Germany’s future Chancellor: can Social Democrat candidate Olaf Scholz fill Merkel’s shoes


Picture of Cordelia Friesendorf
Cordelia Friesendorf

Professor of Economics and Finance at the International School of Management, Hamburg

Federal elections in Germany are due in autumn 2021 and the race to woo voters has begun. Angela Merkel’s announcement that she would not be seeking a fifth term triggered mixed reactions among the electorate. Her Government’s handling of the COVID-19 crisis has demonstrated political agility and an in-depth understanding of economic policy that is making Germans reevaluate consequences without her at the helm. For most Germans, the going has been good during her term.

Merkel’s decision to retire has also set off a fierce power struggle. Merkel’s favourite, acting Defense Minister Annegret-Kramp Karrenbauer (referred to as AKK), failed to assert her authority as Party Head and Chancellor candidate in the state-level coalition politics of Thuringia earlier this year. The fiasco ended with AKK stepping down and creating an even bigger power vacuum. This made it clear that Merkel’s chancellorship of more than 14 years had set a high bar for any successor, regardless of party affiliation.

COVID-19 invited unexpected contestants into the fray. Markus Söder, Head of CDU’s sister Christian Social Union (CSU) party and Minister-President of Bavaria, positioned himself as a tough crisis manager, subtly hinting at his own chancellorship potential to the wider German public. Alas, popularity in Bavaria does not translate into popularity across Germany. The CSU still peddles old-fashioned views that seldom address the demands of the wider German electorate, especially in areas of sustainable development, new business models and social inclusion.

On these points, the Green Party, steered by Anna-Lena Baerbock and Robert Habeck, has made headway with its progressive, equality and welfare-oriented approach. These developments place the Greens as a significant coalition partner in the future, if they fail to win a majority.

Olaf Scholz is a veteran politician and has what Germans admire most – ‘minimum talk and maximum delivery’

Indeed, post-war Germany has seen its Federal Government in the hands of either the centre-right CDU or the centre-left Social Democratic Party (SPD). Merkel’s last two terms have been led by ‘grand coalitions’ between CDU/CSU and SPD. These years were marked by difficult debates that often threatened government collapse or votes of no confidence, and saw new parties come and go.

There was no love lost between Merkel’s CDU and her largest coalition partner SPD; however, being compelled to work with each other ended up fusing the parties’ agenda, leading to little policy differentiation between the two. Social welfare as a necessary fundament for peace, economic success as the cornerstone of influence, and leadership of the EU to sustain domestic growth are priorities both parties compete on.

The close cooperation created synergies between traditional opponents to such an extent that Merkel picked Social Democrat Olaf Scholz over her own party colleagues for the influential position of Federal Finance Minister. Scholz’s financing strategy reversed the conventional CDU position of a zero-fiscal balance based on his beliefs that investment was the motor to economic growth. This was widely perceived as a groundbreaking move, finally shifting towards debt-based investments in transport, digital, education and health infrastructure at the federal, state and community levels. His stance was a refreshing departure from the CDU approach, providing a boost in his popularity among younger constituents while enhancing his legitimacy among the older public for his critical approach to policy issues.

It should also be noted that Olaf Scholz is a veteran politician and has what Germans admire most – ‘minimum talk and maximum delivery’. This has been on full display throughout his various portfolios, be it as Home Minister in Hamburg, General Secretary of SPD, Federal Labour Minister or his longest stint, as Mayor of Germany’s port city and logistics capital Hamburg. The last position won him a reputation as a ‘man of and for the people’.

Olaf Scholz reaped criticism but eventually received praise for his stubborn social welfare agenda

Hamburg has a particularly unique set of challenges. Its Hanseatic flair of being a 400-year-old maritime city endowed her population with an advanced appreciation for openness, liberty and identity. These attributes simultaneously produce a wealth of differing perspectives, which makes it difficult to find a one-size-fits-all solution. In this environment, Olaf Scholz proved himself an effective state planner, capable of navigating complex policy issues.

Scholz’s noted successes include building 55,000 homes in his eight-year term that was deemed a role model for Germany’s metropolitan cities. He also completed the long-overdue tourist attraction Elbphilharmonie to enrich Hamburg’s brand as a musical and art destination, and renovated education infrastructure. His growth projects helped Hamburg stand out from other German cities as an attractive destination for businesses and cooperation between universities.

Two events torpedoed Scholz into the federal limelight: his handling of the refugee crisis in 2015 and the vandalism of left extremists during the 2017 G20 summit. Olaf Scholz reaped criticism but eventually received praise for his stubborn social welfare agenda of integrating homes for the poor, especially refugees, into the most luxurious residential districts in Hamburg with the long-term goal of preventing the formation of ghettos, often framed as ‘islands of social isolation’.

During the G20 summit hosted by Hamburg, Scholz and his governing team failed to contain violence and looting by left extremists participating in anti-globalisation protests. Hamburg’s public did not hide their disdain since such vandalism is almost an annual event on Labour Day. Scholz, a long-time mayor and home affairs senator of Hamburg, was not spared for his inadequate handling of Hamburg’s big moment on the world stage.

Scholz is certainly the candidate who comes closest to matching Merkel’s style of leadership

Scholz faced massive criticism, spurring demands for his resignation. This turned out to be an important moment in his career that demonstrated his potential for higher and tougher jobs. Olaf Scholz apologised to the people of Hamburg for the damages and costs incurred. Ultimately, Scholz left his mark on Hamburg and Germany. He is perceived as a person of integrity, a mayor open to criticism, and a political leader capable of empathy.

Germany’s future chancellorship demands more than political talents, social skills and international experiences. As evidenced during Merkel’s tenure, the position requires, on the one hand, a deep understanding and appreciation of Western values of democracy, equity-driven growth, economic welfare, social inclusion and dedication to anti-corruption. To implement these domestically and abroad, the candidate must possess political acumen to discern, debate and run parliamentary agendas towards a regulation-based functioning of the state machinery. On the other hand, the candidate should also be a good negotiator, capable of building alliances within and outside Europe. Given the above realities, Olaf Scholz may not yet be the right fit to fill Merkel’s shoes, but he is certainly the candidate who comes closest to matching her style of leadership.

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