The Slow March of Germany’s Democracy Means Merkel Isn’t Leaving Yet

(Bloomberg Businessweek) -- For the past 16 years, Europe and the world have grown accustomed to Angela Merkel’s steady hand steering the German government. So after a Sept. 26 election in which Merkel wasn’t a candidate, those wary of change and fearing a vacuum have fretted about the end of the chancellor’s long tenure. But for now at least, Germany’s leader will be … Angela Merkel.

The voting left the Social Democratic Party in the lead (though just barely), the Christian Democrats reeling from their first outright defeat since 1998, and two smaller parties positioning themselves as kingmakers. After Germany’s last national election, in 2017, it took almost six months to install a governing coalition—despite a clear victory by the incumbent chancellor. Until a new government is named, Merkel will remain in the Chancellery. “Nobody wants to repeat the experience of 2017,” says Carsten Nickel, a managing director at political risk consultancy Teneo. “But it’s always a challenge to get parties together.”

Olaf Scholz, the Social Democratic leader who’s in the strongest position to take power, says he wants to form a government by Christmas. Yet even after an unlikely come-from-behind victory—he was written off by the punditocracy as recently as August—Scholz has a rough road to the chancellorship. He’s staked his destiny on a three-way coalition with the climate-focused Greens and the pro-business Free Democrats (FDP), parties with diametrically opposing views on taxation, debt, and the role of the state.

Armin Laschet, the hapless state premier who emerged as the leader of the Christian Democrats after a bruising internal battle, is holding out for his own coalition with the Greens and FDP, though such a matchup can happen only if Scholz’s talks collapse. Other majorities are possible, including a revival of a “grand” coalition with the two biggest parties, this time led by the Social Democrats. But the political will for such a combination is close to zero, with a Civey/Der Spiegel poll finding 63% of Germans backing Scholz as chancellor, vs. 24% who prefer Laschet. And as Laschet struggles to contain the damage of his electoral loss, it’s unclear where he’ll be in a few months: Some in the rank and file are calling for his resignation, and his Bavarian allies have said he has no mandate to form a government.

That puts two parties with a history of mutual enmity at the center of efforts for a new government. The Green candidate, Annalena Baerbock, spent the campaign excoriating Christian Democrat and FDP plans for tax cuts, insisting that their proposals would leave Germany crippled when it comes to investing in climate technology, the digital economy, and education. Christian Lindner, the FDP boss who wants to lead the powerful Finance Ministry, pledged not to increase taxes. And on the campaign trail he drew cheers by hectoring the Greens as a “party of prohibition” and ridiculing them for a proposal to offer subsidies for cargo-carrying bicycles. “Germany doesn’t need any more left-wing policies,” Lindner told a crowd in Dresden on Sept. 17.

Still, it was Lindner who on election night proposed a first round of talks with the Greens, saying the two parties represented a “renewal” after the stale status quo of the Merkel era. The overture was taken up by Green co-leader Robert Habeck, a former energy minister in the state of Schleswig-Holstein, where he helped form a coalition with the Christian Democrats and FDP. Habeck, a novelist-turned-politician who tries to portray himself as a fresh-thinking outsider, said a three-party alliance would require each faction to “find itself” rather than succumb to the familiar political categories of the past. “Hey, Germany, are you still sleeping?” he said to reporters. “Something new can happen. It’s actually a cool situation.”

The parties will hold exploratory talks to determine whether there’s enough common ground to even attempt negotiations. If there is, teams of experts will begin shaping policy goals in meetings that can take weeks, ultimately either storming away from the table and calling it quits or—with luck, sweat, and goodwill—producing a book-length document mapping out the new government’s agenda. Only then will the parliament meet to vote on the new chancellor. “Parties have to fulfill the expectations of the people who voted for them,” Scholz said the day after the election. “You have to find a solution where all supporters can say, ‘I’m happy with that.’ ”

Until that happens, the region’s biggest economy will be left with the European Union’s longest-serving leader as a caretaker chancellor. Merkel, the only postwar German chancellor to leave the job willingly, will represent the government at EU Council meetings and, probably, the Group of 20 summit in Rome at the end of October. There’s a trip to Israel in the works, she’ll address the nation on the 21st anniversary of reunification after the fall of the Berlin Wall, and her team will likely attend the COP26 climate talks in Glasgow, Scotland, in November.

If the coalition negotiations indeed drag on until the holidays, the incoming government will give Merkel a Christmas gift of sorts: On Dec. 19, she’ll surpass Helmut Kohl as Germany’s longest-serving chancellor since Otto von Bismarck, the very first person to hold the job (he was forced out by Kaiser Wilhelm II in 1890, one day shy of 19 years in the position). Even if things go more smoothly than expected and Merkel is packed off to retirement before December, she’s given no indication that she regrets her decision—announced almost three years ago—not to seek a fifth term. During a livestreamed interview on Sept. 8, she said that initially, at least, she plans to “do nothing and just wait for what comes up.”
 
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