Nov 7, 2018 | 12:30 GMT

9 mins read

Germany's Political Woes Spell Trouble for Europe

Ralph Brinkhaus, leader of the CDU/CSU parliamentary group, addresses the Bundestag on Oct. 17.
  • Germany has entered a period of political turbulence that will likely reduce the effectiveness of the federal government and its influence on European Union affairs.
  • In the coming months, the main threat to the continuity of the German government will come from the Social Democratic Party, which is mulling whether to withdraw from the governing coalition.
  • Over time, Germany's political polarization could make it harder for Berlin to accommodate its partners in Southern Europe, which would reduce the room for compromise on EU issues.

Angela Merkel's announcement that she will not stand for re-election as the leader of Germany's governing Christian Democratic Union (CDU) party is raising questions about the political future of the largest economy in Europe. Merkel wants to remain German chancellor until the end of her term in 2021, but the race to succeed her already has begun. Beyond the mere domestic ramifications, the consequences of the competition to succeed Merkel will have an impact across the European Union. In the immediate term, a weaker German government could result in the postponement of important EU reforms. In the longer term, Germany's political polarization could make it harder for Berlin to accommodate its partners in Southern Europe, thereby threatening the entire continuity of the union.

The Big Picture

Germany is the largest economy in Europe, and one of the main political players in the European Union. As a result, events in Germany have ripple effects across the entire Continental bloc. The ongoing political turbulence in Germany could affect the policymaking process in the European Union, as well as relations between Berlin and other EU members.

Tough Choices for the CDU

One factor that will determine Germany's course is the future orientation of the CDU. In recent years, Merkel has moved her conservative party to the center, supporting controversial decisions to introduce a minimum wage, shut down the country's nuclear power stations and allow a parliamentary vote on same-sex marriage. More notably, Merkel supported rescue programs for eurozone countries in distress (the third Greek bailout in 2015 was particularly controversial within her party) and opened Germany's borders to around a million Syrian asylum seekers.

The measures, which were unpopular among the most conservative members of the CDU, contributed to the emergence of the nationalist and euroskeptic Alternative for Germany (AfD) party. The AfD's irruption onto Germany's political scene meant that, for the first time in decades, the CDU now faced a rival to its right. Since the AfD's emergence, the CDU has conducted an internal debate over whether to remain in the center and appeal to moderate voters, or move to the right and compete against the AfD; the dilemma will be front and center during discussions over Merkel's successor. The chancellor's policies also induced more fragmentation by aiding the electoral resurrection of the pro-business Free Democratic Party, which is critical of eurozone bailouts and competes for many of the same voters as the CDU.

Some of the most popular candidates to replace Merkel, including former CDU parliamentary group leader Friedrich Merz and Health Minister Jens Spahn, advocate more conservative positions on issues like the economy, EU integration and immigration, while others, such as CDU Secretary-General Annegret Kramp-Karrenbauer, largely share Merkel's policy views. If the CDU elects a leader with different policy views during its Dec. 7-8 leadership conference, both the party and its lawmakers in the Bundestag may decide to start distancing themselves from Merkel, thus weakening her ability to influence policy.

A chart shows the electoral fortunes of Germany's major parties since 1998.

The Weakest Link: The SPD

The CDU may be encountering some turbulence, but that's nothing compared to what its partner in the government coalition, the center-left Social Democratic Party (SPD), is facing. Amid a steady decline in its popularity over the past decade, the SPD suffered its worst electoral performance of the postwar period in the 2017 general election. In essence, the party has become embroiled in an identity crisis after so many years in coalition with its traditional rivals, the CDU. Immediately following the last polls, the SPD announced that it would not enter another coalition with the CDU in the hopes that a few years in opposition would revitalize the party, only to reluctantly agree to a coalition with the CDU to end the country's political paralysis and prevent another snap election. The decision, however, has not improved the popularity of the SPD, which is losing ground to parties on the left, including the environmentalist Greens and the left-wing Die Linke (the Left).

To a large extent, the future of Germany's government is in the hands of the SPD. The party will likely decide to stay in power with the CDU — at least for a few months — to try and influence policy. As it is, the SPD's polling numbers are so poor that it has little to gain from a new election. Nevertheless, the SPD is facing increasing pressure from its grassroots to renew itself as an opposition party, and a weak performance in the EU parliamentary elections in May 2019 could be the straw that breaks the camel's back, forcing the party to withdraw from its partnership with the CDU.

If the SPD did leave the coalition, the CDU and its sister party in Bavaria, the Christian Social Union (CSU), could choose to remain in power as a minority government, although no one has ever governed Germany in such a fashion before. (What's more, Merkel opposes such a plan.) Alternatively, the CDU and the CSU could seek support from parties like the Greens and the Free Democratic Party, yet these parties could decide that they have little to gain in supporting Merkel and could push for early polls instead.

Regardless of when the next German election occurs, it will likely bequeath a fragmented Bundestag, as well as complex negotiations to appoint a new government. Without doubt, the years when the CDU and the SPD dominated German politics are over, as emerging parties on the right and the left are here to stay. Germany politics will become more polarized as challengers on the ideological extremes force the moderates to move away from the center in pursuit of votes.

Without doubt, the years when the CDU and the SPD dominated German politics are over, as emerging parties on the right and the left are here to stay.

What Does This Mean for Europe?

If Germans go to early polls in 2019, the country's leaders will postpone most of the crucial decisions regarding the future of the European Union until after the vote. And in the likely event that the elections produce a fragmented Bundestag, it might take months for the parties to cobble together a new coalition. As a result, an early election would severely slow the policymaking process at the EU level.

If, on the contrary, early elections are avoided and Merkel remains in power, she would be in an ambivalent position. Free from the pressure of seeking re-election, she could turn her attention to her legacy. The chancellor has long defended the idea of a more integrated Europe, meaning she could endorse integration plans that she was reluctant to support in the past. This would be good news for France, as it would give Paris a counterpart in Berlin that is more open to discussing things like completing the banking union or introducing a large budget for the eurozone (Merkel has so far accepted a small budget in the single-digit billions).

Still, the chancellor would face many limits. Conservative German lawmakers are reluctant to share financial risk in the eurozone or introduce policies that stipulate greater transfers of money from north to south. These constraints will remain in place regardless of Merkel's personal future — and could even grow if the CDU adopts more nationalist positions. Because German law obliges the government to inform the Bundestag of any EU-related negotiations or policies, lawmakers could pressure Merkel to avoid making concessions to Southern Europe. Indeed, a Bundestag vote is mandatory on some issues in which German taxpayers' money is involved, such as the allocation of financial assistance to countries in distress. France's plans to transform the European Stability Mechanism (the union's permanent bailout fund) into a European Monetary Fund, for example, would probably require Bundestag approval.

Things would become even more difficult if France and Germany reached agreements on matters that require amendments to the EU treaty, such as the issuance of bonds that are jointly backed by all eurozone members (so-called eurobonds), the provision of additional executive powers to the European Commission or the transformation of the European Central Bank into a proper lender of last resort. In such a case, the parliaments of every member state, including the Bundestag, would have to ratify a new EU treaty. And even if Merkel lent her full support to such amendments, Germany would struggle to convince other EU members to discuss a new treaty at a time when euroskepticism is rampant across the Continent.

Merkel's shaky position, however, is unlikely to significantly shift Germany's stance on other issues like Brexit. Germany stills wishes to reach a trade agreement with the United Kingdom that preserves bilateral trade, especially on goods (the United Kingdom is Germany's fourth-largest export destination). A more conservative CDU may even consider trade to be a priority that trumps issues such as the future of the Irish border. And when it comes to immigration, Germany has already toughened its position under Merkel, reducing benefits for asylum seekers and supporting EU plans to assist the countries of origin and transit of migrants to prevent them from even reaching Europe.

The Dangers of Polarization

Germany's political turbulence should not have a dramatic effect on the European Union immediately — other than adding to the delay of some structural reforms that are already likely because of the EU parliamentary elections in May 2019 and the appointment of a new EU Commission in October 2019. The only thing that would spur Germany, as well as the European Union, to quicker action would be a sudden crisis that could be financial (such as if Italy requires a rescue program) or political (such as if a member state in Central and Eastern Europe refuses to adhere to EU rules). In this case, no matter who is in charge, Berlin's main goal would be to preserve the bloc's unity. A weak German government, however, would be less effective at achieving such a goal than a strong one.

In the long run, the repercussions could be far-reaching, especially if German politics becomes more polarized. If the CDU adopts a more nationalist position, it could decide that the AfD is a viable coalition partner. Such a government would entail a more euroskeptic Germany that resists immigration, rejects financial solidarity throughout the union and opposes compromises with Southern Europe. And if the SPD regains enough strength to win elections before seeking allies on the progressive side of the spectrum, the result could be a government that favors more intervention in the economy, questions its traditional Atlanticist alignment, wavers in its support for free trade and dismantles some of the business-friendly policies that have contributed to Germany's economic growth in recent decades. Either way, political fragmentation in Germany will likely weaken Berlin's leadership in the European Union and reduce its effectiveness in guiding the bloc's policies.

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