A new anti-euro political party, AfD (Alternative for Germany) is gaining ground in the polls, threatening Angela Merkel’s ruling center-right coalition just as the campaign season heats up ahead of general elections in the fall. While the political establishment in Berlin is only beginning to take this new brand of conservative populism seriously, the rise of the AfD is sure to entrench austerity politics at a time when the opposite is needed. Germany just got its own Tea Party.
At the AfD’s first party convention this past April, there was little of the pageantry we’ve come to associate with the Tea Party: no Colonial-era uniforms, no powdered wigs, no effigies of chancellor Merkel burning in the hotel foyer, only a few guys in T-shirts depicting the European Union as a Stalinist dictatorship (“(E)USSR”) and one gentlemen with a nationalist tricolor sash of gold, red, and black. Most of the 1,300 delegates, a vast sea of wizened, grey-haired men, looked exceedingly prim and middle-class, as if they had come to discuss their retirement plans or maybe the future of dentistry.
What the AfD does share with the Tea Party, however, are uncompromising and, many would say, illusory political goals. In the U.S. that means dismantling the welfare state; in Germany, getting rid of the euro. “The mainstream parties are exhausted ... we have seen this crisis and the way in which parliamentarians have given in to this government without a thought, only because they thought there was no alternative to the bail-out policies," said AfD party leader, Bernd Lucke, in his opening speech at the convention. "But there is an alternative. It’s now here!” Because all of the mainstream national parties support the euro, the AfD has been able to gain momentum since the party’s founding in February of this year. The party recently cracked the 5 percent hurdle in national polls, which would give it seats in the German parliament, the Bundestag, if elections were held today.
AfD began just as the latest saga in the Eurozone crisis was unfolding on the small island nation of Cyprus, where the banking system was on the verge of collapse after years of high-risk investing had left it with little liquidity. The subsequent bailout was the 12th time since 2010 that the Bundestag approved new funding to keep a Southern European state in the currency union. And now with Slovenia’s banks on the verge of crisis as well, some say it is only a matter of time before a 13th round begins sometime this year.
In this seemingly unending story of bailouts, stronger states like Germany must explicitly guarantee the credibility of weaker states, and fears have long simmered that German savings and economic strength would be sacrificed in the process. The AfD appeals to these fears explicitly, a particularly worrisome development for the conservative coalition of Christian Democrats and pro-market Liberals, whose lower ranks have long harbored reservations about the bailouts. This internal tension has led to Merkel's uneasy balancing act: trying to appear tough when negotiating with Greece, Spain, Italy, and Cyprus on reform and fiscal austerity, while also providing enough guarantees and funds to keep the euro from unraveling. The founding of the AfD by a group of disillusioned Christian Democrats demonstrated just how brittle these internal divisions had become.
Euro-skeptics have long existed on the fringes of conservative politics in Europe. They usually come from the nationalist right, with xenophobia not far behind. Yet what is remarkable about the AfD is the degree to which they have avoided the trap of the far right and instead aimed for the center. So far the party has kept known right-wing extremists out of key positions. It's tried to appeal to mainstream sentiments by not demonizing Southern Europe for its own failings, merely claiming that the currency union is a bad deal for all involved. Even on immigration, the AfD strikes a centrist chord, arguing for “smart” policies based on the Canadian points system and maintaining Germany’s historic position as home to those seeking political asylum. This is not your typical “Germany first” type of crowd.
Perhaps one reason why the AfD has done well in shielding itself from far-right extremism is the libertarianism many in the party leadership share. Whereas the German far right tends to use the collectivist appeal of nationalism and race to find support, the AfD’s leadership is more at home in the economics and business faculties of German universities, where radical pro-market ideas have often found a home. Party chairman Bernd Lucke, for example, is a professor of economics in Hamburg. Other prominent supporters like Hans Olaf Henkel, a businessman and mainstay on the German talk- show circuit, is also a notorious supply-sider and opponent of state intervention, who has long been critical of the euro as well as the massive fiscal response in the United States to the crisis.
At a time when many economists believe that Germany needs to be dialing back its push for austerity and focus on stimulative measures, it is the AfD’s commitment to libertarian ideas of non-interventionism that could prove most troubling. The party’s sudden success is already forcing the mainstream parties to push back, especially in the conservative camp, where even a small number of party defections could result in a loss in the September general election. The AfD’s ascent has already pulled the debate further to the right; many political observers think that the importance of austerity could grow in the short run as conservatives try to keep voters from drifting toward the AfD.
If the center-right coalition does not hold, then a grand coalition between the Christian Democrats and their main rival on the left, the Social Democrats, is the likeliest scenario. They would no doubt be able to enact meaningful legislation on the domestic front, but fear of further voter disaffection to the anti-Euro fringe could keep such a coalition from doing anything dramatic to get Europe growing again, like slowing fiscal consolidation in Southern Europe. With German growth expected to be slightly positive for the rest of 2013 and recent polls suggesting that 70 percent of Germans are happy with the current state of the euro, a grand coalition would have little incentive to alter the status quo. The Eurozone will no doubt survive, but it will not thrive.