What “Merkel 3.0″ Means to Germany, U.S., and Europe

With the FDP, ubiquitous in voicing doubts about Eurozone bailouts, to be replaced as partner in government by the pro-Europe SPD, Germany will be even more pro-European in “Merkel 3.0.” But for all of the likelihood of Germany remaining a stable and low-key ally of the U.S. and the “power engine” of Europe, there are clouds on the horizon that could be disturbing.

By John Gizzi | September 30, 2013

Politicians and pundits from Berlin to Washington are still reeling over the landslide win of German Chancellor Angela Merkel a week ago Sunday. Observers wonder what a third term and a new cast in her ruling coalition in the Bundestag (parliament) means for the strong-willed lady known as “Iron Angie,” and “Mother Europe.”

Clearly delighted with the results from Germany, official Washington is looking forward to continuing to work closely with good friend Merkel.

There are other “clouds” on the horizon that may well cast dark shadows over Germany and “Merkel 3.0.” The chancellor’s smashing win notwithstanding, the two parties that grew the most at the polls in 2013 were one strongly leftist and the other strongly on the right.

Without question, both parties are going to be a force in the future. The next German national election in 2017 – not to mention the elections for several Federal States and the European parliament next year – may yield some results far different from those of Sunday September 22.

Berlin at the Ballot Box

With German unemployment dropping to a modern low of 5.3% under Merkel’s rule and Germany itself now the undisputed economic powerhouse of Europe, the popular chancellor was always considered a favorite her leading opponent, Peer Steinbruck of the SPD (Social Democrats), was considered bright but also razor-tongued and aloof. With “Team Merkel” running a presidential-style campaign focusing on “Angie” herself, Steinbruck never had a chance.

So, at 59 and after eight years in office, Merkel led her CDU (center-right) Party and its sister CSU (Bavarian conservative) party to their biggest win under Germany’s parliamentary system in twenty years. In fact, Merkel’s party actually came within five seats of winning an outright majority in the 630-seat Bundestag – a feat not accomplished by any party since the legendary Chancellor Konrad Adenauer led the CDU to a majority in the old West Germany back in 1957.

Because they fell just short of a majority, ‘Merkel and Company’ must form a coalition with another party. Herein lays her dilemma: for the first time in 65 years of post-war German politics, the FDP or Free Democrats (libertarians), long the CDU’s junior partner in government, fell just short of the 5.0% of the vote needed to have parliamentary seats. That means they won’t be in government, and, at this writing, Merkel was meeting with the leaders of her chief rival at the polls, the SPD (Social Democrats), about forging a “Grand Coalition” similar to that in power from 2005-09.

As Karl-Theodor Guttenberg, former defense minister and now at the Washington-based Center for Strategic and International Studies (CSIS), wrote: “Ms. Merkel’s consensus-driven leadership and decision-making style seems to be more geared towards another grand coalition with the SPD.”

No announcements have been made, but a CDU-SPD “grand coalition” is about the only route Merkel can take. The lone alternative would be an alliance between Merkel’s CDU and the smaller Green Party. Inarguably, both sides would agree, this “marriage” would be mutually incompatible. Its environmentalism “uber alles” position aside, the Greens want a tax increase on the highest earners and offering political asylum in Germany to renegade CIA contractor Edward Snowden for exposing widespread government surveillance in the U.S.

“A coalition of two parties aiming in opposite directions cannot work,” Green leader and onetime student militant Jurgen Trittin told reporters before the balloting. (Within 24 hours of the voting, Tritten and FDP leader Philipp Rosler tendered their resignations.)

As to what it means for Germany in the next four years, the answer on the domestic front is more of the same of Merkel’s consensus-driven agenda. In contrast to Margaret Thatcher – the last female leader of a Western European power – Merkel is less a committed ideologue than a compromiser. Her campaign manifesto reached out to the middle and left, supporting a cap in rent increases, a statutory minimum wage (Germany has none), and increasing pensions and allowances for children. She has also vowed to phase out Germany’s long-standing reliance on nuclear energy.

However, she remained adamant on no new or higher taxes – throwing the gauntlet down to the SPD and the Greens, who campaigned hard on raising taxes on property and higher wage earners. This position is unlikely to change in a “grand coalition” with Merkel at the helm and popular CDU Finance Minister Wolfgang Schaueble keeping his job.

“To Lead From Behind”

“The German way to do foreign policy,” remarked Klaus Scharioth, former German ambassador to the U.S., at a panel following the recent election, “is to lead from behind.”

Martin Klingst, Washington bureau chief for the German publication Die Zeit, agreed. In his words, “[Merkel] leads through moderation and modesty. She averts risks.”

Germany did not get involved in the combined NATO strike in Libya or even hint it would assist the U.S. and France in an airstrike against Syria this year. Under Merkel, Berlin has engaged Russia and China more than the Washington has, but this is primarily on the economic front.

While some wish for more German leadership on the international front, this is unlikely to happen. Washington is quite comfortable with Merkel as she is and the relationship with Berlin is strong and likely to become stronger, if the position of foreign minister goes to Frank Walter Steinmeier. Having held the office in the previous coalition, Steinmeier, SPD candidate against Merkel in ‘09, is well-liked at the U.S. State Department and by President Obama.

Germany’s major focus abroad is on the Eurocrisis. Finance Minister Schaueble has already said that there will most likely be another loan for Greece. But, as Quentin Peel wrote in the Financial Times, “[T]he next government will not be very different from the present one as far as economic policy is concerned. Ms. Merkel’s mantra of ‘solidarity in exchange for solidity – meaning that Berlin will stand by its Eurozone partners, but only if they ‘put their own houses in order’ – will remain at the heart of German policy.”

Former U.S. Deputy Ambassador to Germany John Kornblum put it another way: “Merkel treats the EU as an equity investor.” With the FDP, ubiquitous in voicing doubts about Eurozone bailouts, to be replaced as partner in government by the pro-Europe SPD, Germany will be even more pro-European in “Merkel 3.0.”

Clouds on the Horizon

For all of the likelihood of Germany remaining a stable and low-key ally of the U.S. and the “power engine” of Europe, there are clouds on the horizon that could be disturbing.

Unemployment in the 17-member Eurozone is now 12% and its Gross Domestic Product grew by only 3% in the second quarter this year. In Germany itself, the rate of 1.36 births is one of the lowest in Europe and the Merkel government recently inaugurated a program to encourage parenting. In terms of upgrading infrastructure, research and development, and education, German expenditures are lower than those of many sister countries.

Noted but relegated to the back pages in the wake of Merkel’s big triumph is the unusual strength of parties that are strongly on the left and on the right.

Coming in third behind the CDU and the SPD and ahead of the Greens was the Linke (far left), with 8.7% of vote. Primarily made up of former Communists from the former East Germany, the Linke broke from the SPD to protest the market reforms of its last chancellor Gerhard Schroder (1998-2005). In this campaign, the Linke called for Germany leaving NATO, no cuts in social benefits, no privatization, bans of arms sales and outside military intervention and tax increases.

Even more stunning than the Linke’s showing was the 4.7% performance – just shy of the threshold for entering the Bundestag – of the new party, Alternative fur Deutschland or AfD. Barely seven months old, the party frequently described in the press as “euroskeptic.” But, with intellectual firepower provided by leaders such as economics Prof. Bernd Lucke and Beatrix von Storch, the Alternative’s position is much more nuanced; it doesn’t want Germany to leave the EU, but it wants the Eurozone to split between north and south. In addition, the new party supports curbs on immigration, pension reform, and pro-family social positions.

Alternative is widely credited with taking enough libertarian votes from the FDP to keep them from entering the Bundestag. Although it fell short in ‘13, it is almost certain to be a major force in elections for the European parliament in 2014 and in German politics for years to come.

That leaves the question of Merkel herself. Sources close to the chancellor say she is well aware of the fates of her fellow CDU chancellors of significance: Konrad Adenauer, who was essentially eased out of power in his ’80s and after fourteen years as chancellor, and Helmut Kohl, who sought an unprecedented fourth term in 1998 and lost badly. Betting is strong in Berlin that Merkel will not serve a full four-year term, instead grooming a successor and resigning as chancellor at mid-term in 2015. The problem with this scenario is that no heir apparent looms large in the CDU.

Perhaps the most prophetic comment about how Angela Merkel will now proceed is her own favorite phrase: “step by step.”

John Gizzi is the White House correspondent and chief political columnist for Newsmax. He is also a contributor to SFPPR News & Analysis.