January 10th, 2017

Global Outlook 2017: Merkel and the myth of German hegemony

by Michael Wohlgemuth More than any other major country in […]

More than any other major country in Europe, Germany has reason to be optimistic about 2017. Economically, gross domestic product is expected to grow by another 1.3 percent (somewhat less than in 2016, mainly due to calendar effects), employment should reach record highs (with more and more refugees filling gaps) while the jobless rate remains at a 25-year low and the net overall public deficit should remain nonexistent. Politically, many foresee Germany remaining a bedrock of stability, especially after Angela Merkel announced that she will run for a fourth term in 2017. She seems likely to remain chancellor for another four years.

After the United Kingdom’s vote to leave the European Union, the election of Donald Trump, French President Francois Hollande’s decision not to run again and Italian Prime Minister Mario Renzi’s resignation, many commentators were tempted to proclaim Angela Merkel the sole remaining leader of Europe or even, as Timothy Garton Ash put it, “the leader of the free world.”

This, however, may be an overestimation both of Ms. Merkel’s style and Germany’s weight in European and global politics.

2017 elections

Before turning to Germany’s political role in the future, it is apt to look ahead to its federal elections, which will be held on either September 17 or 24, 2017. It seems clear that Ms. Merkel’s center-right Christian Democrats (CDU) will reap most of the votes, but very likely less than the 41.5 percent they received in 2013.

The center-left Social Democratic Party (SPD) should continue trailing behind by more than 10 percentage points. The party has not yet declared which of its members will run (and eventually lose) against Angela Merkel. It could well be former European Parliament President Martin Schulz, who will return to domestic politics next year. It is telling that he is considered a more effective candidate than the party’s current leader, Vice Chancellor Sigmar Gabriel.

The opposition parties in parliament, the Green and the Left party, expect to reach around 10 percent each. The right-wing populist Alternative for Germany (AfD) will certainly enter the federal parliament for the first time, perhaps even as the third-largest group. A reentry of the classical liberal party, the Free Democrats (FDP), into the Bundestag is just a bit more likely than it was in 2013, but a leap over the five-percent threshold is far from guaranteed.

In the context of a five or six party parliament, a continuation of the present grand coalition will be an option for the next four years. However, both centrist parties prefer to avoid a reenactment of the coalition government that alienated parts of their core constituencies and only helped parties of the more radical left and right. Since a renewal of the Christian Democrat-FDP coalition would not add up to a majority and the AfD is considered a pariah across the political establishment, a center-right government is not in the cards.

Angela Merkel would have to look once more to the SPD to help her re-establish a comfortable majority. She and some in her CDU have also been flirting with a “black-green” coalition, at least at local levels, where this combination has worked with remarkably little friction so far. However, such an experiment on the federal level would face fierce resistance from her value-conservative Bavarian sister party, the CSU, just a year before the Bavarian state elections.

If the numbers add up, as indeed they did in the last election, a hard-left majority could lead to a SPD-Green-Left government this time. As yet, the social democrats and greens have been reluctant to form a government with the former communists at the federal level. Meanwhile, however, both the social democrats and greens are most keen to avert another four years of Angela Merkel as chancellor. She has cleverly managed to remain in power not least by “stealing” their core policies, such as instituting a minimum wage and phasing out nuclear power.

Still, a continuation of the grand coalition under the leadership of Angela Merkel is the most likely outcome. But does that imply that Germany will become “the leader of the free world” or more modestly, of the EU? Due to its comparative economic strength and political stability, Germany has been labeled Europe’s “reluctant hegemon.” As this period has coincided with Chancellor Merkel’s time in office, person and country are often conveniently conflated.

Hegemony denied

Angela Merkel is indeed a straightforward hegemon as party leader (ousting potential rivals), an opportunistic strategist as government leader (appropriating the opposition’s proposals) and a somewhat reluctant leader on the European stage (trying to mediate conflicts as they arise). The very fact that her political style is one of unassuming, unromantic, skeptical pragmatism does qualify her for all three kinds of leadership. But that is also why she knows that from party to nation to the international sphere, the degree of “hegemony” naturally diminishes.

Germany is one of 28 EU members and just one of 19 members of the eurozone, where on the board of the European Central Bank the German representative is regularly outvoted. With the UK leaving the EU, Germany will become not more, but less powerful. It will lose an important ally and its ability to prevent a qualified majority in the European Council from approving more financial transfers and market interventions.

Germany will certainly remain a key player on the European stage, but – with or without Ms. Merkel – it will not become a hegemon that decides on the EU’s future. On Brexit, the key negotiators will be a Frenchman, Michel Barnier, on behalf of the EU Commission and a Belgian, Guy Verhofstadt, on behalf of the European Parliament. Germany can only hope that the negotiations allow for a smooth Brexit and not an orgy of mutual economic and political self-impairment.

On the future of the euro, the crucial decisions will be taken by the ECB, the International Monetary Fund, the Eurogroup and governments in Greece and Italy. Germany can only hope that it will not have to foot too much of the bill too soon.

On the refugee crisis, Turkey and the countries along the Balkan route will hold the key when it comes to the number of refugees entering and crisscrossing the European continent. Germany can only hope that the precarious situation does not deteriorate.

On security in Eastern Europe, Russian President Vladimir Putin will decide how much instability he wants to create and soon-to-be United States President Donald Trump will decide how much of that he is willing to tolerate. Germany can only hope that its sanctions policy will be upheld and finally show some effect, which seems unlikely. It should do its homework first by investing more in its own military capacity.

The list of key policies where Germany is far from exerting dominance or even leadership goes on. Germany will hold next year’s G20 presidency. Chancellor Merkel will be a widely respected and charming host at the big meeting in Hamburg July 2017. The media will show pictures from the 2016 meeting with former British Prime Minister Cameron, soon-to-be former President Hollande, former Prime Minister Renzi, soon-to-be former U.S. President Barack Obama and other leaders who are no longer present, except for the “eternal” Ms. Merkel. But staying power does not in itself make her the “leader of the free world.”

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Source: Geopolitical Intelligence Services