(Bloomberg Businessweek) -- Angela Merkel used to tell Germans “we can do it” when addressing the question of integrating the million-plus refugees who have come to Germany since 2015. That pragmatic attitude and her liberal approach have—after the election of Donald Trump and his “America First” agenda—spurred many politicians and pundits to hail Germany’s motherly chancellor as the de facto leader of the free world. But after a narrow election victory in September and the collapse of coalition talks on Nov. 19, it’s beginning to look as if she may not be able to “do it” after all.
First elected chancellor in 2005, Merkel has been a stable presence on the global stage for so long that it’s hard to imagine Germany, or Europe, without her. Following September’s election, in which her conservative bloc of Christian Democrats and the Christian Social Union lost 65 seats in the Bundestag, Germany’s parliament, she has struggled to assemble the jigsaw of smaller parties needed to form a majority government, proving that, for all its economic strength, Germany is vulnerable to the same forces of populism and political fragmentation that have swept other democracies in recent years.
Despite Merkel’s legendary skills as a backroom negotiator, honed at countless European Union and global summits during her dozen years in power, coalition talks broke down over the vexing question of immigration as well as economic concerns—the first time since before World War II that a German election has failed to produce a government. Although there are as many ways for her to stay in power as to be forced out, and she says she’s prepared for another election, a world without Merkel as chancellor has become a real possibility.
“Merkel was a historic figure as far as Europe’s concerned, but her time has come and gone,” says Ashoka Mody, a former World Bank economist just finishing a book about Merkel’s handling of Europe’s currency crisis. Even if she remains as chancellor, Merkel is now so badly weakened that she would be a different kind of leader. “Merkel mark 2 would be very different from Merkel mark 1,” Mody says.
In her three terms as chancellor, Merkel, 63, steered Germany relatively unscathed through the global financial crisis and helped keep the euro intact, winning fans abroad. But her decision to embrace the flood of refugees from Syria and other troubled parts of the world cost her support at home. Germany’s next chancellor—whether Merkel or someone else—will be faced with fixing a growth model that led to too much inequality, too many people feeling abandoned, and seemingly limitless immigration. The populist Alternative for Germany (AfD) won 12.6 percent in September’s vote, enough to make it the first hard-right party to enter the Bundestag since the 1950s. The primary question facing the next German leader will be how to limit the AfD’s rise.
Merkel’s declining influence is “very bad news for the European Union,” Le Monde wrote in a gloomy editorial on the collapse of talks in Berlin. The French daily newspaper pointed to the wider roller-coaster narrative of European populism this year. Hopes that the center might hold, raised after Emmanuel Macron won the French presidency with an unashamedly pro-Europe, liberal message, have now been “suspended,” the paper wrote.
Macron had been counting on Merkel’s support to secure sweeping change to the EU, proposing deeper cooperation on defense, taxes, immigration, and—crucially—a common budget for the 19-nation euro area. That’s looking much more difficult as the compromises he needs from Merkel would be politically costly for any chancellor. Other than Merkel, “no one here has the grasp or the popular trust to enable Germany to make the concessions needed,” says Jan Techau, director of the Richard C. Holbrooke Forum at the American Academy in Berlin. One objection the Free Democratic Party had when it walked out of coalition talks at midnight on Nov. 19 was that it wants a commitment to change EU rules so member states could exit the euro without leaving the wider bloc—a political nonstarter for Merkel.
She’s also been central in corralling the EU on relations with Vladimir Putin’s Russia. A Russian speaker who grew up in communist East Germany, she took the lead in persuading Austria, Greece, Italy, and other reluctant EU members to impose economic sanctions on Russia in 2014 aimed at punishing the Kremlin for its destabilization of Ukraine. The sanctions have cost both sides, and Merkel has consistently supported them as they come up for renewal every six months. Losing her voice would create “a target-rich environment for Putin” to get them lifted without first pulling his troops and weaponry out of eastern Ukraine, says Frederick Kempe, president of the Atlantic Council, a think tank in Washington. “After Merkel we will have a more inward-looking Germany,” he says. “Macron has stepped up, but let’s not kid ourselves: On the economy and on geopolitical issues, nobody in Europe can fill Germany’s shoes.”
Merkel has earned her share of critics, and there’s another way to look at the coming end of her era. Hers was “a visionless leadership,” says Josef Janning, who heads the Berlin office of the European Council on Foreign Relations. For all her strength in crisis management, she has rarely led by principle or sought to shape the future. Even Merkel’s decision to welcome, rather than fight, the sudden flood of refugees was a tactical calculation—there was little she could do to stop it, and Germans at first responded enthusiastically—rather than a moral choice or strategic plan, Janning says.
At international summits, Germany punched above its weight because of Merkel’s perceived stability and authority. But she never committed the resources necessary to take the lead in reshaping the world, in part because she knew Germans don’t want that role, Janning says. If she goes, it’s unlikely anyone will pick up where she left off. The political concessions needed to keep supporting the kind of rules-based order Merkel promoted can’t be made when societies are as fragmented as they are and leaders must constantly appeal to their domestic bases. After September’s election, in which both of the traditionally dominant, centrist parties lost share to smaller fringe ones, that became true for Germany, too. “If Merkel is no longer around, it will just become clearer that we are actually living in a leaderless world,” Janning says. And no one—not a new German leader, not Macron, not anyone else—would be able to change that.
To contact the author of this story: Marc Champion in London at mchampion7@bloomberg.net.
To contact the editors responsible for this story: Matthew Philips at mphilips3@bloomberg.net, David Rocks Jillian Goodman
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