Wait and See

Alexander Privitera

AGI Non-Resident Senior Fellow

Alexander Privitera a Geoeconomics Non-Resident Senior Fellow at AGI. He is a columnist at BRINK news and professor at Marconi University. He was previously Senior Policy Advisor at the European Banking Federation and was the head of European affairs at Commerzbank AG. He focuses primarily on Germany’s European policies and their impact on relations between the United States and Europe. Previously, Mr. Privitera was the Washington-based correspondent for the leading German news channel, N24. As a journalist, over the past two decades he has been posted to Berlin, Bonn, Brussels, and Rome. Mr. Privitera was born in Rome, Italy, and holds a degree in Political Science (International Relations and Economics) from La Sapienza University in Rome.

Europeans are looking at September 22 as the day that could finally deliver some badly needed change to the continent. This is not to say that many Germany watchers expect Angela Merkel to lose power. However, there is widespread belief that if Merkel is confirmed at the helm of Germany for a third term, she could finally change gears in handling the European crisis. With re-election pressure no longer guiding her, Merkel  might finally accept the need for some form of mutualized liabilities, or simply try to accelerate the process of fiscal and political European integration. Perhaps she might even pursue both.

Indeed, even senior German officials realize that the September date is having a huge impact on the current behavior of some key European partners. Germans, too, hope for things to change after September 22, albeit for completely different reasons. They believe that French President Francois Hollande  is hoping for a win of the Social Democrats. Hence, he won’t invest in his somewhat cool relationship with Chancellor Merkel until German voters have cast their ballots.

But September could provide a rude wake up call for chancelleries across Europe, particularly for those located in the periphery of the continent. Soon thereafter, Europeans will realize that Merkel did not stick to her careful step-by-step approach for electoral reasons only. She actually believed it to be the only responsible course of action. Throughout the crisis for Merkel, solidarity has been delivered in small doses. If some European countries continue to fall further  behind Germany instead of catching up, it is mainly because they are simply not trying hard enough to do their homework and take the tough medicine of structural reforms. The French malaise is a case in point.

While Europeans wait for Merkel, she waits for Europeans. It is the usual game of chicken. If Chancellor Merkel keeps her job, this standoff won’t magically disappear after September 22. A win for Merkel is still the most likely outcome, regardless of whether she will be able to retain the weak Free Democrats (FDP) as her coalition partner.

In the latest polls, the gap between Merkel’s Christian Democrats and the Social Democrats is still wide. Yet, the Christian Democrats have become worried. They do not fear a sudden surge of the SPD and its leading candidate Peer Steinbrück, but instead believe that a small, new party could derail Merkel’s plans.

One such party seeking to sway the September outcome is “Alternative für Deutschland (AfD),” the party of German euro skeptics. In a German twist to the widespread rise of demagoguery across Europe,  AfD is a populist movement cloaked in professorial respectability. Its leader is a soft-spoken academic, Professor Bernd Lucke, who has finally managed to cause headaches for the political establishment. The AfD still polls well below the threshold of 5% needed to send representatives to the Bundestag, the German lower chamber. Nevertheless, Lucke is gaining traction and many voters could be reluctant to tell pollsters whether they intend to vote for a party that has been branded by the establishment as nationalistic and anti-European.

The AfD does not only appeal to bailout fatigued conservatives. Its potential reaches well into the core of Social Democrats as well. In terms of pure arithmetic, however, a small surge of the AfD—even if it stayed below 5%—would mainly hurt the CDU. It would manage to bury any chances for a Christian Democrat led coalition, either with the Free Democrats (FDP) or the Greens. This explains the growing nervousness among CDU politicians.

In typical Merkel fashion, the Chancellor has chosen a wait and see approach. While some of her party colleagues would like to go after the anti-euro newcomers aggressively, she prefers to ignore them for now. She knows all too well that many of her own voters share the AfD’s views about the euro crisis. Attacking the AfD could be interpreted as an insult to them, thus pushing these voters toward Lucke’s party. Over the past several years, Merkel has carefully cultivated the image of a politician that slows down when others get agitated. So far, in Europe as well as domestically, this tactical acumen has served her well. She is not about to change that simply because others expect her to.