'Germany is going to see tough times so it's very important to get the economy back on track'

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00:00Hello everyone, I'm François Picard.

00:12It's what Germans call a grand coalition.

00:15The two big tent parties agreeing on a government six weeks after elections

00:20that put the CDU of Friedrich Merck's tops

00:23and relegated the SPD of outgoing Chancellor Olaf Scholz

00:26to third place behind the far right.

00:28Six weeks can seem long to form a government,

00:32but in Germany that is speedy.

00:35And with all the challenges that await both domestically and abroad,

00:42it helped move along those negotiations.

00:49The coalition agreement now before us

00:52is the result of intensive consultations and negotiations.

00:56It is, above all, a very strong and very clear signal to the citizens of our country.

01:03And it is also a clear signal to our partners in the European Union.

01:09Germany will have a strong government capable of taking action.

01:13The political center of our country is in a position to solve the problems we are facing.

01:20The future government, the future coalition will reform and invest in order to keep Germany stable,

01:26make it more secure and make it economically stronger again.

01:31And Europe can also rely on Germany.

01:33Our coverage begins in Berlin with correspondent Nick Holdsworth.

01:39Nick, what more do we know?

01:44Stable, safer and economically stable.

01:47That's Friedrich Merck's central message as he announced the agreement for the coalition

01:54that will govern Germany for the next four years, 148-page agreement document with plenty of detail.

02:02He's doing what he's been saying all along.

02:05He's going to be tough on immigration,

02:07stopping asylum seekers at Germany's borders,

02:11denying them entry,

02:13repatriating people,

02:15widening the list of so-called safe countries

02:18so that people from those countries won't be able to apply for asylum,

02:23reducing the ability of people already here

02:25to have family reunification

02:28and reducing another thing that the Germans introduced recently,

02:33which was a three-year path to getting a German passport

02:38for people who had achieved a certain level of the German language

02:42and had integrated well.

02:44That will be scrapped.

02:45And these are all policies that are going to be taken,

02:47some of the thunder out of the far right, the AFG,

02:51who have reacted fairly angrily to the coalition statements today.

02:55They're very critical of it.

02:57On wider economic themes,

03:00Merck says that he's going to reduce red tape,

03:02his message to Donald Trump,

03:05his Germany is back on track,

03:08and he will work with the other European Union member countries

03:12to see if they can reduce those tariffs

03:15which Donald Trump has introduced calls and havoc in markets across the world.

03:20Yeah, the tariffs,

03:22the way that the U.S. vice president

03:27met with the far-right leader

03:28instead of the outgoing chancellor

03:30at the Munich Security Conference,

03:32all these elements that help concentrate the minds.

03:36How much of a change are we going to see from this German government?

03:38In some ways, it's going to be business as usual.

03:44With this coalition, we've got a couple of key cabinet posts

03:47which are likely to go to Social Democrat Party leaders.

03:53The defence minister, very popular.

03:56Boris Pistorius, likely to stay in defence.

03:58And finance, likely to go to the Social Democrats.

04:02Foreign policy, the chancellor and other key ministries

04:07obviously will be with the CDU.

04:10So there will be continuity in some senses.

04:13What's new will be this drive to reduce red tape.

04:18Friedrich Mertz is a businessman.

04:19He forged a successful career as an international investment manager

04:24after he stepped away from politics

04:27when Angela Merkel became the chancellor candidate some years ago.

04:33And he wants to see reduced red tape, lower costs,

04:37easier agreements and permissions for businesses.

04:40Wants to reduce the cost of energy

04:43by reducing taxes on gas for Germans, for German companies too.

04:47And basically, he wants to reinvigorate the economy,

04:51use digital means more effectively,

04:54like other countries across the EU,

04:56want to use AI more effectively.

04:59And basically, put this country back on the road

05:04to the sort of success it's enjoyed in the past

05:06so that in four years' time, when there's a new round of elections,

05:08they will be able to see off the threat of the far right, the AFD,

05:12who today, a poll suggests,

05:15if there were an election tomorrow,

05:17would get 25% of the vote in this country.

05:20That's 1% more than the CDU could expect.

05:23Nick, stay with us,

05:24because we're going to stay in Berlin with Markus Zener,

05:27visiting senior fellow at the German Marshall Fund.

05:30Thank you for speaking with us here on France 24.

05:34Thanks for having me.

05:36Six weeks to form a coalition government.

05:38Is that because there were only two parties negotiating,

05:42or is it because of all that's going on,

05:45both domestically and in the outside world?

05:49Yeah, both is true.

05:50I mean, it's only two parties instead of three,

05:52as we had in the previous government,

05:53which was quite difficult to basically get them all on the same page.

06:00But I think what's more important is the fact that there are so many foreign policy issues pressing right now,

06:08that I think there is this need for getting things done quickly, I think,

06:14and getting this government together quickly.

06:16I think that was obvious.

06:18And you heard Nick Holdsworth say,

06:20the emphasis put by Friedrich Mertz on cutting red tape.

06:24Is that the carrot to his own base?

06:26After all, he's having to sell them what he did not campaign on,

06:30which is increased spending, particularly on defense.

06:36Yeah, well, I think Friedrich Mertz, the designated new chancellor,

06:40he fully understands that what he needs most is actually to somewhere get the money from,

06:48to finance all what he wants and has to do.

06:51And for this respect, actually, you need an economy that's thriving, that's working,

06:59that's producing tax revenues.

07:02And this is why he was focusing so much on competitiveness of the German economy.

07:08And it was already mentioned that the energy price,

07:11the price for electricity should be lowered by five cents, which is quite a bit.

07:15So that's basically done through cutting back on the electricity tax.

07:20Then competitiveness is supposed to be strengthened in a number of ways.

07:25Red tape, yeah, sure.

07:26That's what everybody, what every government actually is promising,

07:29that to cut back on red tape.

07:31At this time, I think they're very serious about it.

07:33And, yeah, and then I think they, given the fact that we are basically in a trade war with the United States

07:43and that Germany is selling so much to the U.S., we're going, we're going to see tough times.

07:50So it's more than, it's very important to get the economy back on track.

07:54Important to get the economy back on track.

07:56Let me ask you, it's called a grand coalition when you have the Christian Democrats and the Social Democrats.

08:01Marcus, when the Social Democrats polled third, their numbers in the teens,

08:09and yet they still get the finance and the defence portfolio, what does that tell you?

08:16Well, first of all, I mean, it's really not a grand coalition anymore, given the numbers.

08:20I mean, the CDU had 28%, 29%, and the SPD, 16%.

08:25So that's not really big, two big parties now forming a coalition.

08:29This is, this is, this is different.

08:33I think two things here.

08:35The one is that the most popular minister in Germany is the defence minister.

08:41It's Boris Pistorius, and he's with the Social Democrats.

08:44So it would have been very unwise by Friedrich Merz to,

08:48to not leave the Ministry of Defence to the Social Democrats, number one.

08:53Number two, there was basically no alternative for the CDU to form a government.

08:58I mean, the Green Party had not enough, did not get enough votes to be a coalition partner for a two-way coalition.

09:07And then there's the AfD and the left party, and they're both out of question to form, forming a coalition with,

09:14though there was only the SPD.

09:15And for that reason, I think, well, for the Social Democrats, it was a very convenient and very beneficial bargaining situation.

09:25So they could ask for much, and obviously they got a lot.

09:30Now, Boris Pistorius, the defence minister, the outgoing one,

09:34polls suggest the most popular member of that outgoing government,

09:39most popular politician inside the SPD.

09:41How long will the honeymoon last between him and Friedrich Merz?

09:47As long as he's not going to challenge Friedrich Merz.

09:52I mean, I think he has his, both Pistorius, I think he has his hands full to reorganise the German Bundeswehr.

09:59We all know that the German army, the German defence is in bad shape,

10:03even though that already three years ago there was this extra fund of 100 billion.

10:08But procurement is sluggish.

10:11It takes a long time to get, well, new installments of products and of weaponry.

10:19Then also Germany has given a lot to Ukraine.

10:22So there is a lack of all those defence equipment that's needed.

10:28And this takes time.

10:29And I think to change the Minister of Defence at this point would be very, very unwise,

10:35because it takes a lot of time to really get into this whole,

10:39into the nitty-gritty of this very complicated ministry.

10:44One last question.

10:45I'll put it to Nick Holdworth, our correspondent.

10:47Nick, there's a meeting of EU defence ministers on Thursday in Brussels,

10:52a meeting of EU finance ministers to talk defence in Warsaw on Saturday.

10:56What's the mood in Germany when it comes to, again, this sea change,

11:01when it comes to spending on defence and weaning itself off the US defence umbrella?

11:11I think Germans, along with most Europeans,

11:13understand that we're now living in a totally new world

11:16and that we can't rely upon Donald Trump's America anymore,

11:20not for defence nor for economic, global economic rules.

11:25Everything's been tossed up in the air.

11:27And Friedrich Merz is, if nothing else, a realist.

11:30And he clearly wants to work with his European partners.

11:34He wants to forge stronger relations with France and Poland.

11:37He wants to bring the UK more and more back into the fold.

11:41And the British government has even today suggested

11:43that they are looking for closer economic links with the European Union.

11:48That's a little bit short of rejoining the EU,

11:51but they certainly want to come closer because everyone understands

11:54that if Europe doesn't pull together, it's nowhere.

11:57There are threats all over the place, economically, threats militarily from Russia.

12:03And Merz is very keen to concentrate on making Germany, again,

12:08part of the heart of the EU.

12:10So we always had France and Germany at the heart of the EU.

12:14And he would, as I've just mentioned, like to have the UK a lot closer to the EU

12:18because that is what is required now in a world that has suddenly became a lot more unstable

12:23and in some ways more dangerous than it was just a few months ago.

12:27Nick Holdsworth, I want to thank you alongside Marcus Zener

12:30for being with us from the German capital.

12:33Thank you all.

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