James Ferguson web

When Angela Merkel hosted the G20 summit in Hamburg last July, she was the most experienced western leader in the room. The German chancellor took office in 2005 — when Emmanuel Macron was just a year out of college, and Donald Trump was still a reality TV star and real estate guy.

The only G20 leader who has been in office longer than Ms Merkel is Vladimir Putin of Russia, and the two leaders’ records make an instructive contrast. Under President Putin, Russia has lost friends, was sucked into wars and been hit with economic sanctions. But, in the Merkel era, Germany has grown steadily in prosperity and political influence. On a range of crucial issues — Russia, refugees, the euro — Germany has become Europe’s “indispensable nation”, with decisions taken in the chancellery in Berlin critical to how events unfold.

So the current political crisis in Germany has global implications. If, as now seems distinctly possible, the end of the Merkel era is within sight, Europe will be in a new and dangerous situation.

The EU-optimists in Brussels and Paris will hope that a new German leader might inject some dynamism into the European project, ditching the cautious, incremental approach that Ms Merkel has displayed over the euro.

But, in fact, the opposite is more likely to happen. The current tenor of German politics suggests that a new chancellor in Berlin is far less likely than Ms Merkel to take bold risks for Europe. The spoilers in the current coalition negotiations are the Free Democrats, who are strongly opposed to visionary ideas for deeper European fiscal integration.

For that reason, the collapse of the coalition talks in Berlin is bad news for Mr Macron. In a recent speech on Europe at the Sorbonne, the French president laid out a series of ambitious ideas for the EU, including the creation of a European finance ministry, EU-wide taxes and a joint military force for overseas interventions. Yet for these ideas to have any chance of adoption, France needs a positive response from Germany. The failure to form a new German government means the response will now be indefinitely delayed, and will be more likely to be negative when it finally comes.

Some conservatives hope that a post-Merkel Germany could be better for European unity when it comes to the sensitive issue of dealing with refugees. The chancellor was bitterly criticised in Hungary and Poland for unilaterally deciding to accept more than 1m would-be refugees from Syria and elsewhere, and then seeking a burden-sharing agreement with the rest of the EU.

The current coalition talks have already demonstrated that Germany is moving towards a much more restrictive view of refugee rights — including setting an overall limit to the number of asylum-seekers the country will accept each year. But even if the next German government is closer to the EU mainstream on migration, that is unlikely to lead to EU unity.

There are still many potential migrants who might attempt the journey to Europe. With a disproportionate number arriving in southern European countries such as Greece and Italy, there is a clear need for some sort of EU-wide response. If even Germany retreats into a nationalistic crouch, attempts to find a workable EU approach would collapse, and migration policy would become even more chaotic and divisive.

Ms Merkel’s response to the refugee crisis helped to turn her into a global symbol. During the US election, Mr Trump lambasted the German chancellor’s policies as “insane”, and regularly predicted a surge in terrorism across Europe. More broadly, after Brexit, the election of Mr Trump and the rise of quasi-authoritarian governments in Poland and Hungary, Ms Merkel was widely hailed as the most powerful defender of an international liberal order that was suddenly under unprecedented pressure.

No currently conceivable replacement for Ms Merkel is likely to embrace the populist agenda of Mr Trump, or the Euroscepticism of the Brexiters. But it is clear that a large part of the German chancellor’s current difficulties stem from the rise of the far-right and the far-left in Germany, who collectively achieved more than 20 per cent of the vote in September’s election. If the chancellor now loses office — or staggers on, in a hobbled state — her fate will be perceived across the world as a big setback for the liberal and internationalist ideas that she has championed.

The fact that Ms Merkel will end the year fighting for her political life will damp some of the optimism that has been building steadily among EU elites in the past year. The twin blows of Trump and Brexit meant that the EU began 2017 in a state of shock and fear. But Mr Macron’s victory, a modest revival of economic growth and the shambles of the Brexit process had restored the confidence of professional pro-Europeans.

Set against these positive trends, however, there have also been warning signs. These include separatism in Spain, populism in central Europe and continuing worries about the Italian banks. Amid all these problems, Ms Merkel’s Germany was the rock of political and economic stability on which the EU hoped to build. If even Germany no longer looks solid and predictable, the whole of the European project will be back in trouble.


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