The Merkel Regime: Perspectives After the German Election

Klaus-Dieter Frankenberger

Non-Resident Senior Fellow

Klaus-Dieter Frankenberger is non-Resident Senior Fellow at AICGS.

As negotiations to form a grand coalition move forward, reflecting on the results of the German election reveal big winners, losers, and the outlook for the coming years of German politics. A frequent AGI contributor, Klaus-Dieter Frankenberger is the Foreign Editor of the Frankfurter Allgemeine Zeitung and recently presented this analysis at the event, “The German Election Results: Domestic and International Perspectives,” hosted by the Denver Eric M. Warburg Chapter of the American Council on Germany and the Denver Council on Foreign Relations.

This is the heart of what the September 22 election has been all about: It is the Chancellor, stupid – the personality of the incumbent trumped every other issue. A public predominantly interested in stability bestowed Angela Merkel with a trust that was hard won over the Euro crisis and impossible to beat. There was no game changer, no “It’s time for a change”-mood. Germans went to the polls with high approval rating for the Chancellor while her opponent was trailing far behind. Actually, her approval ratings were as high as never before for any incumbent since 1990, the year of unification. The emotions she evokes have been reassuring to many voters who thought a changing of the guard was a bad idea.

And so her reelection was kind of a triumph for Angela Merkel which earned her impressive titles: Queen of Europe, the Woman who runs them all, Boss of Merkelland. She is clearly seen as the most powerful, even dominant politician in Europe. Interestingly enough, the German national election was seen from outside the country as the most important one for Europe, particularly by those who have not been happy about Ms. Merkel’s insistence on budget consolidation and fiscal discipline in Europe’s Southern crisis countries. In order to understand how remarkable Ms. Merkel’s victory really is, one has only to look around: Sarkozy out in France, Berlusconi out in Italy and Monti, too, Gordon Brown in the U.K. out, Zapatero out in Spain, and a few others out, too. This is dramatic.

Ms. Merkel won big, that is almost 42 per cent of the vote, because a lot of voters appreciated her kind of governing: It is pragmatic, not ideological, step by step, common sense driven, somewhat presidential, surely aware of what is on people’s mind – and what might be dangerous to her. Not surprisingly, most women voted for her; perhaps a little bit more surprising is the fact that most young voters cast their ballot for her, too. If Ms. Merkel succeeds in completing a full term, she will have twelve years under her belt and go down in history as being among the longest serving chancellors of the Federal Republic, in the line of Adenauer and Kohl.

What was special about this election? For sure the success of the Christian Democrats. They won 236 seats directly out a total of 299 directly elected seats – this is quite impressive. Then there is the elimination from parliament of the Free Democrats, the German liberals, the party of Genscher and Lambsdorff and all the other stalwarts of post-war Germany. And the third aspect that made this election special is the relatively strong showing of the Alternative for Germany, a newly formed group that sees both the current structure of Europe’s monetary union and the bail-out policy as deeply flawed, misguided, and dangerous. Most, if not all of their voters and activists want Germany to leave the Euro zone. This group was the wildcard before the election with pollsters not sure how to rate them. It failed to pass the threshold of five per cent necessary to be represented in parliament, but to poll 4.7 per cent as a newcomer is still a pretty good result. For others, this is frightening.

Let us look closer at the results. The CDU and her Bavarian sister party CSU together polled the best result in two decades. They are only five seats short of an outright majority in the Bundestag. There were moments during election night, when an absolute majority looked possible. It has never happened since Helmut Schmidt in 1976 that an incumbent chancellor increased his or her share of the vote. Merkel did.

But where there is joy there is also bitterness. And this is the loss of the German Liberals, junior partner in Merkel’s outgoing coalition government. Their loss is big and of historic proportion: For the first time in the history of the Federal Republic the Free Democrats will not be represented in the national parliament. In 2009, the party had polled 14, 6 per cent of the vote, and now annihilation. Imagine this! Obviously, the previous result went to the head of many liberal politicians including, including Foreign Minister Guido Westerwelle. But their performance in government was extremely disappointing.

It is extremely relevant that the Free Democrats have been purges from parliament. The voice of liberty, self-reliance and free markets almost silenced, its leadership discredited and widely reviled, the new Bundestag includes mostly parties that look to the government for help, view the government’s role in society and the economy favorably. To say this is not unfair to the CDU. And when confronted with the alternative of spending cuts or tax increased in order to consolidate the budget, certainly the Social Democrats and the radical Left opt by and large for tax increases. So this has a major impact on the politics and also on fiscal policy ion the future.

The SPD marginally increased its share of the vote. But 25.7 per cent still is their second worst result ever. Frankly, it is very bad, indeed. The man who was supposed to kick Queen Angela off the throne, former Finance Minister Peer Steinbrück, never found his stride. He did not resonate well with most of the electorate. He did not radiate much empathy, so he did not get much sympathy, either.

The Greens were in for a sobering surprise. They wanted to form a coalition government with the Social Democrats and deluded themselves by thinking voters would reward their decisively left-wing platform of higher taxes and so forth with winning big. In the end they went down substantially, from 11.9 per cent in 2009 to 8.4 per cent now. Some voters clearly were appalled by learning that some of the Green leaders were implicated in a pedophile scandal. Licking their wounds, they have immediately engaged in a brutal leadership struggle between the leftwing of the party and the so called real politicians. And for the record: The radical Left which has thought it could politically leverage the social justice issue did also loose. The Alternative for Germany and their relative success have been already mentioned.

Even if a more charismatic challenger had taken on Angela Merkel, it would have been difficult in any event. The main reason is clear: The election took place in an environment that was favorable to the incumbent: Many voters agreed with the way Merkel handled the Euro crisis; the public mood was not negative and did not call for changing the leader at the helm; and the German economy simply fared better that most other economies, with unemployment down considerably, manufacturing output strong, budgets close to balance. Germany has established herself as the key supplier of the emerging markets. This has helped to bring the country without too much pain through the crisis, some would say with not pain at all. Let the good times roll – that is what the chancellor offered.

Under those circumstances and with the chancellor in a comfortable position, issues that could have had an impact on voters’ choices fell on deaf ears or got not much traction. Social justice is something most Germans cherish. But it simply did not reach the level of intensity to pose a threat to Merkel who, by the way, talked a lot about justice herself. The NSA spay scandal did not catch on. Europe seemed to be taken care of, so no polarizing debate about it either. To a large extent, it came down as a personality contest.

Two questions have dominated the post-election debate. With whom will Ms. Merkel govern in the future? And here is a big paradox: Even, though, Ms. Merkel’s party won big, it is still difficult to form a new coalition government. And, second, will the new government eventually be strong and courageous enough to pursue a vigorous reform agenda which is much needed (despite the we-enjoy-ourselves-mood)?

When the victory parties were over and members of Ms. Merkel’s Christian Democrats were sober again, they did not fail to notice on thing: Berlin, we a have a problem. Merkel won big, but at least in the beginning, nobody queued to get an appointment for a new coalition government with her. Because the fate of those who have done so in the past is all too obvious and discouraging: They get slaughtered at the next elections: It happened to the SPD in 2009 and it happened again to the FDP. But then, enjoying the trappings of governing and meeting world leaders are more fun than sitting on opposition benches. And so CDU and Social Democrats have entered into negotiations to form a so called grand coalition. This is the option most Germans want to see in place. Still, the SPD has made clear that it will be a very assertive negotiating partner, and in any event, it will take quite some time, months, not weeks to reach agreement on an agenda for governing. The Social Democrats want to hold a party convention in mid November to approve any coalition agreement.

Ms. Merkel held preliminary talks with the Greens. This is an option a lot of commentators, pundits, and intellectuals dream of. There are some convergences, particularly on fiscal policy and on nuclear energy the use of which will be phased out. But culturally and when it comes to some social issues and to Europe, Christian Democrats and Greens, particularly the leftwing, remain far apart. Besides, the base in both sides does not like this idea. It would be an interesting experiment, but one for another day.

If all fails, then new elections may loom at the horizon. This is the nuclear option at the disposal of the chancellor as a snap election might demolish Social Democrats and Greens even further, might see a triumphant victory of Merkel and the return of the Liberals after their shocking rejection in September. So the Chancellor will be ready to make concessions and even offer something her to-be-partner cannot refuse, maybe a minimum wage – but only up to a point.

So what will Ms. Merkel do with her mandate? What should we expect from a Merkel III regime? To some extent, this will depend on the coalition she will eventually form and on the price he junior partner will be able to extract from her. The price tag could be higher than last time. But some items on the agenda stick out, nevertheless: completion of energy transformation which so far has been badly managed; tax reform (read i.e. tax increases), minimum wage, infrastructure modernization. The rehabilitation of the German road and rail networks which have been badly degraded over time is one of the top priorities now. Given the lack of investment in previous years, investment is now required in the range of 30 to 40 billion Euros in the coming four years. We might also see new efforts to address Germany’s demographic problems.

One big item on the agenda continues to be Europe. It is Europe on which Germany’s partners will encourage and expect the new government to act forcefully. The main task for her is to save the Euro and avert disaster for the global economy. But I would not expect a big shift here, maybe some growth related adjustments to placate the Social Democrats, but not more. Merkel will not change course and rush to complete a Banking Union, for example, just to please her European critics. She will insist on what she believes is best for Europe. Her believe is not molded in the Kohl way that sees a United States of Europe as the ultimate goal. While our partners dislike a Germany that imposes her policy choices inflexibly upon them, the German public is fed up with Germany’s traditional role of being the paymaster of Europe. And so is Ms. Merkel. She has become wary of the Commission and the notion that powers should continue to be transferred to Brussels. To the contrary, she has asked for some powers to be repatriated. Sounds somewhat British, does it?

High on the agenda will be the free trade agreement with the United States. Angela Merkel has been an early advocate of a Transatlantic Trade and Investment Partnership, and some observers say if it had not been for Ms. Merkel’s keen interest in the issue – an interest that is shared widely throughout the economy –, President Obama might not have made it a priority. Maybe – maybe he would have proceeded anyway. For Germany a Partnership Agreement has at least three major benefits, commercial and political: It would expand and deepen the transatlantic market place setting standards which other economic powers could not ignore; it would be a welcome source for growth in an otherwise not too growth-friendly environment; and it would bind the two sides of the Atlantic more closely together. Former American ambassador Bob Kimmitt has said, TTIP might be tomorrow what NATO was in the past. Assuming this is so, we should really work for it – and protect it against the fallout of the NSA spying scandal.

There will be one thing the German public and Germany’s partners particularly in Europe can rely on: Chancellor Merkel will continue to beat the drum to become and remain competitive, to modernize, to bring public finances in shape. As we enter a period of ultra-competitiveness simply resting on old laurels will not be enough to preserve our prosperity and protect our interests. It will continue to be a constant challenge to persuade our publics not to resist adjustment and change, annoying as this may be. But enhance competitiveness is Ms. Merkel’s mantra, as much for Germany as for France, Italy or Spain.

People abroad may ask one fundamental question: What kind of partner will Germany be under Merkel III? The short answer is this: It will be reliable, but not willing to be lectured when it comes to economic and fiscal matters. It will be self-confident. When it comes to security and military matters, the prevailing impulse will be not to move ahead of France and the UK. Here Ms. Merkel is happy to play second fiddle, thereby being totally in sync with the public, though this may disappoint hopes and expectations of partners and allies. Germany will contribute but within limits drawn by conviction, domestic politics, and the history of the country.

It has become fashionable to call Germany the new hegemon of Europe, though, a reluctant hegemon. It is true: The German economy is the strongest and biggest in Europe; during the crisis years, the gap between it and almost the rest of Europe has gotten wider and deeper creating new pressures for the common currency. It is also true that on the basis of the country’s economic success, German policy-makers have asserted themselves, wielding significant power over European policy-making and maybe even beyond, within the Group of 20. But German predominance is not all-encompassing. In foreign and security matters Germany still punches below its weight, as the Libya conflict demonstrated. It is a stark disparity between Germany’s performance as an economic world power and its security and military restraint and shyness. The country, both elite and public, does not have the will, the ambition, the mentality, and the means to act as a hegemon. It does not come even close to the role the U.S. played in postwar Europe. A few weeks ago, President Joachim Gauck called upon his fellow Germans to shoulder more international responsibilities. At the end of the day, they are willing to do so as a major Western country, but not as hegemon. In this regard, the elections have not made a difference, either.

The views expressed are those of the author(s) alone. They do not necessarily reflect the views of the American-German Institute.