The German elections went exactly as I had predicted. Here is what I wrote in The Malta Independent on Sunday:
In the last weeks of the electoral campaign I perceived a stance on the part of Mrs Merkel where she sent discrete signals to push the last coalition partners FDP below the 5% threshold. This would deny them parliamentary representation, and leave the grand coalition as the inevitable solution for a stable government. This will strengthen Merkel’s hand to overcome internal resistance towards a more benign approach towards the Euro problem. It would also help to bridge the conceptual differences between Germany and France and augur well for a rapprochement of the twin motor that is necessary to drive European integration forward to the next level.It is no co-incidence that her partners in the last government, the right wing FDP, went below 5% and lost parliamentary representation. Merkel could have worked for tactical voting to preserve the FDP parliamentary representation, but she did not. Merkel schemed a grand coalition and she got it even though she knows she would have to pay a high price in concessions to the SPD to persuade them to participate in the coalition.
Why was Merkel prepared to open up so much to the SPD?
Simply because in her third and last term as Chancellor Merkel wants to be remembered as the Chancellor who saved the Euro not the one who broke it. She knows that to save the Euro Germany has to pursue growth policies in tandem with restructuring. Austerity as an economic tool would be abolished from Merkel's dictionary and this would not be possible if she continues to have Schauble as her Finance Minister.
Merkel also knows that she cannot have a successful third term unless she patches her relationship with French President Hollande. With the SPD as a coalition partner she stands a better chance of developing a good working relationship with Hollande especially at a time when the British seem to have lost interest in taking any leading role in Europe.
Negotiations for forming a grand coalition will be long and hard. The SPD have been burnt by their participation in the first Merkel government 2005 - 2009. But in the end they have to give substance to the people's mandate and provided they get two basic concessions they will have to participate.
The concessions that will force the SPD to join in the grand coalition will be, two strong ministries, possibly finance and foreign affairs and an assurance that Merkel will not seek a fourth term in 2017.
We might have a grand coalition before Christmas but only after going through the motions of the SPD role playing as uninterested in the marriage unless the dominating bride makes grand concessions to the bruised groom.