DECEMBER 8, 2021
Kuttner on TAP
The Biden-Scholz Connection
The new German chancellor can be both an economic soul mate and a key ally on Ukraine policy.
Olaf Scholz is Germany’s first Social Democratic chancellor in 16 years. He has two big things in common with Joe Biden. He is a reassuring career politician who takes office amid several crises not of his own making, including foreign policy. And, like Biden, Scholz will have to scramble to produce a working legislative majority.

In Biden’s case, the obstacle to success is a handful of corporate Democrats and a 50-50 Senate. Scholz has a united party but governs as the leader of a three-party coalition that includes the center-right Free Democrats.

The legacy of Biden’s Democratic predecessors includes deregulation and hyper-globalization, which made life worse for a lot of working-class voters who abandoned the party of Roosevelt for Trumpism. In Scholz’s case, his SPD predecessor Gerhard Schröder cut social supports for workers and joined with Germany’s conservatives in making budgetary austerity a centerpiece of economic policy.

Now Scholz, saddled with a finance minister from the Free Democrats, needs to find some fiscal running room, both for Germany and for the EU, if he is to carry out both the climate ambitions of his Green coalition partners and the job creation needs of his own Social Democrats.

Scholz also inherits from both his immediate predecessor Angela Merkel and from former SPD Chancellor Schröder a coziness with Vladimir Putin, the most tangible expression of which is the Nord Stream 2 pipeline, which is not yet operating. Russia already supplies 40 percent of the EU’s natural gas.

On this front, Scholz’s government may change things for the better. His new foreign minister, Annalena Baerbock of the Green Party, has called for suspension of the pipeline, warning that it would open Germany to blackmail.

On this front, a closer working relationship with a new, harder-line German government could help Biden out of a nasty dilemma on Ukraine, where Putin is gambling that Biden will not go to war if Russia invades, and there are limited sanctions short of war. Germany has already warned Russia, at Biden’s request, that the pipeline would definitely be shut down if Russia invades Ukraine.

In the past, Putin benefited from a docile Germany. A closer Washington-Berlin alliance would signal not only a resurgent progressive left on economic issues, but a more effective Russia policy.

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