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24 September 2021

The making of a Hanseat: What Hamburg reveals about Olaf Scholz

How seven years leading Germany’s second city shaped the front runner to succeed Angela Merkel.

By Brian Melican

With every passing day, it is looking more and more likely that Germany’s next chancellor will be Olaf Scholz of the Social Democrats (SPD). For those of us on the left, after 16 long years of Christian Democrat (CDU) political dominance, the prospect of the next head of government being from the SPD feels oddly exhilarating.

That is curious, as the party has been the junior partner in three out of four Merkel administrations and as Scholz himself – Angela Merkel’s vice-chancellor and finance minister – has been a fixture of German political life since the time of Gerhard Schröder’s chancellorship (1998-2005). All the more so as, under Schröder, Scholz was nothing less than the public face of the “third way” Agenda 2010 reforms which slashed benefits, helped create a burgeoning low-wage sector and left the SPD electorally so enfeebled that it had no other option than to prop up Merkel’s administrations and argue that the alternatives would have been worse.

Yet the idea of an SPD-led government under Scholz remains strangely alluring. Partly, this comes from simple elation that, after the prospect of a left-of-centre government had become illusory, the right-of-centre CDU can now clearly be dislodged from the chancellery. Another factor is the expectation that winning will finally force the SPD to show the colour of its money: after the “third way” mantra of “remaining competitive”/“international markets” was exhausted in the 2000s and the 2010s were defined by “We’d like to, but the CDU won’t…”, an electoral victory would replace these narratives with a simple imperative: no more excuses.

This latter consideration goes a long way to explaining why the party’s disenchanted left has ditched its decades-long habit of sniping at its centrist leaders and backed Olaf Scholz. Yet for all his years as a key figure in the party’s more conservative, business-friendly wing, Scholz is by no means static. Like many others in his party, Scholz has learned from its millennial mistakes, and there is every reason to take at face value his commitment to renewing the social contract that the Schröder SPD helped undermine.

Scholz has not, however, undergone a Damascene conversion. Rather, he has reasoned his way to more traditionally social-democratic, interventionist positions; some of his ideas have progressed while, in most respects, his overall convictions and political persona have remained largely unchanged. Those of us who observed his time as mayor of Hamburg (2011 to 2018) got a close-up view of Scholz as he evolved – and some salient reminders of both his aptitude and his limitations.

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The importance of regional background in German politics is hard to overstate. Scholz is immediately identifiable as a Hanseat – one who hails from the country’s second city and, crucially, is seen to embody the better characteristics associated with both its trading past as part of the Hanseatic League and its present position as the third largest port in Europe and a thriving business hub. In the same way as Gordon Brown long traded on the associations awakened in British voters by his reassuringly dour Scottish accent (“son of the manse”, “fiscal prudence”), when Scholz speaks in his understated northern manner, Germans everywhere hear a voice redolent of solid commercial practices and a coolly analytical approach. The aura of a good man to have around in a crisis.

As he is doing in the current campaign, Scholz deployed this Hanseatic demeanour to great effect in the 2011 election to Hamburg’s regional assembly, the Bürgerschaft. Historically, the city had been a social-democratic stronghold since the 1950s. But it had fallen to an alliance of the CDU and right-wing populists in 2001 after an SPD gone to seed had presided over a decade-long deterioration in both the city’s finances and its public realm. “The Hamburg SPD had long thrived on being seen as sensible, pragmatic, and unideological,” explains the Hamburg-based political analyst Martin Fuchs – a safe pair of hands, the party that produced the steely Helmut Schmidt rather than that old softy Willy Brandt – “and it was this tradition to which Scholz sought to reconnect”.

He was aided by an increasingly chaotic CDU. Despite its considerable wealth, Hamburg in 2011 remained one of Germany’s most heavily indebted states on a per-capita basis, with public infrastructure starved of investment while a badly delayed vanity project, the quayside Elbphilharmonie concert house, loomed forlorn on the city’s skyline. The contest was the SPD’s to win – and Scholz won it resoundingly. He kept a typically Hanseatic low profile, politely but persistently harrying his increasingly agitated opponent on the CDU’s poor record with confident equanimity and a wry smile. Hamburg’s electorate found the Hanseat they were looking for and gave the SPD its best result since 1982 and an absolute majority.

[see also: Angela Merkel’s austerity condemned Europe and Germany to decline]

Broadly, Scholz’s seven-year tenure was a sustained success in tackling the thorny issues which had eluded the grasp of his predecessors. This explains why his SPD was re-elected in 2015, losing only two percentage points since the previous election. Early on, Scholz grasped the nettle of the Elbphilharnonie, the construction of which had come to a complete standstill following protracted legal wrangling with the developer Hochtief, one of the world’s largest construction companies. Recognising that any further delay in resuming work would be more damaging than a settlement, Scholz redrew the contracts to shift any future risks of rising costs on to Hochtief. “He didn’t waste time talking to heads of department, but went straight to the top to cut the deal,” recalls Axel Schröder, Hamburg reporter for German public radio.

Scholz was also finally able to return Hamburg’s exchequer to the black – a matter of pride for all true Hanseaten. Although he and his finance minister (and, in 2018 successor as mayor) Peter Tschentscher were undoubtedly aided by Germany’s sustained post-financial crash boom, the lasting fiscal difficulties of Hamburg’s smaller Hanseatic neighbour, Bremen, show that strong tax receipts alone do not balanced books make. Fundamentally, Scholz’s instincts are fiscally conservative, but in Hamburg, he learned when to loosen the purse strings – much as he would do in the Covid-19 crisis as federal finance minster, throwing his commitment to Germany’s sacred “black zero” overboard and spending through danger in 2020.

A watershed moment in this regard came early in his tenure as mayor when, in 2012, Hamburg’s flagship freight carrier Hapag-Lloyd was staring into the abyss. The Scholz administration bailed it out with a half-billion-euro buy-in which left the city with a controlling stake approaching 40 per cent. That Germany’s hawkish economists consider state holdings a mortal sin might have bothered Scholz in his Schröder years. Yet as mayor of Hamburg, he refused to sacrifice a business so crucial to a port city on the altar of economic orthodoxy – and, when the parliamentary arithmetic looked wonky, even used votes from the hard-left Linke party to get the deal through. In 2019 the city divested itself of most of those shares at a profit.

Scholz’s persistence is legendary. Opponents and allies alike refer to his ability, in the face of sustained criticism, to simply keep on repeating what he considers to be a valid argument as Scholzomat (“Scholz-o-matic mode”). On education, for instance, that emotive issue which had tripped up the preceding CDU/Green administration, he handed the brief to the unpopular Ties Rabe – and left him there despite constant, often personalised campaigning from pressure groups to reform selective schools. Recognising that tilting at grammar schools would be polarising, Scholz and Rabe instead aimed to improve the educational attainment of children from low-income families within the existing system. (At the time of writing, Rabe is now Germany’s longest-serving state education minister; Hamburg’s schools have made a steep climb towards the top of the country’s league tables.)

At times, Scholz’s relentless focus on what a majority of voters are willing to stomach can appear to be political opportunism, a charge also levelled at Merkel. Yet unlike Merkel, Scholz has political goals and is proactive, creative even, in pursuing them. “Scholz doesn’t lack social-democratic convictions,” explains Axel Schröder, “but he is keenly aware of what can be done, and how to do it. He is a political craftsman who doesn’t leave things to the administration, preferring to take the lead himself.” Along with many others, Schröder is impressed with one of Scholz’s pet projects: an agency for helping unemployed school-leavers get a foothold in the jobs market.

On housing, too, Scholz set a social-democratic goal – to increase the supply of affordable homes – and then went about trying to achieve it within the realms of what was practicable. The result in Hamburg is the “Alliance for Homes”, an agreement between the city authorities, local councils, housing developers, cooperatives and providers of social housing to build 10,000 new homes annually. The city’s end of the bargain is to speed up planning permission; the other parties commit to keep rents moderate and build, build, build. “There is, of course, considerable collateral damage,” says Schröder, “as developments are making many areas more crowded and eating into the city’s green spaces.”

Under Scholz, the city took an extremely light-touch approach to environmental considerations, even resorting to felling trees overnight if protests by residents’ initiatives against developments threatened to gain too much momentum. That has helped push up support for the Greens in Hamburg, which surged to 24 per cent at the 2020 election there. Yet the SPD remained at just under 40 per cent – in no small part thanks to the way the slew of new-builds has helped slow, if not altogether reverse, price rises at a time when they have rocketed elsewhere. In contrast to the mix of cynical laissez-faire and headline-grabbing interventions that characterise Berlin’s fraught housing policy, for instance, the Hamburg approach has delivered results.

This is perhaps why even left-wing idealists can enthuse about the otherwise unexciting prospect of Olaf Scholz in the chancellery: the feeling that he might help shift government from eternal crisis management to tackling the root causes of said crises. For this, many are willing to take Scholz warts and all.

And the warts are, while masked by the inadequacy of his competitors in the current campaign, plain to see. Scholz is overly self-assured, arrogant even. In Hamburg, he was often sarcastically referred to as “King Olaf”. “If senators disagreed with him,” recalls Schröder, “he would take them to one side and say, ‘I see you haven’t quite understood the issue. Let me run you through it again…’ The idea that they might simply have a different, wholly legitimate opinion rarely occurred to him.”

So Scholz is vulnerable to blind spots. His willingness to hold the 2017 G20 summit in Hamburg in spite of repeated police intelligence warnings – and, as anyone familiar with Hamburg’s tradition of anti-capitalist activism might argue, against good common sense – is the single most obvious incidence of this over-confidence. While swathes of the city centre turned into a battleground on the opening evening of the summit, Scholz sat in the Elbphilharmonie listening to classical music with Merkel and other world leaders supremely confident that the hard-line policing strategy he and his police commander had devised would keep things under control.

Indeed, Scholz has an unbecoming taste for law-and-order displays. Many write them off as knowing sops to socially conservative voters. Yet Scholz doesn’t just talk tough to get votes; he acts tough, even when public opinion is broadly in favour of a more liberal approach. “Following the refugee crisis in 2015, Scholz was instrumental in tightening up legislation around deportation, making it increasingly difficult for asylum seekers to get a fair hearing, and even set up Germany’s first airport detention facility in Hamburg.”

“At the same time, however, Scholz was also telling people from the jobseekers agency to go to refugee accommodation and ask new arrivals if they had any qualifications which might be of relevance on the employment market,” adds Schröder: “He’s not a xenophobe.”

To this, I can personally testify. In April 2016, in Hamburg’s imposing city hall, it was Olaf Scholz himself who handed me my certificate of German citizenship with a smile and a handshake. Scholz is known to be a strong proponent of naturalisation and under his mayoralty, Hamburg authorities started writing to foreign residents who met the criterion for citizenship to invite them to become German. He also personally led as many citizenship ceremonies as possible, writing a fresh speech for each occasion and mingling, however briefly, with the assembled new Germans over a glass of sparkling wine.

This is Scholz at his best: achieving social-democratic results through political action. Hamburg naturalises a high percentage of its foreign-born population compared to other German states, and in contrast to Bavaria or Saxony, does not routinely deport refugees who have found work. Under Scholz’s leadership, Hamburg also began to stipulate a living wage as a criteria for winning public sector contracts, scrapped higher education tuition and childcare fees, and still stabilised its finances to the point where it was able to start investing in its public spaces again.

The rise of the Hamburg Greens during Scholz’s mayoralty shows, however, that another of his blind spots – and now potentially the most dangerous one – regards the urgency and import of the environmental crisis. For example, it was under his aegis that the port of Hamburg forced through a renewed dredging of the Elbe river to make way for ever bigger container ships. This was in spite of ecological concerns and ignoring that both container ship size and global transport requirements have demonstrably peaked.

Yet there is hope. Just as Scholz reasoned his way out of dogmatic neoliberalism (anecdotally, due to avid reading and intellectual exchanges with younger economists), there is no reason to think he cannot reach a more balanced position on ecology and the environment. So the prospect of Chancellor Olaf Scholz remains an alluring one – and even more so if his vice-chancellor is Annalena Baerbock of the Greens.

Brian Melican is a freelance writer and translator based in Hamburg.

[See also: What the end of the Merkel era means for the world]

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