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Ascendant Greens will turn Germany and Europe upside down

With Germany and southern Europe swinging in opposite directions, sharing a monetary union is about to become even harder

Expect 130km speed signs across the German Autobahns, with 30km per hour becoming the general rule in all towns. Expect a ban on sales of combustion engines by 2030, and a regulatory squeeze on overpowered trophy cars. Expect a halt to domestic short-haul flights wherever trains are viable. 

Prepare for a German carbon tax of €60 a tonne in two years, and perhaps a wealth tax, a Tobin tax, a supertax on high incomes, and an end to corporate tax deductibility for pay above €500,000. Dream no longer of an EU-US trade deal (TTIP) or any other trade deal unless the ideological principles of German ecologists are satisfied.

All of this is in the draft manifesto of Die Grünen, the German greens, and right now there is no conceivable combination in which they will not be a central pillar of the next coalition. The likelihood of a Green chancellor has soared after the Christian Democrats (CDU/CSU) picked the back-slapping Armin Laschet as the “continuity candidate” in a leadership stitch-up – blocking Bavaria’s disruptive rising star, Markus Söder, so clearly preferred by the grassroots and the German people. 

To insist on Mr Laschet was a fateful decision for a stale exhausted party so badly in need of a makeover after 16 years in power: an era when Germany began to rest on its laurels, neglecting digital technology, cutting public investment to the bone in pursuit of balanced-budget shibboleths, doubling-down on 20th century industries.

It also mistook the mercantilist advantages of the euro system (an undervalued synthetic D-Mark) for a second Wirschaftswunder. Only later will it become clear that Angela Merkel has presided over “peak Germany” and the onset of decline.   

Green party co-chairwoman Annalena Baerbock 
Annalena Baerbock is the German Green Party's candidate for Chancellor  Credit: Andreas Gora/POOL/EPA-EFE/Shutterstock

Annalena Baerbock, the trampolinist and newly chosen Green candidate, has vaulted into the lead at 28pc following her party’s smooth leadership contest. It is a movement on the march, hungry for power. “They are disciplined and extremely well-run,” said Giles Dickson, head of renewable lobby WindEurope.

The hapless Mr Laschet has collapsed by six points to 21pc. The Social Democrats (SPD) have crashed to 13pc and risk going the way of the French Socialists. The two great Volksparteien that have run the country since the Second World War cannot muster more than 34pc between them. The Germany that most of us have known all our lives is about to change in radical and unpredictable ways.

The Green Party was born in 1980 with a mission to tear down capitalism and end the affluent way of life. The Fundis - the fundamentalists – like to ban things. The origins of the movement could hardly be further removed from the Ordoliberal spirit of Ludwig Erhard, economic father of modern Germany, who lived by the motto “if in doubt, always choose the freer path”.

Ms Baerbock is from the pragmatic Realo wing, which has captured the leadership. “She has spent the last three years talking to business and she understands that you have to use the free market to steer the economy in a green direction,” said Holger Schmieding from the German bank Berenberg.

While the vested interests of Deutschland Inc are horrified by the prospect of a Green victory, there are even more powerful interests in the new economy and finance that can see the lucrative opportunity. They think the great fortunes of the 2020s will be made in green tech and data analytics, and that any country clinging to the metal-bashing fossil age will be left behind as the US and China run away with the prize.

Armin Laschet speaks following confirmation as CDU/CSU's chancellor candidate
The Fundi wing of the German Green party has vowed to block any coalition deal with CDU leader Armin Laschet, a coal supporter Credit: Sean Gallup/POOL/EPA-EFE/Shutterstock

Erstwhile sinner Volkswagen has changed sides, betting all on electric vehicles with €30bn of investment under the new management of Herbert Diess, who warns of a “Nokia Moment” for companies that fail to make the switch in time. “German business has seen the light. They know they have to go green,” said Mr Schmieding.

The difficulty with the Greens is that the unreconstructed Fundis dominate the party base and shape its character, more so than Labour’s defeated Corbynistas. As a political culture, they are inimical to free enterprise.

If a Chancellor Baerbock went into coalition with the Christian-Democrats reduced to a junior partner – as in Baden-Württemberg – she might be able to keep her hot-headed troops in line and force them to accept centrist compromises. But the Fundi youth wing aims to block any deal with Mr Laschet, a coal supporter and closet-climate denialist. 

What might emerge instead is a Red-Red-Green coalition with the ex-Communists of Die Linke and a broken SPD party lurching leftwards in search of its lost soul.  

This is the stuff of nightmares for the German establishment. “The party base will pull the Greens to the hard Left if they are in coalition only with other left-wing parties,” said Mr Schmieding.

What the Greens cannot do is fund a vast Bidenesque fiscal expansion by tapping the bond markets, much as they would like to. That would breach the constitutional debt-brake. It takes a two-thirds majority in both houses of parliament to change the Basic Law. 

The Greens would have to raise taxes or cut spending elsewhere to pay for lavish welfare spending and their plan to lift public investment by €50bn a year (an extra 1.5pc of GDP), comparable in scale to Joe Biden’s infrastructure push. That would rob it of its stimulus effect. 

Nor would they be able to ram through their plan for an EU treasury or fiscal capacity, or transform the European Parliament into Germany’s supreme legislative body at the expense of the Bundestag. Such a transfer of power to the EU crosses constitutional lines and cannot be imposed by simple majority. 

For Britain, a Green Germany would be a chilly adversary. The party is supra-nationalist, inclined to scapegoat City ‘speculators’ for the world’s ills (an atavistic reflex), and above all ideologically hostile to the concept of the sovereign nation state. 

Die Grünen want a European federal state, on alleged grounds that environmental disaster knows no borders and that the only way to save the planet is to avert a race to the bottom by competing states. They are an extreme millenarian pro-EU party even in their new technocrat guise, like Emmanuel Macron’s En Marche party but without his mitigating Gaulliste streak and regalian idée de la France.

If it were just a matter of ecology, Boris Johnson would get on swimmingly with Annalena Baerbock. The UK’s plan to cut CO2 emissions by 78pc from 1990 levels is just as ambitious as the Green’s 70pc cut by 2030 and it will be committed to law much earlier. 

The UK’s coal phase-out by 2025 is five years ahead of the Green target, though the date scarcely matters since rising EU emissions contracts – now €46 a tonne – will price coal out of the German market long before 2030.

But the rift over identity politics trumps climate unity. The UK is a Westphalian state under the 1648 settlement, or trying to become one again, and the Greens are the fer-de-lance of the Holy Roman Empire in its modern form. 

Which raises an intriguing question since southern Europe seems to be swinging in the opposite direction from Germany: what happens if Marine Le Pen takes France next year, as she well might if the centre splits and Mr Macron is knocked out in the first round? Her party has dropped the anti-euro clause from its platform for tactical reasons but it has not become federalist.

What if Giorgia Meloni takes Italy a few months later at the head of a hard-Right alliance of Fratelli d’Italia and the Lega? And what if the Spanish conservatives (PP) take Spain with supply and consent from the rising neo-Franquista Vox party?

We may have Red-Red-Green Germany facing a triple nationalist front across the Latin bloc, obliged to share monetary union across the North-South divide, and agreeing on almost nothing. Good luck with that.

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