impression to a fault. Where Laschet and Baerbock sniped and sparred, he plodded, talkingin genial generalities and posingas the experienced, familiar, reasonable middle ground between them. Short of donning one of Merkel'sboxy, colourful jackets, it is hard to imagine what more he could have done to encourage the parallel.

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Three full weeks still separate Scholz from polling day, let alone Merkels office in the sprawling glass-and-steel chancellery by the River Spree. It came out of the blue, it can go back to the blue, ruminates Miebach of the SPD surge. Two more TV debates await, on 12 and 19 September. Scholzs strong personal polling has plateaued. Events (the floods, Afghanistan) have already sent this election campaign in unexpected directions and could do so again. And the CDU/CSU is launching a fightback, including a deluge of retail policies and scaremongering about the chance of Scholz bringing the socialist Left party into a coalition.

Olaf Scholz, Annalena Baerbock and Armin Laschet attend an election TV debate in Berlin on 29 August 2021. (Image credit: Michael Kappeler/Pool/AFP via Getty Images)

Though an SPD-led coalition with the Greens and the Left party is the SPD lefts preferred option, its chances are low. The Left is divided andpolling poorly, and its foreign policy instincts concern the mainstream. What of the alternatives? Neither the CDU/CSU nor the SPD fancy another spell in government together, and on current polling they would need to add either the Greens or the FDP to wield a majority. Such an outcome is not unthinkable, but more likely at this stage is either a Jamaica coalition led by Laschet (CDU/CSU with Greens and FDP) or a traffic light one led by Scholz (SPD with Greens and FDP). That could make the Greens and FDP the kingmakers; and while the former leans towards the SPD the latter is closer to the CDU/CSU.

Germany's current coalition would lose its majority if an election were held today

New Statesman analysis of the latest polls and projected seat shares

So Scholzs ability to win over the conservative-liberal FDP, among whose voters he is more personally popular than Laschet, could be the decisive factor. His messages hint at examples of social-liberal cooperation in state politics (most notably in Rhineland-Palatinate, where a popular SPD minister-president leads a traffic-light coalition) and in the federal government (his prominent references to Helmut Schmidt evoke not just Scholzs Hamburg roots but also Schmdt'sSPD-FDP coalitions from 1974 to 1982). Still, it will be hard to forge an agreement that wins over the FDPs yuppie-ish leader Christian Lindner, who wants the finance ministry, while satisfying the SPD left. Under Khnerts leadership the Jusos (Young Socialists) have become a strong veto player and are uncompromising on government participation, notes one insider. Areas of common ground for any traffic-light government would likely include green industry, planning reform, modernising the state and digital infrastructure.

[See also:Annalena Baerbock: the woman who could become Germanys first Green chancellor]

It would be a mistake to expect sudden transformative change from such a government, not least as German politics runs on compromise and consensus. The best guide to how Scholz would act as chancellor is his time in Hamburg: recognisably social democratic but pragmatic, big-tent and loyal to German traditions of fiscal conservatism. He would be decisive at points but Merkelishly ponderous (some suggest, excessively so) at others. Internationally he would represent continuity in relationships with the US and UK while edging German foreign policy closer to France. Scholz has known Macron since before he was French president, likes his notions of European sovereignty and, by backing the Next Generation EU rescue package, has nudged Germany towards French visions for the eurozone.

Yet even assuming all this, a broad spectrum of outcomes from a Scholz government is possible. Germany faces enormous challenges and under Merkels placid leadership has come late to some of them (digital infrastructure being a case in point). It is perfectly possible to imagine Scholz being too much like Merkel, delivering decent and mature leadership but weighed down by caution, loss aversionand stasis. At the other end of the spectrum is something more invigorating: Scholz as the Schmidt-esque chancellor of action tackling intransigent problems, the banger-together of heads, the Hanseat steering the ship through waves of change.

So it is right to reserve judgment on Scholz: as an election fighter, a coalition negotiator and as a prospective chancellor. But as the past weeks have shown, it would also be a mistake to underestimate him.

With reporting by Brian Melican

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How Olaf Scholz and the SPD could lead Germany's next government - New Statesman