Germany: Mertz Optimistic About Approval of Landmark Spending Package

The leader of Germany’s Christian Democratic Union (CDU), Friedrich Mertz, expressed optimism regarding the approval of a landmark spending package despite deep divisions between the CDU and the Greens. The support of the Greens is crucial for passing this significant fiscal policy reform. Mertz, who aims to succeed Chancellor Olaf Scholz in the coming weeks, acknowledged that negotiations with the Greens over defense and infrastructure spending, alongside coalition talks with the Social Democrats (SPD), are proving challenging. However, he remains confident that his agenda will prevail. “We always have many balls in the air,” Mertz stated during an interview with public broadcaster ZDF. Despite the challenges, “there are possibilities for solutions,” he added. The bloc led by Mertz’s CDU and the SPD is rushing to secure a two-thirds majority in parliament by Tuesday, March 18th, to approve constitutional amendments that would free defense spending from debt limits and create a €500 billion investment fund for infrastructure. To achieve this, major parties forming a new coalition government after last month’s elections are courting the Greens, who so far have rejected the package as pre-election favors. A Bundestag debate on Thursday highlighted the environmental party’s reluctance. Mertz’s performance during the debate came under scrutiny after initially praising the Greens’ cooperation, only to abruptly insist they should be satisfied with the climate measures offered. “What more do you want beyond what we’ve proposed?” Mertz asked, sparking criticism from the Greens. This misstep alienated the Greens at a critical moment in negotiations, according to a senior SPD legislator. Failure to pass the economic package could undermine coalition talks between Mertz’s CDU/CSU bloc and the SPD. With less than three weeks since his electoral victory on February 23rd, Mertz and the SPD strive to approve the debt financing package in the current parliament before the new Bundestag convenes on February 25th. Constitutional changes in the newly formed assembly face higher hurdles due to increased support for the far-right AfD and the Left party, which now hold an effective veto over the two-thirds majority. Last week, Mertz and the SPD unveiled an ambitious fiscal package focusing on dramatically increasing defense spending and creating an infrastructure fund bypassing Germany’s restrictive debt brake, measures that ultimately brought down the Scholz government. While the Greens and the incoming governing alliance remain far from agreement on the infrastructure fund, they have reportedly moved closer on defense spending, according to someone familiar with the discussions who requested anonymity due to the private nature of the talks. Mertz’s contentious appearance in the debate drew sharp criticism from Katrin Göring-Eckardt, co-leader of the Green parliamentary group, who accused the conservative leader of deceiving voters about his plans to gain power. Nevertheless, Göring-Eckardt left room for dialogue: “We are ready to talk.”