In the middle of the traffic light negotiations, Olaf Scholz flew to Washington. In fact, the short trip to the USA could still help him to become chancellor.
When Olaf Scholz enters the world stage in Washington, he first wants to announce his success in English: “This is a very special moment,” says the finance minister, who would like to become Germany’s next chancellor. Behind him is the White House, which he visited as the backdrop for his statement on the global minimum tax. Before him the German and also the international press. Next to him is the Canadian Treasury Secretary Chrystia Freeland. She praises him profusely.
“Thank you very much, Olaf,” says Freeland. She is very happy to be here with him. Because it was personally he who had fought for years in particular for the global minimum tax of 15 percent for companies. For a moment Scholz tilts his head gently in her direction. It seems as if he wants to say thank you very quietly.
Olaf Scholz with Canada’s Finance Minister Chrystia Freeland (Source: imago images)
Scholz, Freeland and the other G20 and G7 finance ministers are negotiating a binding communiqué on this at the annual IMF autumn meeting in Washington. This important final chord is also the reason for Scholz’s trip to the USA, which falls in the middle of the traffic light explorations in Berlin. That’s why he keeps it as short as possible. Only about a day and a half, closely spaced, little sleep. Completion is to be reported in Berlin on Friday in order to enter into coalition negotiations.
Scholz is in demand like never before
136 countries have agreed to take part in taxing the big global corporations at least minimally. The so-called “minimum corporate tax rate” is to apply as early as 2023. This will end the “race to the bottom”, says Scholz proudly, referring to the competition between countries to attract companies with still lower tax rates, which in the end has harmed all national economies. Nobody expected that a few years ago. Just as little as most of them with his chancellorship.
This trip to Washington is of course also about being seen. The SPD minister can enjoy it. Because of the German election results and the victory of his SPD, he is more in demand in the US capital than ever before. When Freeland is already gone, a video team from Bloomberg gets an extra interview. But Scholz does not want to wait any longer for his colleague, the late French Finance Minister Bruno Le Maire, who should actually also be there in front of the White House. A BBC television team that realized too late that the possible successor to Merkel was standing here in Lafayette Park has no chance either.
Scholz is not yet Chancellor. And that’s why he has to get back to Berlin quickly. “Before Christmas,” he says, the coalition should be in place. Then he wants to replace the CDU Chancellor after 16 years. With him, the SPD would provide the head of government for the fourth time in history. Then Scholz could take a quick breath at the turn of the year.
A bit of putty for traffic light negotiations
The global minimum tax is not inconvenient for this plan. If it were actually implemented by all countries, that would indeed be historic. For Scholz that would not only be a personal but also a financial success that could help him with the traffic lights. A study just published by the Ifo Institute assumes that this would mean that Germany would have around 5 billion euros in additional tax revenue available every year.
That would only be around one percent of the current federal budget. But it is money that Scholz can use well if he wants to reconcile the wishes of the FDP for no tax increases, the Greens for major climate investments and the SPD for a lot of social equality. Even the Jusos, that critical mass in the new parliamentary group, could possibly deter with these prospects from more radical taxation demands.
The USA, of all countries, whose finance minister Janet Yellen Scholz also met during the G20 and G7 consultations, could still become a problem. A corresponding new tax law might still have to go through the repeatedly blocked US Senate. A tricky situation to which a possible Chancellor Scholz is already preparing for many other issues with the transatlantic friends.
But Scholz also wants to bring back a little of the glamor of international pomp from his visit to Washington. He underscores his claim to leadership here, he emphasizes multilateralism to Merkel and lets the world know of his negotiating skills and international networking. Just a few hundred meters away, the foyer of the International Monetary Fund would have done the same. But pictures in front of the White House are not to be missed in such a situation.
When does Olaf Scholz meet Joe Biden?
So far, Scholz has never met the incumbent US President Joe Biden. That didn’t happen on this short trip to Washington either. In terms of protocol, it would also be a step too early for that. However, there could be a first meeting with Biden at the end of October. The Chancellor travels with Scholz to the G20 summit in Rome. And Scholz could also come to the climate summit in Glasgow, which is important for Joe Biden. However, that has not yet been decided, according to the Ministry of Finance.
With France’s Bruno Le Maire, for whom Scholz no longer wanted to wait in front of the White House, he at least strolled briefly through the streets of the US capital accompanied by photographers. The two are considered the “Franco-German dream team” that played the leading role in the global minimum tax project. Friendship with the French is just as important for the transatlantic Scholz as it is with the USA, especially in times of mutual resentment within NATO.
In front of a small café bar right next to the World Bank building, you greet each other with a friendly smile with your fists. A short statement for the press. Maybe the two of them will see each other again soon, only then in different roles. Scholz’s possible first trip as Chancellor would, that much is certain now, go to France.
In Washington at Dulles Airport, Scholz initially boarded the Airbus of the readiness for flight as finance minister, which is supposed to bring him back to the complicated negotiating table in Berlin. In his luggage he has the historic communiqué of the G20 finance ministers. This very important sentence can be read in it: “We endorse the final political agreement.” In diplomatic language, this formula “We support the final political agreement” is the much more binding variant than a mere “We take note.”
At 10.30 am German time on Thursday, Scholz should land back in Berlin. Bringing three parties together on the basis of the facts could in some places be even more complicated for him than 136 countries and all G20 finance ministers. Because it’s about much more than just taxes. But he’s sure he can do it. The next Christmas speech should come from him.