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Green light from CDU for debt brake reform

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Friedrich Merz, leader of Germany’s conservative Christian Democratic Union (CDU), announced on Wednesday that the constitutional debt brake, which limits public deficits to 0.35% of Gross Domestic Product (GDP), could be open to reform under certain conditions.

Merz, the frontrunner to become Germany’s next chancellor after the collapse of the country’s “traffic light” coalition, has previously argued that Germany should adhere to the constitutionally guaranteed debt brake, a measure introduced by his party under Angela Merkel in 2009.

The debate over debt brake reform within the CDU was reignited this year by Berlin’s conservative mayor Kai Wegner. Several powerful CDU leaders from regional governments have also supported the reform push, as these states face more constraints than the federal government and lack the flexibility for new borrowing.

Merz: Revision possible if borrowing is for investment

Pressure is mounting within the party, with CDU state premiers urging Merz to include debt brake reform plans in the campaign for the early elections on 23 February.

Speaking at an event on Wednesday, Merz stated: “Of course, reform is possible. The question is: why? To what end? What would be the result of such a reform?”

Merz emphasized that he would not support reform aimed at increasing consumption or social policy spending. However, he suggested that if additional borrowing were used to increase investment, “then the answer could be different.”

According to the Greens, the only way out of the crisis is a revision of the debt brake

Merz noted that the debt brake was a “technical issue” and stated that he did not wish to engage in the discussion at that moment. Later, a source close to the CDU leader told Reuters that Merz had no immediate plans to reform the debt brake.

However, Bruno Hönel, a member of the Bundestag’s budget committee from the Greens, argued that if Merz assumed power, the debt brake would be reformed immediately, pointing out that the budget could not be financed without borrowing during such a crisis.

Hönel stated, “If you want to work with the budget in a forward-looking way, there is no other way than to reform the debt brake.” He also noted that 80 billion euros would be needed to meet NATO’s 2% defense spending target by 2028, nearly 30 billion euros more than the draft budget for 2025, which currently envisions defense spending of 53 billion euros.

Traffic light coalition collapses over debt brake debate

The debt brake was a key factor in the collapse of the coalition, leading to calls for early elections.

Christian Lindner, leader of the fiscally conservative Free Democrats (FDP), who was dismissed as finance minister last week by Social Democrat Chancellor Olaf Scholz, claimed that Scholz had pressured him to suspend the debt brake.

Suspending the debt brake in an emergency, citing special circumstances, is possible with a government majority. Germany reinstated the debt brake in 2024 after a four-year suspension to allow for extra spending on the COVID-19 pandemic and the energy crisis.

CDU’s sister party CSU opposes reform

However, reforming the debt brake requires a two-thirds majority in both the Bundestag and the Bundesrat.

The CDU premiers from the eastern states support the debt brake reform, while Markus Söder, the leader of Bavaria’s CSU, opposes it. Söder emphasized that “absurd extra spending” must be cut first.

Before discussing the debt brake, Söder argued that the fiscal equality of federal states must be addressed, referring to Germany’s income redistribution system.

The wealthy state of Bavaria recently had to transfer over €9 billion to other states. “This cannot go on,” Söder declared.

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Turmoil in the SPD: Pistorius vs. Scholz

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Pressure is mounting on German Chancellor Olaf Scholz to relinquish leadership of his party, the Social Democrats (SPD), ahead of the upcoming snap elections. This move is seen as a potential lifeline for the party, currently polling in third place, to regain electoral momentum.

The SPD leadership has thus far supported Scholz’s bid for a second term in the federal elections, now rescheduled for 23 February 2025 following the collapse of the three-party coalition on 6 November. However, internal dissent is growing.

In two heated party meetings last week, SPD MPs deliberated over whether Defence Minister Boris Pistorius should replace Scholz as the party’s candidate. According to Der Spiegel and POLITICO, one meeting included the conservative wing of the SPD, while the other involved its left wing. Both groups reportedly had significant support for replacing Scholz with Pistorius.

Calls for Scholz to step aside reached a crescendo on Monday, with prominent SPD politicians from North Rhine-Westphalia, Germany’s most populous state, leading the charge.

Pistorius’ voices rise within the party

Dirk Wiese and Wiebke Esdar stated: “The focus is on finding the best political line-up for this election. We hear a lot of praise for Boris Pistorius. It is clear that the final decision on the chancellor candidacy will rest with the party committees, as it should.”

Markus Töns, a long-time SPD member, echoed this sentiment in Stern: “The chancellor has done a good job in difficult circumstances, but the coalition’s end signals a need for a fresh start. Boris Pistorius would make this easier than Olaf Scholz.”

Former SPD leader Sigmar Gabriel was even more critical. Writing on X (formerly Twitter), Gabriel warned of “growing resistance” within the SPD to Scholz’s leadership. “The SPD leadership’s only response is appeasement and loyalty pledges. What we need is bold political leadership. Without it, the SPD risks falling below 15 percent,” he cautioned.

Scholz confident of ‘support from the leadership’

The SPD leadership had planned to finalize the chancellor candidacy decision at its party conference on 30 November. However, the timeline may accelerate to quell the escalating debate.

Speaking from the G20 Summit in Brazil, Scholz dismissed questions about his candidacy, expressing confidence in party support. “The SPD and I aim to win this election together,” he told Die Welt. Secretary-General Lars Klingbeil reinforced this stance, stating on ARD television: “We are committed to continuing with Olaf Scholz—there’s no wavering.”

Chancellor returns without stopping in Mexico

Despite these reassurances, Scholz abruptly canceled his planned trip to Mexico, returning to Berlin after the G20 Summit amid rumors of party infighting. While the SPD leadership held a conference call on Tuesday to discuss the campaign strategy, no decisions were reached.

Recent opinion polls paint a bleak picture for both Scholz and the SPD. The party is polling at 16 percent, far behind the CDU and the far-right AfD, marking a steep decline of 10 points since the 2021 elections.

Yet, Boris Pistorius remains Germany’s most popular politician, consistently outpacing CDU leader Friedrich Merz in approval ratings. This has fueled hopes within the SPD that Pistorius could revitalize their electoral prospects.

Pistorius’ rising profile is not without controversy. Known for his hawkish stance on military issues, he advocates for making the German military “fit for war” and has pushed for increased defense spending to meet NATO’s 2 percent of GDP target. Critics argue that these positions clash with the SPD’s traditional skepticism toward military intervention and ties with Moscow.

Nonetheless, many within the SPD believe Pistorius offers the best chance to avoid a crushing defeat in February’s elections. Pistorius has championed investments to rebuild the Bundeswehr after decades of neglect and launched initiatives to recruit for Germany’s depleted armed forces. His restructuring of the army earlier this year emphasized regional defense over external missions.

Internationally, Pistorius’ assertive approach has earned respect from Western allies, positioning him as a strong contender for the chancellorship despite his public denials. “We already have a candidate, and he is the sitting chancellor,” Pistorius recently told German state television.

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Greek workers hold general strike over high cost of living

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Workers across Greece are participating in a nationwide general strike today (20 November), encompassing all sectors of the country. The strike is being held under the slogans “Money for Wages, Education, and Health” and “Out of the War Slaughterhouses.”

This strike follows weeks of preparation, marked by massive protests and sector-wide actions involving doctors, construction workers, dockers, maritime workers, metal workers, telecom workers, hotel staff, and distribution employees. These coordinated efforts underscore the growing discontent among Greece’s working class.

In a statement, the Militant Front of All Workers (PAME), the organization leading the strike, declared: “For the strike to succeed, there is no alternative but to fight everywhere. If we don’t fight for our interests, we will gain nothing. The great strike struggles of construction workers, railway workers, delivery workers, hotel staff, miners in the shipbuilding region, dockers, shipyard workers, health workers, and teachers are showing the way, providing hope and optimism for more sectors to join in.”

The strike is expected to disrupt government offices, schools, hospitals, and public transportation, including trains and island ferries.

Yannis Panagopoulos, president of the leading private sector union GSEE, emphasized the growing challenges faced by workers: “The cost of living is too high, and our salaries have hit rock bottom, while the high cost of housing has left young people in a tragic situation.”

Like other labor groups, GSEE accused the government of “refusing to take meaningful measures to provide decent living conditions for workers.”

Currently, low-income Greeks are forced to subsist on a minimum wage of less than 900 euros per month, even as retail, telecom, and energy costs remain among the highest in Europe. The left-wing opposition often criticizes this disparity, claiming the less privileged are forced to pay “British prices on Bulgarian salaries.”

Conservative Prime Minister Kyriakos Mitsotakis recently pledged to raise the minimum wage to 950 euros. However, critics argue that this measure is insufficient in a society where the wealth gap continues to widen, exacerbated by rising housing costs.

Despite these domestic struggles, international credit rating agencies have lauded the Mitsotakis administration for its fiscal reforms. These reforms have not only ensured Greece met financial targets and returned to investment-grade status, but also enabled the country to outperform other EU member states in terms of economic growth.

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The German army takes steps toward economic militarization

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In Germany, preparations appear to be underway for a potential conflict that could directly impact the Federal Republic much more than before. According to Frankfurter Allgemeine Zeitung (FAZ), the Bundeswehr has initiated training programs for companies based on the newly approved German Operational Plan. This classified strategy document reportedly spans 1,000 pages and outlines critical infrastructure and buildings deemed essential for military protection.

The report highlights plan to address a potential Russian threat, focusing on defense strategies and escalation scenarios. Among the measures discussed are steps to ensure the resilience of the civilian economy during crises.

Civil servants ‘train’ companies in Hamburg

One notable aspect of the strategy involves collaboration with businesses. A recent event hosted by the Hamburg Chamber of Commerce showcased this approach, where Lieutenant Colonel Jörn Plischke offered concrete recommendations.

“For every hundred employees, train at least five additional truck drivers that you do not need,” Plischke suggested, citing the high reliance on Eastern European drivers—70% of all trucks in Germany are driven by workers from this region. He raised concerns about a potential labor shortage should war break out in Eastern Europe.

Chamber of Commerce stresses ‘resilient economy’

The Bundeswehr advises businesses to create detailed crisis management plans, including assigning specific roles to employees. Self-sufficiency measures, such as installing diesel generators or wind turbines, are also recommended. The Bundeswehr has called for similar training events to be conducted nationwide, with implementation overseen by state commands.

Malte Heyne, General Manager of the Chamber of Commerce, emphasized the importance of these initiatives, stating:

“A well-prepared and resilient economy is essential for Germany’s civil and military defense.”

Greens propose special funding for armed forces

As early elections approach, debates surrounding Germany’s military spending are intensifying. Green Economy Minister Robert Habeck is advocating for a new “special fund” to bolster military capabilities before the elections, fearing that a two-thirds majority may be unattainable if the AfD and BSW gain more seats in the Bundestag.

The “special funds” allocated since 2022 are projected to be exhausted by 2027. Habeck, along with Defence Minister Boris Pistorius, argues for exemptions from the “debt brake” to accommodate these increases. Pistorius has proposed raising the Bundeswehr’s budget to 3.5% of Germany’s GDP, equivalent to over €140 billion.

Germans against military intervention

Polls reveal mixed views among Germans regarding military spending and intervention:

50% support increasing the Bundeswehr’s budget to 3.5% of GDP, but 56% oppose cuts to social, ecological, cultural, and developmental budgets.

Less than half (46%) favor greater German involvement in international crises, with 71% supporting diplomatic measures over military action.

65% oppose Germany assuming a military leadership role within the EU.

Support for military aid to Ukraine has declined from 66% in 2023 to 57%.

CDU prepares for new interventions

Despite public hesitation, political leaders emphasize the need for Germany and the EU to assert global influence. Economy Minister Habeck recently stated:

“We must be capable of global policy-making.”

Similarly, Friedrich Merz, the opposition CDU/CSU’s chancellor-designate, added:

“Europe must be capable of global policy-making on its own.”

These remarks underscore a shared priority among Germany’s political elite: positioning the country as a global power, potentially through enhanced military means.

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