How a German regional election could shape Europe

by Oliver Noyan

The northern German state of Lower Saxony, home to eight million people, rarely makes headlines, and the international media barely registered this Sunday’s election there. However, its outcome could have huge repercussions for Europe.

This otherwise-minor regional election could trigger German Finance Minister Christian Lindner to double down on his already hawkish position on joint EU debt and the relaxation of the bloc’s fiscal rules.

The election was a massive blow for the liberal FDP and Lindner, its party chief. For the first time since 1998, the party won’t be represented in the regional parliament as it did not pass the requisite 5% threshold.

Worse still, it is the fourth regional election in which the liberals have lost ground. The spectre of the year 2013, when the FDP lost all of their seats in the Bundestag, looms large.

For the FDP, the disastrous outcome means they have to be more assertive in their coalition with the Social Democrats and the Greens.

General Secretary of the FDP, Bijan Djir-Sarai, was quick to declare after the election debacle that the voice of his party has to be “more visible” in the coalition and that they have to “prevent leftist projects from being implemented”.

Lindner also intervened, stating that his party has to do more to “refine its profile” for potential voters.

In the last couple of months, we have already seen that Europe is not being spared either from the FDP’s push or from this profile ‘refinement’, as fiscal austerity runs at the heart of the liberal party and is always an easy way to appease its voter base.

And there is already precedent for that.

After the FDP lost their last election in May, Lindner quickly adopted a harsher tone towards the Southern European member states aiming to make the EU’s debt rules more flexible.

While up to this point, Lindner tried to be understanding of the needs of the southern EU countries, the self-proclaimed “friendly hawk” suddenly became unfriendly.

“You can become addicted to government debt, and we need to end the addiction to more and more debt as soon as possible,” he said in mid-May.

The harsh statement was widely regarded as driven by domestic reasons – to signal to their voters that the FDP is still the party of austerity.

This time, the FDP is likely to double down even more and tighten its already harsh stance on fiscal issues. This month alone will provide multiple opportunities for Lindner to prove his point.

Firstly, the European Commission is set to release its proposal for reforming the stability and growth pact, which regulates the amount of debt a member state is allowed to make.

While the EU executive is expected to follow the plea of the Southern member states to make the rules more flexible, this might be an occasion for Lindner to show his fiscally conservative side.

At the same time, there is a growing initiative on the EU level to push for a European solution to fight inflation by resorting to joint borrowing.

While the call for joint borrowing gathers more and more followers – including the European Commission itself – a German finance minister who aims to refine his profile vis-a-vis the “leftists” is unlikely to give in and agree to anything that could resemble it.

*first published in: Euractiv.com