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ELECTION

Social Democrats declare ‘war on the banks’

Germany’s centre-left Social Democrats kicked off their election campaign with what was described as a declaration of war on the banks, sparking fears in the sector that it could force the conservatives to follow suit.

Social Democrats declare 'war on the banks'
SPD politician Peer Steinbrück. Photo: DPA

Though the German chancellor is the typical target for the political opposition during any election campaign, the SPD is looking to score points with voters who are fed up with the banking sector.

On Tuesday former Finance Minister Peer Steinbrück, one of three possible challengers to from the SPD to take on Chancellor Angela Merkel in 2013, gave his party’s parliamentary group a 25-page paper called “Taming the Financial Markets”.

Business newspaper the Handelsblatt described it as “nothing short of a declaration of war on Germany’s large banks.”

As one of Steinbrück’s advisors put it, “We are also conducting a banking campaign.”

The plan would create a European rescue fund for struggling banks of between €150 billion and €200 billion, which would be funded by the financial institutions themselves.

Steinbrück is keen to shift the liability of a potential collapse from taxpayers to creditors and shareholders – but expects it will take “several years” to build up the fund. The SPD politician also wants big banks to set up a firewall between riskier investment operations and their lending and deposit businesses.

The head of the Association of German Chambers of Industry and Commerce (DIHK), Hans Heinrich Driftmann, told the Rheinische Post newspaper that separating “good banking from bad banking” was no simple matter, and would not prevent another financial crisis.

Steinbrück’s plan was also criticised by the banking industry, with the head of Germany’s BdB banking association, Michael Kemmer, telling public broadcaster ARD that the plan “sounds good, but it won’t help anyone one bit,” besides helping politicians score a few populist votes.

But the proposal found supporters in the executive suite. A poll conducted by opinion research institute Forsa for the Handelsblatt suggested 71 percent of German managers backed tougher banking regulations.

Forsa head Manfred Güllner told the paper that many people, including members of the middle class, had “a great deal of scepticism about the role and the misconduct of individual banks and banking managers.”

DAPD/The Local/arp

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SPD

Germany edges a step closer to a government led by the Social Democrats

The Social Democrats' Olaf Scholz said that his party together with the Greens and the Free Democrats had a "mandate" to form a government in Germany, after the parties agreed to begin coalition talks.

The SPD's chancellor candidate Olaf Scholz speaks to reporters in Berlin on Wednesday.
The SPD's chancellor candidate Olaf Scholz speaks to reporters in Berlin on Wednesday. Photo: picture alliance/dpa | Michael Kappeler

“Voters have given us a mandate to build a government together,” Scholz told journalists after the Greens and the liberal FDP agreed to meet his party Thursday to begin discussions over a possible three-way coalition.

The move brings Scholz a step closer to the chancellery after 16 years of Merkel’s centre-right-led government.

The political upheaval in Germany was unleashed by last month’s general election which Scholz’s centre-left party won with 25.7 percent, followed by Merkel’s centre-right CDU-CSU bloc at 24.1 percent.

For either party to head the next German government it would need the support of the centre-left Greens and the pro-innovation and business Free Democrats (FDP), which came third and fourth.

Despite leading the conservatives to their worst-ever election result, beleaguered CDU leader Armin Laschet insisted he still has a shot at the top job.

Speaking to reporters, Laschet said the conservatives “respect the decision” by the two kingmaker parties to pursue a coalition with the SPD.

But the CDU-CSU is “still ready to hold talks,” he said.

READ ALSO: German coalition talks – Greens want to govern with Social Democrats and FDP

CSU leader Markus Söder however gave a more sobering assessment, saying the possibility of a CDU-CSU government had essentially been “rejected”.

The conservative bloc must now prepare itself for a stint in opposition after four Merkel-led coalitions, he said.

“This will change our country,” Söder said, adding: “The conservatives will enter a new era too.”

Recent surveys suggest most Germans want Scholz, who is also finance minister and vice chancellor, to become the next leader of Germany.

‘Building bridges’ 

Green co-leader Annalena Baerbock said that after preliminary discussions with the SPD and CDU-CSU, the Greens “believe it makes sense” to focus on a tie-up led by the Social Democrats.

Baerbock said Germany faced “great challenges” and needed “a new beginning”.

“This country can’t afford a lengthy stalemate,” she said.

READ ALSO: 10 German words you need to know to keep up with the coalition talks

Greens co-leaders Annalena Baerbock and Robert Habeck give a press conference on Wednesday after exploratory talks.
Greens co-leaders Annalena Baerbock and Robert Habeck give a press conference on Wednesday after exploratory talks. Photo: picture alliance/dpa | Kay Nietfeld

The FDP said it had accepted the Greens’ proposal to move on to formal exploratory coalition talks with the SPD.

The first such three-way talks will start on Thursday, FDP leader Christian Lindner said.

The Greens and the FDP are not natural bedfellows, diverging on key issues including taxation, climate protection and public spending.

But both parties have said they also have common ground and want to “build bridges” in order to govern.

All sides are eager to avoid a repeat of the 2017 election aftermath, when the FDP dramatically walked out of coalition talks with the conservatives and the Greens and it took months for a new government to take shape.

 ‘Not a done deal’

A tie-up of the SPD, Greens and FDP, which would be a first in Germany, has been dubbed a “traffic light” constellation after the parties’ red, green and yellow colours.

READ ALSO:

Green co-leader Robert Habeck said that while the party shared some common ground with the conservatives, there are “significant differences” too.

Informal talks over the last few days revealed “more overlap” with the Social Democrats, he said, on issues like climate protection, social justice and European integration.

The clear preference for a Scholz-led government is likely to put further pressure on Laschet, whose political future hangs in the balance.

Gaffe-prone Laschet, once seen as a shoo-in for the chancellery, fell out of favour with voters after he was caught laughing during a tribute to victims of Germany’s deadly floods in July.

The FDP however threw Laschet a lifeline by stressing that the conservatives were not out of the running yet.

The FDP’s Lindner said a coalition with the CDU-CSU and the Greens – dubbed a “Jamaica” alliance because the parties’ colours match that country’s
flag – “remains a viable option for us”.

The FDP has served as the junior partner in a conservative-led government before, and they share a dislike for tax hikes, red tape and a relaxation of Germany’s strict debt rules.

Green co-leader Habeck also cautioned that “nothing is a done deal yet”.

Merkel herself is bowing out of politics, although she will stay on in a caretaker capacity throughout the coalition haggling.

By Michelle FITZPATRICK

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