Cutting Social Programs Is Recipe for Fascism, German Green Leader Says

(Bloomberg) -- Germany’s Green Party co-leader has urged debt relief for Southern European countries hurt badly by coronavirus, warning that deep cuts to social programs could otherwise pave the way for fascism. 

Those countries shouldn’t be forced to repay their debt according to the EU’s stability and growth pact guidelines, Robert Habeck told the public broadcaster Deutschlandfunk on Saturday. 

“If you force them to pay back their debt through a strict rule, as it is laid out in the stability and growth pact, then Southern European countries will only be able to do that with massive cuts in the social budget and then fascism will govern there in the end,” Habeck said. 

The EU’s stability and growth pact is a set of fiscal rules designed to prevent member countries from spending beyond their means. Habeck didn’t specify which countries he was most worried about. 

Italy, with almost 200 billion euros ($231 billion), is the biggest recipient of the 750 billion euro fund. German Chancellor Angela Merkel made clear after a meeting with Italian Prime Minister Mario Draghi on Thursday that she expects Italy to spend the aid money “wisely” and to adhere to the rules of the stability pact.

Habeck will likely play an important role in Germany’s next government and could even become the country’s next finance minister. 

Together with Greens co-leader Annalena Baerbock, Habeck is holding exploratory talks with the Social Democrats and the liberal FDP party with the goal of forming a three-way coalition government under the SPD’s Olaf Scholz, following the nation’s September election. 

Finances will be the biggest stumbling block in the coalition talks, Habeck said. There are “visible differences” between the SPD and FDP about the budget and investments into climate protection, he added.

The friendly atmosphere in the talks so far shouldn’t belie the fact that there remain “major differences” and a lot of deep-seated policy conflicts between the three parties before a government can be formed, he said: “This is not a done deal yet.” 

Challenging Talks 

The SPD and the Greens are traditional allies who aim to open Germany’s coffers to invest in climate initiatives and infrastructure, but finding common ground with the FDP will be a challenge. The free-market liberals campaigned on cutting taxes, reining in debt and reducing bureaucracy.

FDP Chairman Christian Lindner repeated his vow this week that the party wouldn’t tolerate a leftist shift and would draw a line on raising taxes and loosening Germany’s constitutional debt restrictions.

Scholz, who’s served as Merkel’s vice chancellor and finance minister since 2018, has set Christmas as a deadline to get a coalition agreement signed.

Exploratory talks between the three parties will continue on Monday. If successful, they would lead to formal coalition negotiations. An accord would then have to be approved by each party before a Bundestag session is called to swear in Germany’s next chancellor.

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