Knut Bergmann and Matthias Diermeier discuss the economic origins and developments of Germany’s right-wing Alternative for Germany party and how the party’s rise reflects, in part, voters’ concerns that mainstream parties are failing to protect the future of Germany’s vibrant manufacturing sector.

This article is part of a series seeking to understand the issues of political economy driving populist movements around the world as we proceed through the “year of elections.” We will publish a new article every week, which you can find here.

Until the last decade, electoral research had tried to understand why—unlike in most European countries—no populist radical right party had permanently established itself in Germany since the fall of the National Socialist German Workers’ (Nazi) Party in 1945. However, Alternative for Germany (AfD)—founded in 2013—has since filled this void at all three electoral levels (national, federal state, and municipal) of the German political system, and its influence is growing.

The initial rise of AfD can be attributed to opposition to debtor countries during the European sovereign debt crisis after the Great Recession. Several countries in southern Europe and Ireland with heavy public debt loads and struggling banks looked to the European community, particularly Germany, to bail them out. Many Germans were reluctant to fund these bail-out packages. Still, the AfD failed to pass the 5% percent electoral threshold in the 2013 federal election, their first, and did not enter the German Bundestag.

Europe faced another crisis a few years later, and in 2015 and 2016 Germany saw the influx of nearly one million refugees from countries such as Syria, Iraq, and Afghanistan. The AfD capitalized on rising anti-immigration resentment among German voters and secured a record vote share of 12.6% in the 2017 federal elections. The AfD’s support levels remained around these levels through the end of the decade and into the pandemic, when the party condemned lockdown measures and calls for compulsory vaccination.

Since 2022, though, the AfD has nearly doubled its support levels up to 20%. It has once again taken advantage of an ongoing crisis, this time economic security tied to high energy prices triggered by the Russian invasion of Ukraine. Immigration has also returned as a salient issue on the national political agenda to the AfD’s advantage.

The contemporary German political economy and sources of AfD’s strength going into the 2024 elections

Today, voters increasingly back the AfD’s critique of the state’s perceived openness to immigration, economic sanctions against Russia, and the government’s attempt to implement ambitious policies to battle climate change. Economically, these voters see the German state failing to protect the competitiveness of its manufacturing sector.

In a nutshell, the AfD is attracting voters from different social strata who feel precarious about their financial security and blame the German state for sacrificing their welfare to sanction Russia, support migrants and refugees, or transition to a greener economy. This perhaps explains why the AfD is making strong progress in regions where the traditional car-manufacturing sites are based and where employment is based on energy-intensive industries. These regions are relatively affluent, but voters are feeling the pressure from high energy prices and the structural change necessary to achieve Germany’s goal of climate neutrality by 2045. In the 2023 state election in Bavaria, Germany’s largest and second most-wealthiest state, the AfD defeated the Green Party in manufacturing regions by a spectacular margin of 10.7 percentage points.

Despite AfD supporters’ concerns about their financial security, they are extremely critical of social welfare policies, an attitude they share with voters of the business-friendly Free Democratic Party (FDP). This is particularly evident in AfD voters’ opposition to the recent introduction of a more generous social welfare system, to rent freezes, and to plans to expand targeted welfare for poor children. In a recent poll, 67% of AfD supporters said that “social benefits are being increased to such an extent that it is no longer worth working,” and 87% said that “higher social benefits lead to greater migration, which puts an excessive burden on German social security funds.” These were the highest numbers for any party polled.

Similarly, in response to the German Federal Constitutional Court’s declaration that the 2021 supplementary budget, which transferred unused Covid relief funds to a climate fund, violated Germany’s debt brake and was thus invalid, 69% of AfD supporters favored budget cuts and savings and only 17% favored suspending the debt brake. A mere 5% favored raising taxes. When asked for the reasons why they favored budget cuts, 84% of AfD voters said they wanted to cut social welfare, reduce the budget for “military aid for Ukraine” (86%) and “restructure the economy to be more climate-friendly” (82%).

As polling data shows, what drives AfD’s popularity among voters is not just a sense of (financial) insecurity but that their security is being sacrificed for “non-Germans.” Recently, the German government was again forced to cut their budget to comply with the debt brake. AfD representatives accused the government, which is led by a coalition comprising the business friendly FDP, the center-leftist Social Democratic Party (SDP) and Green Party, of being “all […] left-wing dreamers, socialist ideologues who are ruining Germany and its hard-working inhabitants.” Their opinion is that only the welfare of “pensioners, employees or needy German citizens” should not be cut.

However, it remains unclear what economic policy proposals the AfD would actually implement if it were to follow its less radical sister parties across Europe into government. Similar to most European right-wing populists, AfD focuses on free market policies in matters of tax, labor market, and energy policy—which should actually earn its support from the business community. For the 2023 federal election, AfD proposed income tax cuts comparable to the proposal by the FDP. The party strongly opposes the phase out of coal-based power generation as well as the shutdown of nuclear power plants. However, AfD also represents positions that business representatives view harmful, including ending the immigration of skilled workers (or any immigration), the rejection of free trade agreements, the denial of anthropogenic climate change, and, perhaps ironically, opposition to an active state industrial policy (they oppose state meddling in the free market). The party also supports the possibility of exiting the Eurozone or European Union (Dexit), which some party officials believe will release Germany from the monetary liabilities posed by less wealthy member states, free up the budget, and unfetter German business from EU regulation.

The party’s positions are at once nationalistic and yet often economically liberal. This has led to inconsistent party posturing, which makes it hard to predict what a local, state, or federal government that includes the AfD would actually mean for policy. For example, in a recent talk show, AfD economic policy spokesperson Leif-Erik Holm attempted to dismiss party consideration of Dexit, which party and parliamentary group leader Alice Weidel called a “last resort.” When the government eliminated agricultural subsidies, the party demanded red diesel and car tax benefits for farmers—contrary to the long-standing opposition to the matter and general neoliberal stance. Such backtracking suggests that, similar to what Italy has seen under the rule of the right-wing populist Brothers of Italy, the AfD would not advance all of the extreme policies they currently flaunt and would moderate on other issues. What would matter is which of their current policies they still decide to pursue. 

Regional policy instead of social policy could win votes back from the AfD

Although center-right candidate Ursula von der Leyen stands a good chance of being reelected as president of the EU commission, the AfD is projected to do well in the upcoming 2024 EU elections. Nevertheless, it is perhaps at the regional level where the future of the AfD will be decided and where the mainstream and more centrist parties (including the FDP, Greens, SDP, and sister center-right Christian Democratic Union and Christian Social Union) are best equipped to retake the polls. To win back popularity, the centrist parties will need to explain how they will support Germany’s manufacturers, the economy’s backbone of the countryside. This will entail explaining how the state will keep energy prices low, despite sanctions against Russia and efforts to transition the country to a sustainable economy. It will also require keeping regulatory burdens minimal and supplying the necessary infrastructure, such as pipelines for hydrogen and equipment to capture carbon emissions. Unlike the United States, France, the United Kingdom, or Italy, Germany’s manufacturing-dependent regions have continued to thrive. The recent rise of the AfD goes along with setbacks to this sector and regions dependent on it. If the centrist parties do not address these concerns, voters will continue to flock to the AfD, and Germany may very well witness a populist takeover of local and state governments in manufacturing hubs as has happened in the aforementioned industrialized states.

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