This article is part of a special report: Berlin in Brussels.
Judy Dempsey is editor in chief of Strategic Europe, the blog of Carnegie Europe, and author of the book “Das Phänomen Merkel” (Körber-Stiftung, 2013).
BERLIN — A lame duck.
That was how Angela Merkel was often described when she announced last year she would not stay on as leader of the Christian Democratic Union party. Nor was she going to run for a fifth term in 2021.
But as things started to unravel and her chosen successor as CDU leader, Annegret Kramp-Karrenbauer, threw in the towel — sick of the intrigue, the male egos and the endless sniping — the German chancellor was drawn back into the limelight. Slowly, at first, then — with COVID-19 — all at once.
The significance of these transformations in Merkel’s positions — on Europe, on public spending, on the car industry — is huge.
What was happening in Italy jolted Merkel out of her complacency, and she took control in a surprising manner. She didn’t just arm herself with experts and listen, one of her big strengths. She started speaking to the public and communicating, not something she’s known to do particularly well and only reluctantly.
In a remarkable nationwide television address on March 18, Merkel didn’t mince her words: “The situation is serious. Take it seriously,” she pleaded. “Since German unification, no, since World War II, there has been no challenge to our nation that has demanded such a degree of common and united action,” she added.
That was phase one of Merkel’s transformation during the coronavirus pandemic. Phase two soon followed — this one was about Europe.
Ever since Merkel became chancellor back in November 2005, she has steered well away from any discussion of political or economic integration of the European Union. Indeed, Merkel was much more at home with the European Council than with the European Commission. She much preferred playing her part in the intergovernmental institution where member countries doggedly defended their national interests, and steered clear from any efforts to boost the executive powers of the Commission.
This was particularly the case during the 2009 financial crisis that nearly killed off the euro. Merkel and her then Finance Minister Wolfgang Schäuble had no intention of loosening the purse strings. If indebted countries with high budget deficits — such as Greece, Ireland, Spain and Portugal — wanted financial assistance, they would have to implement tough structural reforms that required stringent savings and a thorough overhaul of their finances.
It was Germany, not Brussels, or for that matter the European Central Bank, that called the shots. The approach didn’t win Merkel much love from the South, particularly from Athens. But the Northern countries approved of her policies.
The idea of solidarity was not part of Merkel’s vernacular. Nor was the idea of using the aftermath of the financial crisis to push for more economic and political integration. Such moves remained anathema to the German chancellor, despite constant appeals by French President Emmanuel Macron over the past two years.
Olaf Scholz, the Social Democrat finance minister who succeeded Schäuble, may have sympathized with his French counterpart, Bruno le Maire, and his calls for completing the integration of the eurozone. But Merkel was having none of it.
Then came the coronavirus. And with it, Merkel made another U-turn.
She supported Scholz’s proposals to respond with spending. Lots of spending. Germany’s infamous Schwarz Null — zero debt — was thrown out the window. Merkel’s governing coalition agreed in June to a €130 billion stimulus package, in addition to a supplementary budget of €123 billion agreed in March.
Billions of euros were distributed to many sectors of the economy — though not indiscriminately. When the powerful car industry lobbied the chancellor to agree a rescue package — giving car owners a subsidy to trade in their old cars for new energy-guzzling models — Merkel did not cave. She was in listening mode again, and had an eye on the demonstrations taking place outside her office. The public was urging her to use COVID-19 to deal with climate change.
For once, the car lobby was defeated. Even if it meant job losses, Merkel knew the public would not accept subsidies for an industry that has been staggeringly slow to embrace change.
Consider also how Merkel and Macron joined forces to agree a massive recovery package of €500 billion, to be channeled via the Commission. This was a radical change of course for Germany. Having shunned so many previous calls for more fiscal integration, Merkel finally ceded ground by agreeing on common debt to fund investments in member countries.
The move stunned the EU’s so-called frugal governments, who oppose greater spending and solidarity. What on earth was happening to risk-averse and fiscally cautious Germany? Assuming some version of the package will be agreed when EU leaders meet mid-July, this is another example of a ground-shifting decision that will outlast Merkel.
The significance of these transformations in Merkel’s positions — on Europe, on public spending, on the car industry — is huge. The end of her term may be on the horizon, but no matter who takes over as chancellor, the decisions she is making now have changed Germany’s course in a way that will be hard to row back. They are likely to change the country’s course, as well as Europe’s.
Merkel’s support for Scholz’s big spending spree is as much about economic recovery as it is about disarming the far-right, populist Alternative for Germany (AfD) that rose in the polls following the 2015 refugee crisis, draining the grand coalition of popular support.
She knew that if Germany didn’t introduce measures to cushion the effects of a recession or growing unemployment, the Euroskeptic populists would flourish. Politically, Merkel wasn’t prepared to allow the party to exploit the coronavirus pandemic. It would be too dangerous for Germany — and for the EU.
What we know for now, is that Merkel has thrown caution to the wind and is charting a brand-new course.
For now, Merkel and the CDU are experiencing a bit of a reprieve. In recent months, the AfD has actually flagged in the polls. But the dip in support many have more to do with the toxic infighting in its leadership, or the way Merkel has taken charge since the start of the pandemic.
The next six months, as Germany takes on the EU’s rotating presidency, will be tough. No one knows if there will be a second corona wave. Or when a vaccine might be available. Or if U.S. President Donald Trump will be reelected. Or if there will be a Brexit deal.
Whether Merkel can use her current popularity to act strategically on other issues — such as China, Russia and defense — will depend in large part on how the coronavirus pandemic develops and what else demands her attention.
What we know for now, is that Merkel has thrown caution to the wind and is charting a brand-new course. No matter who succeeds her — and it’s very much an open question — they will find it difficult to shift into reverse.