Friedrich Merz, the leader of the conservative Christian Democratic Union and likely the next chancellor of Germany, did not win a mandate in the federal elections on February 23. Instead, he earned what amounted to a four-year reprieve for the German political establishment. On February 28, he will start exploratory talks with the Social Democratic Party to form a coalition.
Germany is assailed from within and without by economic and political headwinds. Merz has many of the bland attributes of a CEO (he has been in business for several decades and never served at the national level in politics). But his opening moves have been anything but bland, warning his countrymen that to ensure their and Europe’s future, Germany must achieve nothing less than “independence” from America.
I recently visited Germany as part of a delegation of American election observers invited by the Hanns Seidel Foundation (which is affiliated with the conservative Bavarian Christian Social Union). It became increasingly clear that Germany is not only in turmoil, but also that Merz wants to create a caesura with its recent past. Germany has been mired for several decades in its own “time of stagnation” (a term borrowed from the 1970s USSR).
Chancellor Merkel, in power from 2005 to 2021, has come into bad odor for failing to pursue economic reforms, abolishing the nuclear power industry and coddling Russian president Vladimir Putin. Her Social Democratic successor, Olaf Scholz, declared a Zeitenwende, an era of change, but it was a declaration of intent that he never fulfilled. Under his leadership, Germany’s approach to Russian aggression in Ukraine was timid and halting. The Bundeswehr was never adequately funded. Economic reform did not occur. Once the election took place in February, Scholz led his party to a historic low—a mere 16 percent of the vote.
Merz is intent on forming a coalition government with the Social Democrats and on excluding the far-right Alternative Party for Germany. It surged to become the country’s second-largest party with over twenty percent of the vote. In the state of Saxony, in eastern Germany, the Alternative Party for Germany scored almost forty percent of the vote and will determine the state’s minister president. At the same time, the far left party, Die Linke, claimed almost 9 percent of the vote on the federal level. Both the left and right managed to attract significant youth votes. The Alternative for Germany attracted 25 percent of those between 18 to 24-years-old; the far left party snagged a robust 20 percent.
But it would be a mistake to assume that these trends are destined to continue. Merz is intent on seizing the opportunity to reverse them. What is to be done?
Merz regards economic reform as key to defanging the threat that the Alternative Party for Germany poses to mainstream conservatives. Germany has been hit by Covid-induced supply chain problems, energy difficulties after the Russia-Ukraine war and waning demand in China for its goods. Merz’s program of reform could also be complicated by President Donald Trump’s insistence on imposing 25 percent tariffs on the 27-nation bloc of the European Union. Total two-way trade between America and Germany in 2024 was $262 billion, with roughly two thirds being German exports, making the US the largest export market worldwide for German goods.
A top priority for Merz should be to ease the so-called Schuldenbremse, or debt brake, that prevents Germany from deficit spending to ease its current economic recession. He would require a two-thirds majority in the Bundestag to override it, but the left parties are sympathetic to attenuating this onerous economic provision.
Foreign affairs is probably the arena in which Merz will have the most room to maneuver. On February 26, before becoming chancellor, Merz traveled to Paris to meet with French president Emmanuel Macron to help coordinate assistance for Ukraine. Merz has announced that Europe must establish an independent defense capability and is eager to forge closer relations with France as well as Great Britain, both of which are nuclear powers. Poland, which is ramping up defense spending, would serve as a buffer state for Germany’s eastern flank. As chancellor, Merz promises to focus on rebuilding the Bundeswehr and aiding Ukraine, though the budgetary allocations to implement these promises are not yet clear.
Like Angela Merkel, the Christian Democrat chancellor who first came in with a narrow majority in November 2005, Merz is probably underestimated by the press and his political opponents. Few predicted that Merkel would end up governing for four successive four-year terms when she ascended to the chancellorship. Merz is about to become chancellor at a moment of crisis. How he handles it will determine not only his but also Germany’s future.
