Germany’s new right-wing populist party, Alternative for Germany, or AfD, has ridden a wave of popularity in the last six months. Two weeks ago, it won a huge protest vote in German regional elections, reaching 24 percent in one Eastern state and winning seats in all three state parliaments.
But the party is still widely seen as a protest party, focused on immigration and opposition to European integration.
The party’s long-term chances depend on how it positions itself on other issues, above all the economy. That also raises the question of where it will place itself in an increasingly messy political landscape. Among vicious internal battles last summer, Frauke Petry, its new young and charismatic leader, overthrew its original founder, Bernd Lucke, a dour euroskeptic economist. Mr. Lucke left to establish another new party.
Since Ms. Petry took charge, the focus has been overwhelmingly on immigration and the so-called “Islamization” of Germany. It has been criticized for flirting with the extreme-right Pegida movement, especially in the east of the country.
Now the party is facing up to broader questions. At its upcoming party convention on April 30, it is set to agree a new electoral program, drawn up with an eye on the federal elections in September 2017.
Abolition of the minimum wage would hit the poorly paid. We don't want that. Hansjörg Müller, AfD spokesman on mid-size business
Handelsblatt has seen a draft of the economic policy section of the proposed new party program. The emphasis is on support for small and medium-sized business, not big corporations. It wants more market and less welfare state, and proposes a radical reform of the tax system.
“It is important to me that the AfD has economically-liberal policies, friendly to small and medium-sized businesses,” Hansjörg Müller, chair of the AfD Forum on Mid-Sized Business, told Handelsblatt. “We would like to be close to the position of the Free Democratic Party, before they became the party of big business,” he added, referring to the small pro-business FDP.
There are likely to be fierce discussions at the party conference on whether the AfD wants to be the party of high achievers, of blue-collar workers or the unemployed. In the recent regional elections in Baden-Württemberg, Rhineland-Palatinate and Saxony-Anhalt, the AfD picked up many votes among the poorer segments of society.
Since the departure of Mr. Lucke and his supporters, the party has been “the party of ordinary people,” said Alexander Gauland, head of AfD in the state of Brandenburg.
That’s why the party wants to keep the minimum wage, even if it doesn’t quite fit with a pro-business profile, explained Mr. Müller, the AfD’s mid-sized business expert. “Abolition would hit the poorly paid," he said. "We don't want that.”
Germany introduced a federal minimum wage at the beginning of 2015, a measure generally opposed by business leaders.
These contortions and compromises have lead economic experts to cast doubt on the AfD’s economic policies.
Michael Hüther, head of the Institute of the German Economy, or IW, an organization with close ties to German employer, said the program is a grotesque mixture of the questionable (dissolution of European Monetary Union), the reasonable (reforms of renewable energy subsidies) and the naïve (passing the costs of financial crises entirely onto the banks). The AfD draws on popular anxieties, as in its attacks on the euro bailout deal and the proposed Transatlantic Trade and Investment Partnership, or TTIP, he said. But on the other hand, the party promises policies for mid-sized business, and paint large corporations in negative terms.
“It doesn’t add up,” Mr. Hüther concluded.
Lutz Goebel, president of Germany’s Federation of Family Businesses, also sees the AfD program in highly critical terms, despite a few paragraphs which favor small and medium-sized firms: “The AfD’s economic policy may be about rubbing salt in the wounds of Angela Merkel’s coalition government, but the party will stay isolated because of how it is toying with Pegida,” he said.
After looking at the draft economic plans, Handelsblatt outlines the most important aspects:
Europe: The AfD wants a Europe of nations, ideally reversing the deeper integration that began with the 1992 Maastricht Treaty. Germany should either pull out of the euro after a referendum, or it should work at an E.U. level to abolish the currency. The AfD calls this a “correction benefiting all European countries,” an antidote to the tension created by policies designed to rescue the euro.
Finance and Taxes: The AfD wants a new simplified income tax structure, with fewer levels, as well as higher allowances and fewer lump-sum deductions. The policy is broadly similar to the policy proposed by the FDP in 2009. The practice of couples splitting income for tax purposes – which many in Germany think encourages women to stay home – should be replaced by a family-based model. Trade and inheritance taxes should be abolished, and value added tax “harmonized.” The AfD document does not address how this is to be financed. It also proposes to cut the national deficit.
The AfD economic program is a grotesque mixture of the questionable, the reasonable and the naïve. Michael Hüther, Head, Institute of the German Economy
Social Policy: The party wants to cut bureaucracy in the job market and consolidate the mass of regulations into a single code of labor law. The Federal Employment Agency should be abolished and replaced by local job centers. Again, the party adopts an old FDP proposal. The AfD also distances itself from a previous plan to privatize unemployment insurance. The strong support of unemployed voters for the party may play a role here. The party does demand that current long-term unemployment benefits be replaced with an “activating basic insurance”: here it comes close to FDP policy but also that of the socialist Left Party, but does not go into specifics. Families should have their social insurance contributions reduced. The AfD dismisses current federal government targets to increase women in the workforce. Instead, it says “full-time mothers” should no longer suffer discrimination.
Free Trade: The party wants to regulate international trade relations via the World Trade Organization, or WTO. It rejects the TTIP, so long as it is negotiated “in a non-transparent way, and without a proper balancing out of the interests of the various parties.” Here the AfD is close to the position of the trade unions and the left wing of the Social Democrats, who govern in a coalition with chancellor Merkel’s Christian Democrats.
Industry and Energy: The AfD makes no clear statement on German industry. However, the party is concerned about energy: It wants carbon dioxide “to not just be seen as a pollutant,” and wants Germany to stop reducing emissions in isolation. The “centrally planned economy” supporting renewable energy should be abolished, and nuclear power extended until alternatives can be found.
Immigration: On immigration, the AfD recognizes that Germany has “de facto been a country of immigration for decades,” but says this has no legal framework, as in Canada or Australia. E.U. countries should be able to limit migration from other E.U. states. Germany, like the United Kingdom, should be allowed to pay welfare payments only to E.U. citizens who work in the country for at least four years.
Donata Riedel covers economic policy for Handelsblatt. Frank Specht is based at Handelsblatt's Berlin bureau, where he focuses on the German labor market and trade unions. To contact the authors: [email protected], [email protected].