What the German Elections Mean for Europe – and Beyond

German Chancellor Angela Merkel

Europe is waiting with bated breath for the outcome of the September 22 general elections in Germany. The question on everyone’s mind is not really whether Chancellor Angela Merkel retains power or if her main rival Peer Steinbrueck will take over the helm of Europe’s largest economy but what the composition of a new coalition government will be. Merkel herself, who is often described as “the de facto leader of the European Union” and has topped opinion polls for months, is widely expected to retain the chancellorship for a further four years.  However, it is looking doubtful whether the liberal Free Democrats, the main partner of her Christian Democratic Union, will make the grade.

Opinion polls indicate a narrow lead for Merkel’s conservative Christian Democrats and sister party the Christian Social Union along with the Free Democrats, but most Germans polled say they would prefer what is called a “grand coalition” of Christian Democrats and Social Democrats, indicating which way the vote may go. Such an alliance might indeed be better equipped to deal with the mammoth problems facing Europe than the current administration.  Should Merkel be re-elected, as widely expected, she will have to redouble her efforts to ensure the survival of the euro, which she has frequently described as being of crucial importance not only to her country but to the survival of the European Union (EU).

Europe’s Powerhouse

Germany has proved to be the anchor that has so far provided stability during the eurozone crisis. However, that has not stopped many in Europe from feeling that Berlin has failed to offer dynamic leadership, affording only piece-meal solutions to fend off impending fiscal calamities. Gripes about Merkel’s lack of vision for the long-term success of the European project can be heard mainly outside the country, while Germans themselves appear quite content with her cautious, step-by-step approach.

Without its main motor, the EU would come to a standstill, and many would argue that it already has, as Germany has been engaged in its election campaign. Key decisions affecting the 28-member bloc have been put on hold; on the question of a third bailout for Greece, for instance, or on a possible banking union. Ironically, the future of the EU has not figured prominently in the campaign – the issue has been rather suppressed in fact – nor has Germany’s role in it.

Anxious Neighbours

France’s Socialist-led government would prefer Germany’s new administration to be a grand coalition of Christian Democrats and Social Democrats in the hope that the latter would be able to push for a number of significant concessions on Europe. Paris has made no bones about its disillusionment with European Commission President, Jose Manuel Barroso. When Portugal’s former Conservative prime minister’s term ends next year, France would count on a grand coalition in Germany to back a center-left successor, preferably European Parliament President and Social Democrat Martin Schulz, who hails from Germany. However, some political analysts argue that, unless French President Francois Hollande and the new German chancellor, whether Merkel or Steinbrueck, seriously tackle the main concerns of Europeans – with high unemployment topping the list  – voters might turn in large numbers to eurosceptic parties, such as France’s anti-immigration National Front, in next year’s European Parliament elections.

Only a year ago, with Merkel considering having debt-ridden Greece ejected from the eurozone, the newly-elected Hollande offered to lead a revolt of southern European states to counter a feared German domination of Europe. In the end, the two decided for pragmatic reasons to step back from the brink. Since then, the German leader has been more determined than ever to keep Greece in, while at the same time saying it should never have been admitted into the group in the first place – a move she blames on her Social Democrat predecessor Gerhard Schroeder.

Although Germany has made the biggest contribution to the bailout packages, Merkel has regularly been attacked in Greece for prescribing such a heavy dose of austerity, even to the extent of being depicted by some media in a Nazi uniform, much to the chagrin of the German people.  Her challenger Steinbrueck has criticized Merkel’s debt crisis policies, saying they are doing more to harm southern Europe than to help it. However, as his Social Democrats voted in parliament in favor of the bailout packages, a policy change is unlikely should he be elected chancellor.

Reluctant EU member Britain may not be a part of the eurozone but would still suffer disastrous consequences were the euro to collapse. And Britons of all political persuasions, who are not misled by the “Leave Europe” rhetoric, know they need Germany, the bloc’s main paymaster and economic powerhouse, to keep it afloat. Merkel has been extremely tolerant of her Conservative counterpart in the UK, David Cameron – who like the German leader, is also in alliance with the Liberals – not least because of his veto in 2011 of an EU treaty amendment aimed at tackling the eurozone crisis. But if a grand coalition of Conservatives and Social Democrats emerges in Germany later this month, it may no longer be quite so accommodating of Cameron’s approach towards Europe.

Beyond Europe

Across the Atlantic, initial criticism of the German-backed austerity measures for ailing eurozone states has eased as the debt crisis has receded to a certain extent. Now both Merkel and President Barack Obama are pressing for a US-European deal to expand the 4.5-trillion-dollar annual trans-Atlantic trade and investment. Steinbrueck on the other hand, has called for the trade negotiations to be suspended because of the spying activities against European institutions and citizens by the US intelligence agency, the NSA (National Security Agency). Eager to strike a chord with German voters enraged by the scandal, he said in a recent interview that he would break off the talks until he was told by the Americans whether German government offices and European institutions were bugged and being spied upon. While claiming little knowledge of the NSA’s activities in Germany, Merkel has said the affair is over and done with.

In spite of the apparent language barrier between them, the Chancellor and President Obama appear to have a good working relationship, if not a close personal friendship. It is important for the two leaders to be comfortable with each other in view of the fact that the United States and Germany are the two biggest players in the trans-Atlantic partnership, and Germany’s economic dominance in Europe has increased as the debt crisis weakened most other members of the eurozone.

During Merkel’s two terms in office, disagreements over democratic principles and reforms have seriously strained Germany’s relations with Russia, and although there is no reason to expect further deterioration after the elections, no improvement is thought likely either. In contrast to her predecessor Schroeder – who went on to work for Russian energy giant Gazprom – Merkel has not hit it off with President Vladimir Putin, even though she speaks Russian and he speaks German. Right from the start, she adopted a pragmatic approach in her dealings with the Kremlin and was not afraid to criticize what she saw as human rights abuses. Some Russian experts think it will make little difference which parties form the new coalition in Berlin but still feel that a grand coalition would be the most favourable option, as the Social Democrats would probably not be so openly critical of Russia.

Further East, China would likely welcome another term for Merkel, who has paid frequent visits to the world’s second largest economic power. But regardless of who wins the elections, Sino-German relations are bound to remain a priority. For over a decade, China has been Germany’s second-biggest non-European export market after the United States and has supplied more goods to Germany than any other country except the Netherlands.

Back in Europe, Germans are not the only ones eagerly awaiting the outcome of the polls next weekend but also people living in ailing economies on the continent whose immediate future hinges on the policies of the new government in Berlin, as well as EU institutions, which are impatient to press ahead with urgently needed reforms.