IISS Strategic Comments

Merkel 4.0: not so different after all

It took some time, but German Chancellor Angela Merkel got what she wanted in the end. There was no need for fresh elections or an unprecedented minority government. After more than five months of political wrangling in the wake of indecisive federal elections in September 2017, Germany will once again be governed by a ‘Grand Coalition’ comprising Merkel’s Christian Democratic Union (CDU), its Bavarian sister party known as the Christian Social Union (CSU) and the Social Democratic Party of Germany (SPD). Yet Merkel will lead a new government for which there is little enthusiasm or excitement, including on the part of its members, with expectations low from the outset. Although the ruling parties that form Germany’s government remain the same, the political and security circumstances in which they will have to operate have changed significantly since the beginning of Merkel’s third term in 2013.

Domestic uncertainty

As Merkel heads into her fourth and likely final term in office following the CDU’s worst election result since 1949, it is inevitable that her influence will be diminished. She will now need to prepare the ground for a handover, without further undermining her own authority. Merkel has repeatedly said, perhaps as a matter of political compulsion, that she intends to serve a full term in office. At the same time, it is likely that she will contemplate surrendering her position as chair of the CDU in 2019 to her preferred successor, currently understood to be the party’s newly anointed general secretary, Annegret Kramp-Karrenbauer. In the past, any potential rivals would find themselves unceremoniously sidelined as victims of ‘Merkelvellianism’. However, the politically compromised chancellor has now reached out to her political opponents with considerable savvy, co-opting her critics and meeting the internal demand for renewal. This strategy has included appointing Jens Spahn, one of her sharpest conservative critics within the CDU and a likely contender for the chancellorship in the next election, health minister in her new cabinet.

As CDU members begin to consider life after Merkel, it seems likely that the party will shift back to the right, not least as it seeks to regain some of the more than one million votes that it lost to the nationalist Alternative für Deutschland (AfD) in the 2017 election. It was Germany’s broader popular shift to the right that necessitated the grand coalition in the first place, and such coalitions are recipes for the further growth of anti-establishment parties. Still to be fought is the battle over how far the swing towards the CDU’s conservative base needs to go to capture enough conservatives to structurally protect German politics from a wave of far-right populism that would threaten the post-war ethical and political dispensation. Similarly, the SPD, which lost votes to the far-left Die Linke, the Green Party and the Free Democratic Party as well as the AfD, faces the question of what it must do to regain them. Meanwhile, at some point Kramp-Karrenbauer is likely to see political advantage in throwing off the ‘mini-Merkel’ moniker the German media has foisted on her, potentially in dramatic style. These dynamics will inevitably make Merkel’s job as chancellor more difficult.

To complicate this delicate balancing act further, Merkel will govern with a junior partner that is itself deeply divided, under new leadership and fighting for its future political relevance. In recent years, social-democratic parties across Europe have been in steep decline, a trend underlined by the results of Italy’s elections at the beginning of this month. Germany’s SPD will therefore need to differentiate itself from its coalition partner, if it is to avoid further marginalisation in the next elections. This will be easier if the CDU and CSU move to the right. In any case, Merkel will find herself managing not just her own fractious party but also an irascible and insecure junior coalition partner. Moreover, with the AfD now confirmed as the Bundestag’s main opposition party, and one of its representatives now chair of its powerful budgetary committee, the chancellor will also need to pay closer attention to her government’s relations with the German parliament, whose acquiescence her administration has, in the past, largely been able to take for granted.

On issues of defence and security, there will be obvious tensions within the government. Even as popular awareness of the woeful state of the Bundeswehr (the German Armed Forces) continues to grow and a tentative consensus forms that a stronger European defence is at least desirable, the SPD nevertheless appears to consider the NATO commitment to spend 2% of GDP on defence by 2024 – agreed at the Alliance’s 2014 Wales Summit – advisory, rather than binding. That many Germans remain ‘happily vegetarian’, as The Economist recently put it, could be seen in the election campaign, when the SPD candidate for chancellor sought to score points by describing the 2% target as a promise to plunge Germany into a ‘new arms race’. Meanwhile, the new government’s agreed push to tighten German arms-export guidelines is likely to bring some challenges to Germany’s relationships with European defence-manufacturing partners. German-made components are found in, for example, the Rafale fighter jets France readily sells to the United Arab Emirates, and the Typhoon fighters the United Kingdom markets to Saudi Arabia.

International demands

Against this complex domestic backdrop, Chancellor Merkel will return to the international stage, following an enforced absence since the German election campaign officially began in August 2017. It is probable that a whirlwind of foreign travel will temporarily encourage headlines that obscure her domestic vulnerabilities. On the day her government takes office, she will travel to Paris to showcase Franco-German cooperation and kick-start discussions on European Union reforms – for which French President Emmanuel Macron has been waiting since he outlined his ‘Initiative for Europe’ in September 2017. During this visit, Merkel will also likely endorse once again an updated Franco-German Elysée Treaty. The negotiations for this should conclude by 2019, with a broad agreement intended as a strong statement of the vitality of the bilateral relationship at heart of the EU.

Merkel will also need to pay her respects to the EU institutions in Brussels, just as she will have to draw up a vision of EU reform that will be distinctly more inter-governmental than many interlocutors in Brussels would wish. Despite the problematic nationalist politics of Warsaw’s government, the chancellor and her advisors will also consider an early visit to Poland. Such a trip would underline Germany’s enduring commitment to a close partnership with Warsaw. It would also serve as a pointed reminder to other EU member states, most notably France, of the wide range of interests and outlooks that continue among the 27 EU member states, and need to be accommodated in inevitably messy compromises, on issues including (but not limited to) banking union, tax harmonisation and defence cooperation.

German defence spending

It will be only a matter of time before Merkel travels to the United States in an attempt to ward off a trade war with Europe’s closest ally, as well as to secure final agreement on a deal to save the Joint Comprehensive Plan of Action (JCPOA), as a May 2018 deadline nears (US President Donald Trump has threatened to permit the automatic resumption of US nuclear sanctions on Iran after this point). Merkel will also seek to lay the groundwork for this summer’s NATO summit in Brussels, at which Germany’s sub-standard defence expenditure will again face criticism. Even as Germany plans to increase its defence budget from €38.75 billion in 2018 (in 2010 US$45.33bn) to €42.65bn in 2021 (in 2010 US$47.32bn), when set against the country’s robust projected economic growth, this would still only account for 1.15% of GDP in 2021, as shown in Fig. 1. Before the summer is out, Merkel will also host the latest round of inter-governmental consultations between Germany and China, as she attempts to smooth relations between the two. These meetings will occur against a background of growing German concern about Chinese political influence in Europe, and discomfort about the motivations behind Chinese investments in European technology companies and Europe’s collective ability to monitor and assess them.

Merkel will also have to handle relations with Turkey and Russia. While a modest, limited rapprochement with President Recep Tayyip Erdogan of Turkey appears possible, relations with Russian President Vladimir Putin are likely to remain tense. The way forward for the stalled implementation of the 2015 Minsk Agreements on peace in Ukraine and associated EU sanctions is uncertain and a major bone of contention. Merkel has adopted a firm stance, announcing earlier this week that she will seek renewed peace talks on Ukraine following the Russian election on 18 March, asserting her support for a UN peacekeeping force in eastern Ukraine, and indicating that sanctions would not be eased until there had been genuine progress in establishing a durable ceasefire. In February, she also urged Russia and Iran to curb the assault by Bashar al-Assad’s regime on Eastern Ghouta in Syria. In addition, Norbert Röttgen, chair of the Bundestag’s Committee on Foreign Affairs and a CDU ally of Merkel’s, has endorsed joint Western sanctions against Russia if it declines to cooperate in the investigation of a nerve agent attack on a former Russian spy and his daughter in the UK on 4 March, which British authorities strongly suspect Moscow ordered.

Germany will also have to strike delicate balances with some of its allies. Even as Merkel’s government pushes ahead with its so-called Marshall Plan with Africa and endeavours to protect and nurture close Franco-German relations, it will simultaneously seek to minimise its exposure to French-led counter-terrorism operations in the Sahel. Germany will also have to maintain a watching brief on ongoing bloodshed in the Middle East, recognising its limited influence there while also knowing that it will eventually play a larger role in Syria’s reconstruction.

As Merkel considers this array of foreign policy challenges and more, she is likely to see her primary task as keeping the EU27 together. Yet she will be all too aware from recent experience that the unavoidable balancing act will compel her to disappoint partners on all sides. For example, Macron’s most substantive ambitions for deeper integration will almost certainly go unmet, even as some modest collaborative measures aimed at strengthening the resilience of the Eurozone will be agreed. Germany’s coalition agreement may have promised a ‘new dawn for Europe’, but the substance of what Merkel and her government can offer will likely be far more modest. For example, a European Monetary Fund (EMF) may emerge out of the European Stability Mechanism (the Eurozone’s emergency rescue fund). However, the political tussle over governance structures that would follow the creation of the EMF would likely see national parliaments continue to play a key role in any approval of taxpayer-funded loans to fellow EU member states.

Merkel’s inclination will be to moderate the growing chorus of calls across an array of policy areas for a ‘core’ of willing EU states to push forward together with integration initiatives. Indeed, Germany’s emphasis on inclusivity over France’s priority of effectiveness has already proved determinative in the design of Permanent Structured Cooperation (PESCO) in EU defence. The EU Council formally activated PESCO in December 2017, with 25 EU member states now confirmed as participating in 17 different capability projects. Such wide membership will most likely mean diminished focus and impact for PESCO. Berlin’s instincts will remain similarly conservative in the face of any serious move to look again at the long-standing proposal, recently reiterated by European Commission President Jean-Claude Juncker, to ‘look at foreign policy decisions which could be moved from unanimity to qualified majority voting’. Germany’s approach would continue to emphasise the political importance of keeping the EU27 together over the operational advantages in speed and decisiveness that the majority-vote proposal could lend the EU’s hitherto pallid efforts to forge a Common Foreign and Security Policy.

As for Brexit, Merkel’s concern about protecting the future integrity of the EU27 will tilt her government towards supporting an outcome that looks like the exit that it is supposed to be, as opposed to the bespoke deal it could ultimately become. Berlin will see any concession to the UK government which allows it to ‘cherry-pick’ its way through Brexit as encouraging other EU member states to seek customised arrangements within the Union. If strategic thinking prevails, this should not prevent pragmatic agreement between the EU27 and the UK on security and defence cooperation, but it will certainly complicate discussions over the future trading relationship.

Finally, as the year progresses, Merkel will have to help manage sharpening tensions among the EU27 as they negotiate a new Multiannual Financial Framework (MFF) for the period 2021–27. The MFF is invariably hard-fought, and this round will be more fraught than usual due to a funding gap of 12% compared to the previous framework – equivalent to a net deficit in the annual EU budget of around €12.2bn (approximately US$15bn) – due to Brexit.

Outlook: stable if not strong

Merkel is cautious and controlled, and is by instinct a compromiser. These qualities have informed a strategy that has brought her remarkable success. In a Union in which political discourse in many member states has become increasingly populist and turbulent against a backdrop of the formidable challenges of economic downturn, rising instability in Europe’s near-abroad and uncontrolled migration, Merkel’s steady leadership has been critical in securing 12 years of notable political stability for Germany. In this light, there is little reason to expect Merkel in her fourth term to behave too differently from Merkel in her first. Even if political circumstances have changed, her political nature and temperament persist. Germany’s wait for Merkel to be confirmed as head of a new government may have been a political novelty, and generated considerable anxiety in the foreign media, but it was never really a crisis. The chancellor may no longer enjoy as strong a writ as she once did, but remains a stabilising force to be reckoned with and a key player in determining the future of the EU and its position in international affairs.

Volume 24, Comment 9 – March 2018


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