The Greens continue to reject a trillion-euro debt package for defense and infrastructure proposed by the Christian Democrats and the Social Democrats (SPD), and without the Greens, the deal cannot go through.
In negotiations with the CDU and SPD, the Greens co-group leader, Katharina Dröge, told ARD that they have not yet moved forward on a common solution.
“It remains the case that we Greens will not support this bill,” she said.
She further said there was no “significant rapprochement” so far and her group will introduce its own bill for more defense spending to the German parliament. She says the SPD and CDU proposal lacks “structural reforms” and fears the special funds will be used to plug budget holes.
With the U.S. pursuing a path of limited austerity, if Germany cannot abolish the debt brake, it could send a shock through German and European markets. When the deal was first announced, defense and infrastructure stocks soared, with business leaders and investors gearing up for a massive tidal wave of stimulus.
However, the plan was never a sure thing. It was only possible under the old Bundestag, which is set to dissolve in approximately 10 days. The required two-thirds majority needed to change the constitution and abolish the debt brake will simply not be there when the new government enters power later this month. As a result, the CDU and the SPD need either the votes of the Greens or the FDP. With the FDP, they have no chance, leaving only the Greens to negotiate with.
The deal may very well still go through. The CDU and SPD are desperate to convince the Greens, including with billions in green investments. However, from a purely political standpoint, the Greens have little incentive to go along with the debt package. The party will not be included in the new coalition, and the debt, assuming it works to boost the German economy, will benefit the rival CDU and SPD politically.
So far, it appears the Greens are playing hardball.
Thorsten Frei, parliamentary director of the CDU/CSU parliamentary group, nevertheless signaled optimism. He appeared on ARD and said the Greens want to ensure climate protection in the planned special fund for infrastructure.
“We can also discuss how to implement something like this legislatively,” the CDU politician said.
Meanwhile, legal challenges are being launched against the debt package by the left-wing BSW party. MP Sevim Dagdelen intends to file an emergency application to the Federal Constitutional Court to stop the trillion-euro project.
“In such a short time, proper legislative consultation with a serious impact assessment is not possible,” Dagdelen told the dpa news agency. The goal of the lawsuit is to remove the legislative process from the Bundestag’s agenda.
Other parties, including the Left Party and the Alternative for Germany (AfD), are filing their own separate legal actions.
Coalition talks remain ongoing between the SPD and CDU. Both parties say they want to take 10 days of negotiating before forming a government, with the goal of having the coalition in place before Easter.
