I - Political context

Political change      
What is the political context of the Eurozone crisis period in Germany? Have there been changes in government, elections, referenda or other major political events during the period of 2008-present?


In 2008, the German Government under Chancellor Angela Merkel was formed by the Christian Democrats (CDU) and the Social Democrats (SPD). In this period of time, Germany had to deal with effects which arose from the crash of the bank “Lehman Brothers”. Many German citizens suffered severe losses in this time due to their engagement in risky assets sold to them by their banks in Germany. Subsequently, several court judgments obliged the banks to pay damages to their clients because they had faultily advised them.


After the federal elections in 2009, the Christian Democrats (CDU) and the Liberals (FDP) governed the Federal Republic of Germany. The chancellor was again Angela Merkel. In this period of time, the direct Greek aid package was adopted. This was approved by a clear majority in the parliament. Chancellor Merkel expressed in a speech at the Bundestag in 2010 a sentence which had become famous afterwards. She said: “If the Euro fails, Europe fails” (“Scheitert der Euro, scheitert Europa”). From her point of view, there is no alternative (“alternativlos”) to the financial assistance programmes for European countries such as Greece. Despite these clear words, the opposition in parliament (Social Democrats (SPD), the Greens (Bündnis 90/Die Grünen) and the Left (Die Linke)) criticized that the Bundestag did not receive sufficient information regarding the implementation of this political aim. Most members of the opposition were also in favour of a financial transaction tax in order to force banks to participate in the costs of the financial crisis. This proposal was rejected by the Federal Government. The German federal state also had to rescue some banks, such as the “WestLB” and the former “Hypo Real Estate” for which public bad banks had been created. In 2015, the German Bundesbank published a report which stated that since the beginning of the crisis the German Federal State has already invested Euro 236 billion to rescue banks. In addition, the Länder had to pay additional public money to save banks, in particular banks of the Länder (for example the Länder Hamburg and Schleswig-Holstein for the “HSH Nordbank”).


Germany’s participation in the rescue packages has raised many concerns. Amongst other reasons these concerns had led to the foundation of a new political party, the “Alternative for Germany” (“Alternative für Deutschland”) or briefly AfD. The beginning of this party in 2013 constituted the creation of the “Electoral Alternative 2013” (“Wahlalternative 2013”) whose manifesto was endorsed by economists, journalists, and business leaders, half of whom were professors and three-quarters of whom had academic degrees. They also had support from some of the complainants at the Bundesverfassungsgericht against Euro Crisis measures. After having participated in an election in Lower Saxony the AfD also competed against other parties in the 2013 federal elections and achieved a result of nearly 5 % of the votes. It was only due to the 5 % barrier that the AfD did not enter the German Bundestag but it was seen as a remarkable success for the young party. In 2014, the AfD participated in the elections for the European Parliament and achieved 7.1% of the national votes which allowed them to send 7 MEPs to Brussels. The AfD is a member of the European Conservatives and Reformists (ECR) group in the European Parliament. The AfD had further success in election campaigns and is today represented in some Länder parliaments, amongst them Saxony, Bremen, Thuringa and Brandenburg. In 2014 and 2015, the party faced extreme inner-party conflicts between a right-wing faction mainly focusing on topics in migration policy and a faction focusing on Euro criticism and financial politics. In July 2015, the right-wing faction won the internal battle which caused many exits of party members, amongst them one of the founders and some MEPs. Some members of the AfD who left the party created a new party called “Alliance for Progress and Renewal” (“Allianz für Fortschritt und Aufbruch”), or briefly ALFA. Until today, they did not participate in elections but some of their members are members of Länder parliaments because they cancelled their membership of the AfD and became members of ALFA while keeping their mandate as an elected MP.


In the 2013 federal elections, the Liberals (FDP), which were the junior partner of the Christian Democrats in the Merkel-government from 2009 to 2013, failed to achieve the minimum threshold of votes (5 %). Chancellor Merkel is since then leading a coalition of Christian Democrats (CDU) and Social Democrats (SPD). The discussion about the Euro crisis became intensive after the election of a new government in Greece under Prime Minister Tsipras. In particular, the contrary positions of the Greek Finance Minister Giannis Varoufakis and the German Finance Minister Wolfgang Schäuble raised much media attention. Schäuble did not want to exclude the Exit of Greece from the Eurozone (so-called “Grexit”) which had become a well accepted opinion in Germany after the ambiguous positions and behaviours of Greek members of the Government and negotiators. The discussion in Germany focused on the limits of the German contribution to financial assistance programmes.


During the whole period of the Euro Crisis, the data of the German economy was all in all positive. The federal state benefited from the high demand for German securities which allowed the Finance Minister to issue German securities with very low interest rates. The German yearly deficit financing could be reduced being positive in 2014 (surplus of 0.27 %).