Angela Merkel Is Losing Her Touch at the Worst Possible Time

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At a critical juncture for Germany and the European Union, Angela Merkel is faltering.

In the final months of her 16-year tenure, the German chancellor is within touching distance of a historic budget settlement that would underpin the recovery from the pandemic, bind the EU closer together and accelerate the shift to a carbon-neutral future. It’s threatening to slip through her fingers.

For years, Merkel has allowed rule-of-law violations in Hungary and Poland to fester. Now they could derail the 1.8 trillion-euro ($2.2 trillion) budget and jointly funded recovery package that was supposed to be the centerpiece of Germany’s EU presidency. To make matters worse, the dispute with the U.K. over post-Brexit trade ties is overshadowing preparations for Thursday’s crucial EU summit and raising the risk of another economic shock.

With negotiations hamstrung by restrictions on face-to-face meetings, Merkel’s European allies are talking about pressing ahead with the recovery fund without the two eastern holdouts. That would open a breach at the heart of the EU, fuel concerns that more member states could ultimately follow Britain’s exit, and interrupt the reintegration of former Communist states that has been a leitmotif throughout the chancellor’s political career.

“We had imagined our presidency differently,” Merkel told European lawmakers last week. “The presidency is marked by the pandemic. That’s just the way it is, and you have to take things as they are.”

Dissenters within her party say the chancellor should shoulder some of the blame.

Angela Merkel Is Losing Her Touch at the Worst Possible Time

Inside the concrete edifice of Berlin’s chancellery, Merkel has been switching between crisis meetings over the mounting number of Covid-19 cases in Germany and phone calls with EU leaders aimed at finding ways forward, according to an official, who asked not to be identified discussing internal deliberations.

Normally, her spokesman Steffen Seibert issues a statement after such conversations, but during the budget crisis, there’s been little communication -- a sign of just how sensitive the issue has become. Even when French President Emmanuel Macron mentioned he’d be speaking to the chancellor on Monday, Seibert refused to comment.

In an effort to resolve the stalemate, Merkel is resorting to an old trick, said the official familiar with her thinking. She tries to get herself into the mindset of her opponent to understand their weaknesses and find an opening for a compromise.

The threat of EU funds drying up is one obvious pressure point, but for Hungary’s Viktor Orban and his Polish counterpart Mateusz Morawiecki, there’s more at stake, including national identity and a cultural agenda that collides with EU principles. That’s tough for the notoriously pragmatic German leader to crack.

Making Merkel’s position more difficult is that she let Orban flout the rules for years without suffering any consequences, his party Fidesz even remained a member of the same European grouping as Merkel’s Christian Democrats. During the refugee crisis of 2015, which marked a watershed in Merkel’s relationship with German voters, Orban refused to take on Hungary’s allotment of migrants even when threatened with a cut in EU funding. And he ultimately suffered no repercussions.

Angela Merkel Is Losing Her Touch at the Worst Possible Time

This time it’s not just the EU’s moral authority at stake, this fight is about its economic and political future. And the chancellor’s normally unflappable demeanor is starting to show the strain.

Her frustration was evident when she addressed European parliamentarians last week on the results of the German presidency. She bemoaned her lack of progress and unusually complained about the demands put on her.

“There are those who tell me: don’t make a compromise here and don’t change a single comma there. And then the same people tell me: but please come back with a result,” the 66-year-old chancellor said. “Without compromise from all sides, this won’t work.”

Back home in Germany, some in her political movement are suggesting the chancellor carries some of the responsibility for her problems. In the Christian Social Union -- the Bavarian sister party of Merkel’s Christian Democrats -- many officials say she misjudged support for the recovery fund and put Germany into an untenable position, just like she did with her open-door refugee policy.

‘Repeating Mistakes’

EU leaders should have known that the connection between the budget and democratic standards would provoke a hard confrontation, according to Alexander Dobrindt, leader of the CSU caucus in the Bundestag.

He warned Merkel against isolating Hungary and Poland in the budget conflict and raised the possibility that both countries could, as a consequence, follow the British example and leave the EU.

“The proposal to organize EU finances outside the union of the 27 states is anti-European and contradicts the fundamental principles of the EU,” Dobrindt said on Tuesday in Berlin. “We are on the best way to repeating mistakes made with the U.K.”

Her most prominent critic is Ralph Brinkhaus, who leads the CSU and Merkel’s Christian Democratic Union in Germany’s lower house. Brinkhaus spent political capital persuading conservatives in their party to support the EU’s controversial joint-debt plan only to see the agreement among leaders fall apart.

When the recovery fund was agreed in July, Merkel was also winning plaudits for the low rate of infection during the first wave of the coronavirus pandemic. But the country has been hit much harder during the fall and Merkel’s partial lockdown policy has come in for heavy criticism while failing to bring the virus under control.

That’s another point of friction for German conservatives -- already on edge as they struggle to chart a path for the post-Merkel era. The country’s soft shutdown is costing the federal government at least 15 billion euros a month to support affected bars, gyms and cinemas.

At a meeting in November, state leaders rejected and openly criticized the chancellery’s push for harsher restrictions, including limiting kids to one playmate. By proposing measures that were too ambitious for the states to accept, Merkel wound up empty-handed, delaying a longer term strategy and leaving Germany most likely facing tighter curbs.

Angela Merkel Is Losing Her Touch at the Worst Possible Time

Tension in the ranks over the disjointed strategy erupted at a closed-door meeting of CDU leadership last week. Volker Bouffier -- the state premier of Hesse, home of the Frankfurt financial center -- shouted down Brinkhaus over his criticism of the lack of state financing for pandemic support.

“Let me make it clear we are no longer willing to watch your grandstanding,” he said, while Merkel sat quietly as the exchange unfolded, according to an official familiar with the meeting. A spokesman for Bouffier didn’t respond to a request for comment.

Her pending departure from the political scene after elections in the fall is also playing into her fading authority.

Markus Soeder, the Bavarian premier who’s the front-runner to succeed her, has grabbed the coronavirus spotlight. He preempted harsher national rules by implementing a state of emergency starting Wednesday, including a strict curfew in hard-hit areas. On Tuesday, a number of other state leaders followed suit, revoking Merkel’s plan to ease restrictions over Christmas after health experts warned this would lead to a sharp rise in new infections next year.

While one regional premier after the other acted, Merkel remained invisible. With too many crises hitting at once, the chancellery’s attempts to schedule another video conference with state authorities were hampered by the fact that she has to fly to Brussels on Thursday for the EU summit.

Angela Merkel Is Losing Her Touch at the Worst Possible Time

At a meeting with Merkel last week, which extended national curbs to Jan. 10, Soeder slammed the current approach as too timid.

“The question is whether we can keep the country in this kind of half-sleep all the time, or whether we will have to think again at some point to take a very clear and consistent deeper approach in some places,” he said.

Merkel shot him an irritated look, but her own plans for tougher measures on a national level had been shot down by state premiers in November. They both knew she was powerless to change things.

©2020 Bloomberg L.P.

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