Back on track, Germany now tasked with refocusing itself and patching up Europe

It took almost six months but on March 14, Angela Merkel was finally sworn in as German chancellor for the fourth time.  

“I think everyone has the feeling it’s time to finally start working,” she said last week. “A new departure for Europe, a new dynamic for Germany, new cohesion for our country … So there is a lot of work ahead.”

After months of tortuous negotiations, including failed talks with the Greens and liberal Free Democrats, Merkel’s Christian Democrats managed to form a new “grand coalition” with the centre-left Social Democratic Party (SPD).

Now in her 13th year in power, the 63-year-old chancellor was weakened by the relatively poor showing in September’s election, blamed in part on the refugee crisis, and the drawn-out coalition talks, as well as concessions made to the SPD, including handing them both the foreign and finance ministries.

Yet foreign policy is largely determined from the chancellery and Merkel, a sober crisis manager, is now tasked with steering Germany as it navigates an increasingly complicated world.  

German foreign policy was effectively on hold for months, at a crucial time for Europe and much to the frustration of officials in Paris and Brussels.

In January, after the SPD agreed to enter coalition talks, Merkel warned: “The world isn’t waiting for us.” And since taking office last Wednesday, she and her new government have hit the ground running, as if to make up for lost time.  

Merkel has already been to Paris and Warsaw and has hosted the Irish prime minister in Berlin, while her foreign minister, Heiko Maas, who visited Paris on the day of his appointment, was in Brussels on Monday to meet his EU counterparts.

Meanwhile, Finance Minister Olaf Scholz pled for open markets at a meeting of G20 finance ministers in Buenos Aires this week, and Economics Minister Peter Altmaier was in Washington looking for a compromise with the White House over tariffs.

Despite Germany’s strong economy and the ambitious start of this new government, Berlin faces a plethora of external challenges: a European Union that seems more divided and fractious than ever, increasingly brazen authoritarian regimes in Russia, China and Turkey, and a transatlantic relationship put under immense strain by the mercurial presidency of Donald Trump.

The US president has singled out Germany for its trade surplus and “free-riding” in terms of security, berating it (and other NATO partners) for failing to meet the NATO commitment to spending two percent of GDP on defence, while also calling into question the value of the Western alliance in the first place. Relations are likely to sour even further after the imposition of tariffs on steel and aluminum imports, which will hit export-dependent Germany particularly hard.  

The Trump administration’s actions are shaking a transatlantic relationship that, alongside European integration, has underpinned German foreign and security policy since the end of World War II.

For Hans Kundnani, a senior research fellow at Chatham House in London and an expert on German foreign policy, the election of Trump has led to a “radical uncertainty about the US security guarantee” and is a “game-changer” for Germany and Europe in general.  

“It massively weakens Germany within Europe,” he argues, because of the imbalance between German and French military power. While France has always sought to be a strong military power, Germany has largely relied on the US for its defence. “Almost overnight, France became much stronger in the European context and Germany became weaker.”

As such, any talk of Merkel becoming the new “leader of the free world” is “absurd,” he says — a label she herself has also rejected. 

“Leading the free world the way the US did requires military capabilities, which go way beyond what Germany has to offer,” agrees Jana Puglierin, a European foreign policy expert at the German Council on Foreign Relations.

Rich Germany, which still only spends around 1.2 percent of GDP on its military, does not have an army fit for purpose. Soldiers lack basic equipment, there’s a shortage of operational tanks, and fighter jets and helicopters are out of operation for months at a time and constantly in need of repair. 

Defence Minister Ursula von der Leyen has taken steps to modernize the armed forces, though progress is painfully slow. At the Munich Security Conference in 2014, she was one of several senior German figures to pledge the country’s willingness to take on more responsibility in international affairs. And, to be fair, it has done so, taking the lead for example on the Ukraine crisis, as well as increasing its military deployments.

Now, with fraught transatlantic relations, there is a growing realization that “security and defence are no longer guaranteed, and we have to think about how much of it we want to guarantee ourselves,” says Ulrike Franke, a policy fellow at the European Council on Foreign Relations. 

Germany, particularly due to its past, wants to do this firmly within a European context. The Permanent Structured Cooperation on security and defence (PESCO), launched last November, includes 23 EU countries and already looks like an embryonic European defence union.

Franke argues that the fraying of the transatlantic bond preceded Trump. “Already under Obama there was a development away from Europe; other powers are rising, so the transatlantic relationship isn’t what it used to be.”

But Trump has hugely exacerbated this — so much so that last summer Merkel stated: “Europeans must really take our fate into our own hands.”

That doesn’t, however, necessarily mean a definitive turn away from the US. After all, Merkel is a “dyed-in-the-wool transatlanticist,” Puglierin argues. “The new German government has no intention of throwing transatlantic relations on the dust heap of history. We know that militarily and economically the US remains Berlin’s most important ally.”

From a German perspective, the US and the EU are pillars of traditional German foreign policy, and both are at risk. “Germany will try very hard to keep the pillars standing,” says Puglierin.

Indeed, the first priority of the new government will be to bolster and protect the European Union.

The incomplete eurozone reform, as well as the electoral successes of populist and nationalist parties in countries such as Italy and Austria and the authoritarian turn of the governments in Poland and Hungary, are regarded as threats to the European project.

“This is the one big headache that policy makers have in Berlin: that the European Union could fall apart,” Puglierin says.

The final coalition agreement concluded in February put Europe front and centre, and Germany has committed to pay more into the EU budget and to foster the Franco-German relationship.

Much will depend, however, on how far Germany is prepared to meet French President Emmanuel Macron’s calls for deep eurozone reform, for example by establishing a eurozone finance minister and budget. 

Berlin is not going to turn its back easily on its strict adherence to fiscal probity and national responsibility. It remains to be seen if Merkel will use her remaining political capital to help shape a new Europe, or stick with the fixation on austerity and rules that marked her previous governments.

Kundnani argues that Germany’s eurozone policies up to now have undermined centrist, moderate leaders, and helped give rise to populist forces. There is, however, a dawning awareness in Berlin, he says, that some concessions will need to be made to Macron to help him to fend off the far-right Front National at the next election.

At the same time, even if Germany, Europe’s biggest and richest country, does back Macron, it cannot be seen to dominate any reform process.

Sarah Brockmeier, a foreign policy expert with the Berlin-based Global Public Policy Institute, says that Germany has to tread carefully “to not be seen as steamrolling members of the EU that are not in favour of rapid or stronger reforms.”

Already a group of eight northern European states, including Denmark, Ireland and the Netherlands, has stated it will resist ceding too many national powers to EU institutions.

Furthermore, the refugee crisis has caused another fault line in Europe, with Germany facing pushback from Eastern Europe to its requests to share the refugee burden.

The migration issue will continue to be a priority for German policy makers, says Puglierin, including “border protection and trying to stop migration flows, not only by pushing the migrants back but addressing the root causes.”

Brockmeier argues that the current migration policy, for example holding refugees in camps in Libya, is not sustainable. As well as being in conflict with European values, it’s not working, she says, leaving Greece and Italy to bear the brunt of the migration into the EU. “The only sustainable solution is to invest more, to not just think about short-term security issues but also invest in conflict prevention, peace building and development.”

On the broader geopolitical front, Germany has to deal with a Russia that increasingly seeks confrontation with the West. Moscow is not only thought to have interfered in Western elections but is also suspected of having recently used a nerve agent in the United Kingdom, an action Merkel and other Western leaders condemned on March 15.

Merkel has long been wary of Vladimir Putin. She has held the line on Western sanctions despite pressure from parts of the SPD and the business community to ease tensions with Moscow.

Meanwhile, Germany is increasingly alarmed by developments in China, despite Merkel and President Xi Jinping agreeing this week to deepen their strategic partnership. Politically, there had already been a growing realization that China is becoming more authoritarian, confirmed by the announcement that Xi would become “president for life.”

On the economic front, the initial relief after Xi’s Davos speech last year indicating that China would take the lead in defending free trade has given way to unease, particularly due to investments by Chinese businesses in Europe. The news, for example, that a Chinese conglomerate, Geely, had secretly bought nine percent of auto giant Daimler sent shockwaves through German business and political circles.

Berlin is also worried about China’s ability to divide Europe with its investments in the “New Silk Road” in southeastern Europe.

For Kundnani, growing tensions with China reveal just how vulnerable Germany has become as a result of its huge reliance on exports, which account for 50 percent of GDP.

“We know in military terms that Germany is weak, but people seem to think that in economic terms Germany is strong,” he said.

Yet, if a trade war between the US and China were escalated, a new era of protectionism could threaten that strong economy.

For Kundnani, the question, far from being if Germany can be the leader of the free world, is: “Can Germany survive, in terms of its own economy and its own security?”