Olaf Scholz Had a Plan to Win the German Vote. But First He Needed a Crisis
(Bloomberg) -- Less than two years ago, Olaf Scholz rode the glass elevator down to the ground floor of the Social Democrats’ Berlin headquarters with the derisive cheers of his colleagues still ringing in his ears as they celebrated his defeat in the party leadership contest.
The 63-year-old German finance minister was tainted by his role in Angela Merkel’s final government, seen as too moderate, too wooden and just too much like Merkel for a membership agitating for change after years of coalition and compromise had dragged their polling numbers to record lows. Over dinner that night with his wife and a close ally, Scholz was despondent, according to a person familiar with their discussions. There was talk he might quit politics altogether.
Yet as the country’s election campaign enters its final stretch, Scholz is the clear favorite.
The transformation of his fortunes is a sign of the tumult Merkel leaves behind as she steps aside after 16 years in power and the way Covid-19 has shaken up politics around the world. It’s a reminder that the traditional virtues of stability and caution that Merkel embodied still resonate with German voters. And it’s a hint at the flaws of Merkel’s personalized style of government.
While Merkel guided Germany through the debt crisis and the pandemic, her succession planning has been a disaster, landing her conservative bloc with a candidate who struggles to motivate the party’s base, never mind the wider electorate. And that, more than anything, has opened the door for Scholz.
Polling a distant third just a few months ago, Scholz’s party has opened up a consistent lead of as much as six points while Merkel’s Christian Democrats have stumbled to their lowest level in the post-war era. As the chancellor tried to bail out her party’s faltering candidate Armin Laschet this week, Scholz appeared a step quicker.
He grabbed the initiative by flanking his domestic campaign with the optics of a statesman-like visit to Paris, meeting French President Emmanuel Macron on Monday — two days before Laschet got his own photo opportunity.
A Scholz victory — which could still snag on coalition talks even if he wins the vote — would ring changes in Europe’s biggest economy with new rights for workers, increased social spending and more public investment. Merkel told the Bundestag that Germany under Scholz would jeopardize growth. She’s alluding to his past.
The oldest of three brothers, Scholz signed up with the Social Democrats in 1975 to help “overcome the capitalist economy,” and he now laughs off his youthful radicalism.
He helped Gerhard Schroeder, the last SPD chancellor, to push through a deeply controversial labor reform and served as labor minister under Merkel during the financial crisis. In 2011 he became mayor of Hamburg.
He was credited with getting public projects on track. But he was also exposed to the cum-ex tax scandal. The links — like his ministry’s failure to uncover fraud at Wirecard AG — still hang over him, but have proven too obscure to sway voters. His biggest test came with the G-20 summit in July 2017 which saw hooded anarchists roaming the streets and looting in the iconic downtown.
Scholz was taken to task for brushing off security concerns prior to the gathering but he ultimately weathered the storm in part because of Merkel’s protective hand.
She was running for re-election at the time and defended the decision to hold the event in Germany’s second-largest city. When that election threw up another so-called grand coalition between Merkel’s conservatives and the SPD, Scholz became her finance minister and his ambitions to claim the top job began to take shape.
Scholz knew the position would set him up to run for chancellor and that the end of the Merkel era would mean everything was open. And he also identified one asset that Merkel had and he lacked: a track record of crisis management.
So without knowing when or why they might be needed, Scholz and his team started looking at possible measures they could deploy in the case of a national emergency, according to an official with knowledge of their thinking. It would be a big, debt-financed program of fiscal stimulus and public investment and when, or perhaps if, it was unleashed, it would transform his public image.
To prepare German voters for his spending spree, he started warning that the good times would one day be over and Germany needed to be ready, taking a subtle distance from Merkel’s commitment to balanced budgets.
His failure to clinch the party leadership threw a wrench in the works.
By November 2019, the SPD was bristling for a fight with her conservatives rather than more cooperation and compromise. Scholz was seen as too close to her centrist policies and as the new left-leaning leadership team gave their victory speeches, Scholz crept quietly away.
Just a few days later, the first cases of a strange new respiratory infection were detected in Wuhan, China. When Covid-19 spread to Europe in early 2020, Scholz had a full blown crisis to go with his crisis plan.
Within days of shutting down the German economy, he presented a program that would eventually deliver as much as $470 billion in financial support for businesses and jobs. Even his sober rhetoric had hints of bombast — though still delivered in his characteristic monotone. “This is the bazooka,” he said when presenting the pandemic-aid program in March 2020.
Suddenly, Scholz was back in the game.
But the SPD leaders still weren’t thinking of winning back the chancellorship. The party hierarchy were convinced that they needed a period in opposition to rebuild after successive coalitions with Merkel. They’d seen one election defeat after another end the careers of their predecessors. When Scholz was nominated as candidate, he was the party’s only option, according to an SPD official who asked not to be identified.
At the time, the party had slipped to fourth place in the polls, with support less than half the level of the conservatives and even behind the nationalist AfD. At the time, Scholz looked like he’d been set up to be the fall guy.
While Merkel’s party was consumed by squabbling over which state leader would be its nominee, Scholz used his platform as finance minister to plug away and burnish his image as a steady hand.
Markus Soeder, the conservative premier of Bavaria and a potential rival in the national election, detected the danger. He lashed out at Scholz in a private meeting around that time. “You’re not the chancellor of Germany,” Soeder barked, while Scholz just smiled and shrugged. “You don’t have to grin like a smurf now,” the outspoken Bavarian retorted.
Scholz later confirmed the reports, saying he didn’t mind being called a smurf because smurfs always win.
In May this year, even with his party still 10 points behind the conservatives and the Greens, Scholz was still sounding calmly confident.
“Most of the people could think that I could be a very good chancellor and if they could choose directly the chancellor they would elect me,” he said at a Bloomberg event. “This is also what we are insisting on in the public debate: if you want to get the chancellor you want, you have to choose the party he is running for.”
He made his most explicit bid for the Merkel vote in August. In a photo series in the Sueddeutsche newspaper, a smirking Scholz posed pressing his thumbs and fingers together in a diamond shape, forming Merkel’s characteristic hand gesture. It was a defining image that connected the two and generated waves in the conservative camp.
Scholz argues that many of the Merkel policies that voters like most come from the SPD rather than the CDU.
“We’ve implemented a lot that would never have made it into the CDU/CSU’s campaign program — from the minimum wage to the introduction of a basic pension and the big response to the coronavirus crisis,” he said in an interview with broadcaster ntv.
Last Friday evening, he cut a relaxed figure at a low-key campaign event just a few miles across Berlin from the party headquarters where he suffered the low point of his political career.
In the beer garden beside the Spree river, Scholz chatted with a group of 50-odd supporters. The passengers on a pleasure boat waved to the candidate from the water. He engaged with a group of young climate protesters, promising them that he would lead a Green transition. And the party base, so skeptical about Scholz before the pandemic, seemed won over by the prospect of an unlikely victory.
“Scholz is not the man we wanted for our party leader,” said Beate Laudzim, one party member at the event. “But he has good arguments and if he becomes chancellor that’s definitely better than having the CDU.”
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