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Olaf Scholz Is Not Your Friend

Polls for today’s German election point to a once unlikely victory for Olaf Scholz’s Social Democrats. The party’s campaign has focused on Scholz’s personal credentials as a future chancellor — yet his record suggests he will never stand up to the powerful.

German finance minister and Social Democratic Party candidate for chancellor Olaf Scholz speaks to reporters after voting at a polling station in Potsdam, Germany, during general elections on September 26, 2021. (MACDOUGALL/AFP via Getty Images)

He’s “Uncle Olaf,” the “grinning Smurf,” the ”Scholz-o-mat,” and even “the most boring man in Germany.” The current front-runner to become Europe’s most powerful leader has had his fair share of epithets. But with Olaf Scholz’s Social Democrats (SPD) leading polls ahead of today’s federal election, even such a personal focus on Germany’s possible next chancellor has told us little about what he stands for. Yet unlike incumbent Angela Merkel, whose own rise through the Christian Democratic Union (CDU) to the chancellery was meteoric, Scholz has a long political record at both state and federal levels, with much to tell us about what he has done and who he really is.

Scholz has always been a highly effective machine politician, able to strategically maneuver when it best suited his career. He is widely credited with using his ideological flexibility, skill at hammering out backroom deals, and calm style to rise through the ranks of the troubled SPD — a party which is only now arresting its decades-long decline. But alongside his climb to the top of German politics, Scholz has left traces of scandals that could, and should, come back to haunt him.

Sometimes Scholz’s famed flexibility has led to concrete benefits to workers — particularly in the pandemic. In his role as finance minister in the CDU-SPD grand coalition, he used emergency budgetary provisions to open up the public coffers to prevent mass unemployment, breaking with the tradition of “black zero” budgets — i.e., no surpluses. But Scholz also backed the Hartz IV reforms that gutted German welfare, choked the creaking state of investment through balanced-budget fetishism, endorsed brutal policing methods against activists and migrants in Hamburg, and failed to regulate businesses that robbed state coffers. In some now infamous cases, these businesses even committed massive financial and tax fraud.

With a record like this, we can expect Scholz to choose proximity to powerful interests over representing the interests of ordinary people — including when it comes to forming a government after Sunday’s election.

Law and Order: Hamburg

Many profiles in the buildup to the vote have noted Scholz’s youthful period in the 1980s as a longhaired left-wing radical. During his six-year spell as deputy leader of the SPD youth, he was part of its so-called StamoKap wing, dedicated to “overcoming capitalism.” But such left-wing principles did not survive contact with his entry into professional politics.

After becoming interior minister of Hamburg in 2001, a traditional Social Democratic stronghold, Scholz felt a right-wing populist party snapping at the SPD’s heels. Looking to be seen as tough on drug crime, he decreed that the emetic ipecacuanha could be forcibly deployed on suspected drug dealers — against warnings from the Hamburg Doctors Chamber that it could be fatal. Just a few months after this was introduced, nineteen-year-old Achidi John, from Cameroon, died after the syrup was brutally forced down a tube in his nose, against his resistance. His final words were “I will die,” but police failed to call an ambulance immediately. No one has been prosecuted to this day. The European Court of Human Rights declared forced emetics to be torture in 2006, by which time they had been used 530 times in Hamburg alone. Scholz glibly opined in a recent televised debate, “I didn’t see it as torture,” and called it “the mildest method” — despite another death being caused by the same syrup in nearby Bremen in 2005.

The Hamburg SPD has continued to block an investigation into the deployment of emetics, while in Bremen an investigation by the Greens revealed that not one of the people whom emetics had been used against was white.

This wasn’t the last time that Scholz supported brutal policing in his hometown. After the SPD left national government in 2009, he maneuvered his way back to the harbor city, where he won a landslide victory in the 2011 mayoral election, becoming known locally as “King Olaf.” Hamburg especially captured the world’s attention in 2017, when the G20 summit of major world leaders was held in the city. Ahead of the event, Scholz had laughed off fears of escalation, comparing the G20 to the annual harbor birthday celebrations. In fact, the result was riots, burning cars, and widespread police brutality against demonstrators. When a special investigation committee was formed, he insisted there had been “no police violence,” for which he received applause from the far-right Alternative für Deutschland.

Although this poor planning damaged Scholz’s reputation, he was backed by Chancellor Merkel and kept his job as mayor — admitting that if someone had died, he would have had to step down. But the political aftermath was dominated by a swift and brutal reaction against the protesters, with 3,580 cases processed in Hamburg. The leftist website Indymedia was shut down by the federal government, which implemented a hunt across the country for 135 participants in the protests.

A Fetishist in Government

But Scholz is not just a regional figure. He has played a role on the national stage for many years, including as general secretary of the SPD between 2002 and 2004, under Chancellor Gerhard Schröder. This nominally center-left government — a coalition with the Greens — is known for introducing the Agenda 2010 reforms to Germany’s labor and welfare laws. These brought the biggest cut to social security benefits in postwar Germany, with welfare measures controversially replaced with a punitive sanctions-based system known as Hartz IV.

As Schröder’s enforcer, Scholz staunchly defended this agenda — insisting that “even badly paid and uncomfortable work is better than state financed not-working.” Scholz also argued for removing any mention of “democratic socialism” from the party program, similar to Tony Blair’s abandonment of the British Labour Party’s traditional Clause IV advocating common ownership. He insisted that “in the twenty-first century we have to change perspective.” Hammering home his neoliberal hawkishness, he later blamed the effects of increasing poverty and social inequality on “incomplete reforms.”

After the 2017 election, the grand coalition between the SPD and Merkel’s CDU continued, despite the center-left party’s campaign promises. Returning from Hamburg to national government — becoming Merkel’s vice chancellor and finance minister — Scholz stuck loyally to agreements made with the conservative CDU. He supported German fiscal orthodoxy and ran a budget surplus sticking to the black zero tradition of no borrowing. He made his collegiality with the CDU clear to leading weekly Der Spiegel in 2019: “There will be no ultimatums given or red lines drawn. We are in a government, not a bazaar.”

However, like many finance ministers from both Left and Right, Scholz rose to the challenges of the pandemic — and spent like he had never spent before. In the eurozone and on the global stage, too, he used his clout as the finance minister of Europe’s largest economy to push through reforms that would have previously been unthinkable: unified European borrowing and a minimum tax rate among all OECD nations.

Sadly, for those hoping this would be a fiscal Damascus moment, Scholz still refuses to consider reforming the “debt brake” — a constitutional amendment introduced in 2008 that imposes strict limits on government borrowing. Scholz told business weekly Handelsblatt that the necessary funds would come “predominantly from private investment.” Criticizing Green proposals to borrow money, Scholz claimed “those who would fund their manifestos will collapse in on themselves like a house of cards.” Seen as an overture to the market-liberal Free Democratic Party ahead of coalition negotiations, this goes against the new global fiscal orthodoxy, and is to the right even of Joe Biden. Considering the negative interest for German government borrowing, this can only be seen as starving Germany of much-needed public investment while infrastructure crumbles. The likely effects were visible in the disaster that hit the west of the country this summer, with deadly summer floods exacerbated by an outdated warning system.

Follow the Money

Scholz’s backroom deals didn’t start with convincing his party’s more left-wing leadership to make him SPD candidate for chancellor, just a year after they narrowly won internal elections on an anti-Scholz platform. For Scholz has been linked to some of the biggest tax and financial scandals in modern German history. Yet through a combination of bureaucratic stalling, selective memory, and political stonewalling — as well as his opponents’ own mishaps — he has mostly avoided repercussions in the run-up to the election. However, these incidents do tell us something about his relationship to unaccountable power.

One prominent example is the “Cum-Ex” case, in which Warburg bank used complex tax loopholes to rob state coffers of €440 million. Before the scandal broke, a Warburg executive met Scholz, then mayor of Hamburg, after receiving a huge tax bill from the federal tax office. Scholz asked them to send exactly the same documents to the Hamburg finance senator. Two days later, the Hamburg finance ministry waived a €47 million tax bill. Warburg later had to pay Hamburg €155 million in back taxes after a criminal trial. The total damage to public coffers across Europe owing to the case is estimated to be as high as €55 billion.

Scholz’s office initially told an investigation committee that there had been no meeting with bankers — but it was later discovered that one had taken place. Scholz was repeatedly asked at a special committee about other meetings, but didn’t answer. After his diary was examined, it became clear there were at least two more and a telephone conversation, which Scholz claimed not to remember. Scholz used memory lapse as an excuse more than forty times in the committee meeting, noting that, as mayor, he “spoke to a lot of people.”

In another financial scandal, the anti-money-laundering authorities, which Scholz headed as finance minister, kept quiet about Wirecard reports of transfers worth over €180 million and only later noticed they were suspicious, preferring to celebrate an apparently successful German start-up rather than do due diligence. Through parliamentary maneuvers such as holding confidential meetings rather than attend committees, Scholz’s ministry has delayed publishing anything that could endanger him, despite promising “maximum transparency” earlier. Scholz also used this stonewalling tactic to refuse to answer a parliamentary question from the Greens about how many times he met with the coal industry as finance minister.

The Sum of His Parts

As a typical social democrat in the neoliberal era, a Chancellor Scholz would likely bring some modest gains for workers, such as a higher minimum wage (a proposal blocked by his own party in 2013). But he would also meld this with strong collaboration with capital (seeing private investment as key to defeating climate change), and tough law-and-order policies in the name of quieting right-populist challengers. A focus on preserving jobs and European solidarity amid the pandemic is to be applauded. Yet Scholz shows no sign of having the independence necessary to break with German fiscal norms to the degree necessary to seriously confront the climate emergency — nor to deal with the massive inequalities in German society.

Ahead of Sunday’s election, debate is raging about whether a victorious SPD ought to go into government with the Greens alongside the free-marketeer FDP, or else with the beleaguered Die Linke (the Left Party) — or even seek a renewed pact with the conservative CDU. Each of these coalitions is currently predicted to have sufficient seats to form a majority, but there has been intense scaremongering about a left-wing coalition from the center-right bloc, including from Merkel herself. She has used Scholz’s apparent openness to a coalition with Die Linke as a dividing line between herself and her likely successor.

This does not mean that there really are warm relations between the center-left parties and Die Linke. While this latter’s skepticism toward NATO alone is enough to exclude it from the political establishment, the SPD and the Greens are also happy to bash the Left in order to shore up their own credentials as responsible on the economy. Scholz has indicated that he would prefer another grand coalition with the CDU over one with Die Linke, although a “traffic light” coalition between the SPD, Greens, and FDP is still seen as the most likely outcome.

Whichever coalition he heads, Scholz’s priorities will keep Germany on the same course set by Merkel through her repeated grand coalitions. His is a politics of stability above vision, management above transformation, and protecting the interests of the powerful — while making just enough reforms to keep the coal-powered goliath of German industry chugging along.