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ANGELA MERKEL

An era ends: How will Germany and the world remember the Merkel years?

Angela Merkel is leaving office after 16 years with high approval ratings and at a time of her own choosing. How might Germans look back on her time in office? Aaron Burnett explores her legacy and how she's influencing the next chancellor.

An era ends: How will Germany and the world remember the Merkel years?
Chancellor Angela Merkel in the Chancellor's Office on January 6th 2021. Photo: picture alliance/dpa/POOL afp | John Macdougall

An 18 year-old German casting their first ballot in this election would have been two years old when Angela Merkel was sworn in as the country’s first female Chancellor. George W. Bush was still US President, Tony Blair was still the British Prime Minister, and the global financial crisis hadn’t happened yet. 

After 16 years of what seems like near-constant crisis, Merkel, who is also the first chancellor to have been raised in eastern Germany, is stepping down with public approval ratings of around 65 percent. She’s not even running and yet her departure is still heavily influencing the country’s current election campaign. Her Christian Democrat (CDU) party chose their current candidate, Armin Laschet, partly because he represented some continuity with her brand of pragmatic, centrist politics.

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Green candidate Annalena Baerbock is known to have a similar eye for the nitty-gritty of policy detail. Social Democrat candidate Olaf Scholz, currently leading in opinion polls, even released a cheeky Merkel-inspired ad. It said “Er kann Kanzlerin,” or “he can be Chancellor,” while using the feminine version of the world “Chancellor” instead of the male: “Kanzler.” It was probably the biggest sign yet that all three candidates – even those not from Merkel’s CDU – are trying to convince German voters they are her natural successor.

“Everyone is trying to portray themselves as Merkel,” says political scientist and foreign policy specialist Marcel Dirsus. “Everyone is trying to out-Merkel each other.”

Merkel already made history the day she was elected, but she could soon be set to do it again. Coalition talks will start after Germans vote on September 26th. If a new government hasn’t formed by December 17th, she’ll overtake Helmut Kohl as the longest-serving Chancellor in modern German history. Having dominated German and European politics for 16 years, she’ll leave a permanent mark on the country’s political psyche.

READ ALSO: EXPLAINED: When exactly will Merkel leave office?

What will that mark look like? German politics observers we spoke with say that, in short, Merkel will be remembered as a calm and rational crisis manager, a shrewd political tactician, and a natural consensus builder – who lacked a bold vision for where she wanted to take the country and continent. 

A rock of stability in a turbulent time

To be fair, most of Merkel’s chancellorship was heavily driven by unpredictable events. From the financial crisis, euro crisis, refugee crisis, the resurgent populism of Brexit, Donald Trump, and the far-right Alternative for Germany (AfD), and finally, the coronavirus pandemic as well as catastrophic flooding this summer – the Merkel Era has hardly been a golden age. 

Merkel’s scientist-politician approach to policy at times made her particularly well-suited to a crisis-ridden era. “She doesn’t lead ideologically, but rather in a fact-oriented way,” says Oliver Wittke, a Bundestag Member (MdB) from Merkel’s CDU. For him, this approach was especially evident during Covid-19. “She took scientific counsel and implemented it into concrete political measures that found wide acceptance within the population.”

As an unprecedented global health and economic crisis, the current Covid-19 pandemic would test Merkel’s experience in a way no previous event had. Merkel watchers say it revealed a very different chancellor than Germans and Europeans saw during the euro crisis – when Stern magazine labelled her “Die Eiskönigin,” or “the Ice Queen” for her tough eurozone bailout conditions and unemotional style.

“There were a lot of things about it that were unprecedented,” says Berlin-based AFP correspondent Deborah Cole of Merkel’s televised speech in March 2020 – the only one ever given by a German Chancellor outside of the annual New Year’s message. “She spoke in a very personal and emotional way about what this means. She very early on acknowledged that she was asking for sacrifice on the part of the German people, but for the best cause possible.”

Angela Merkel giving the TV address to Germany on March 18th 2020. Photo: picture alliance/dpa | Fabian Strauch

For Christian Odendahl, the Berlin-based Chief Economist at the Centre for European Reform, Covid-19 also showed how Merkel’s crisis management evolved over time, learning from past mistakes. “She misunderstood the euro crisis as a debt crisis when it was so much more than that,” he says. “The difference in how she reacted to the euro crisis and how she reacted to the pandemic is, I think, quite telling.”

READ ALSO: Merkel, the eternal chancellor, gets ready to leave the world stage

From the Chancellor who was often accused of lecturing Europe about the evils of public debt and overspending during the euro crisis, Covid-19 saw Merkel open government coffers in unprecedented ways. Her government passed domestic stimulus packages worth over a trillion euros, and put up the largest single share of money for the EU’s 750 billion euro recovery fund.

“It was a very bold, forward-looking, Europe-focused crisis response – undertaken very quickly,” says Odendahl.

As someone expected to also provide leadership on a European level, Merkel’s Covid-19 response also gave Germans and Europeans another glimpse of her savvy crisis-negotiation skills. “People underestimate how difficult it is to get anything done in Brussels,” says Dirsus. “Merkel is someone who is very good at forging compromise, and she’s shown that at a European level.”

Beyond crises: Merkel’s missing policy legacy?

Perhaps tellingly after 16 years though, it is not yet clear what Merkel’s lasting policy legacy will be beyond her responses to disastrous events. Does Merkel have a signature policy the way Kohl had the euro or Gerhard Schröder had labour market reforms? 

“She has not, at each election, set out a course and said ‘this is where I’d like to see Germany in four years,’” says Cole. “It’s been more about problem-solving than ‘where can we go as a society?’”

Analysts say that beyond her capable crisis response, the Merkel years are marked by many missed opportunities on everything from infrastructure investment to foreign policy – areas that often require longer-term vision and planning.
Angela Merkel and Donald Trump surrounded by other participants at the G7 talks in Canada in 2018. Merkel never minced her words. Photo: picture alliance/dpa | Jesco Denzel

“At a time when we have many large policy questions, when we look at Europe, when we look at globalisation, when we look at the climate. When we look at how to prevent crisis rather than simply manage it, we haven’t seen the same achievements during her time in office,” says Dr. Ursula Münch, Director of the Academy for Political Education in Tutzing.

“The fact that our public train operator is in a dismal state, that is a legacy of Angela Merkel, full stop,” says Odendahl. “The pandemic also put into focus the dismal state of German digitalisation in public administration. A lot of effort had to be put in to compensate for that.”

On foreign policy, Dirsus says Merkel hasn’t done enough to explain to ordinary Germans how harsh the world around them is becoming, with a rising China and an aggressive Russia.

“It’s not the early 90’s anymore,” he says, calling Merkel’s pragmatic China policy her largest foreign policy failure. “Not only did she fail to stand up to Beijing, but she made Germany more dependent on China. That’s especially tragic because China has become more aggressive towards its neighbours and to Germany’s allies.”

The Merkel Era may well go down in history as a pivotal time when Germany’s strength, both economically and politically, increasingly propelled it – and its Chancellor – closer to a central place on the world stage during a turbulent time.

She will also be fondly remembered by many for her no-nonsense communication and way of dealing with world leaders, her sense of humour and honest approach. You’d be hard pushed to find another leader who’d apologise and acknowledge a mistake so quickly, like Merkel did during this year’s short lived Easter lockdown debacle plan. For that she earned respect. 

Merkel’s New Year address through the years from 2005 (bottom right) to 2020 (top left). Photo collage: picture alliance/dpa

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But due to the longer-term nature of some of Merkel’s blind spots, some policy failures might not become clear for several years.

“We may eventually look back on it as a time when we could have done more or had more options. We may say we had more options on climate, that we had more options on anti-pluralist tendencies in the EU. We may ask why we didn’t use those options,” says Münch.

Member comments

  1. “A rock of stability in a turbulent time” – that says it all! Maybe if other countries had a leader of this quality for this period, it would not have been such a turbulent time: instead, we suffered a litany of testosterone-fuelled ego-maniacs – the so-called Populists.
    Hers will be big boots to fill and for sure not with the little dancing tootsies of “Laughing-boy Laschet”! I just hope, if it is the solid Scholz, he can control the left-wing loonies in his own party while advancing climate friendly and digitalisation policies.

  2. Energy policy ? Migrant policy ? Defence policy ? All disastrous – chiefly due to lacklustre lazy politics. Hopeless understanding of European politics and largely responsible for Brexit. Worst German Chancellor since you know who.

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ECONOMY

Schuldenbremse: What is Germany’s debt brake and how does it affect residents?

Nothing sums up Germany's cautious relationship with money quite as well as the debt brake - but this little clause in the constitution has recently caused no end of chaos. Here's what you need to know about the so-called 'Schuldenbremse'.

Schuldenbremse: What is Germany's debt brake and how does it affect residents?

What is the debt brake and why did Germany introduce it?

Known as the Schuldenbremse in German, the debt brake is a cap on government borrowing that’s enshrined in Germany’s constitution. It states that the federal government can only take on a certain amount of new debt in each fiscal year.

This is capped at 0.35 percent of Gross Domestic Product (GDP) – the amount of money the country produces each year in goods and services. Though GDP varies from year to year, this generally gives the government enough wiggle room to borrow around €9 billion annually.

When it comes to spending on a regional level – i.e. by state governments in Germany – the rules are even stricter. States aren’t allowed to borrow any money to fund their plans and must therefore create balanced budgets that finance spending exclusively through tax income and money from the central government.

But why exactly has Germany decided to tie itself to such strict rules on spending? Well, there are quite a few answers to that. 

Back in 2009, the Grand Coalition of the Christian Democratic Union (CDU) and Social Democrats (SPD), led by Angela Merkel, decided to bring the debt brake into law. At the time, the global economy was struggling to deal with the fallout of the 2008 financial crisis, and Germany was racking up a huge deficit. 

The idea was to bring borrowing back under control as soon as possible and prevent leaving billions of euros in debt for future generations to pay off. It also paid homage to the main edicts of neo-liberalism, creating a streamlined state with little room for generous investments or high social welfare payments. 

Thanks to the ongoing effects of the financial crisis, the debt break only came into force seven years after it was put in the constitution. This means that since 2016, the federal governments have been tied to 0.35 percent cap on borrowing.

That said, there are a few exceptions to the Schuldenbremse: in periods of national emergency, such as natural disasters or pandemics, the government is allowed to put the debt brake to one side. That’s exactly what happened during the Covid pandemic in the years 2020 to 2022, and now it appears it will be put aside for the fourth year in a row. In other words, it has been sidelined for exactly half of the time it has been in place.

READ ALSO: Germany to seek debt rule suspension for 2023

Why has the debt brake been in the news recently?

The debt brake was put in the spotlight in early November when Germany’s Constitutional Court declared tens of billions of earmarked government spending to be ‘unconstitutional’.

The case related to €60 billion of borrowing that was originally intended for tackling the Covid crisis but had later been diverted towards a fund for fighting climate change known as the Climate and Transformation Fund.

In normal cases, moving unspent money around wouldn’t be a problem – but in this case, the specific rules around the debt brake came into play. Utilising the exceptions in the debt brake, the €60 billion was borrowed for the purpose of stabilising the economy during the pandemic – and as such it was only supposed to go towards tackling that emergency.

Wind turbines in Germany

Wind turbines in the northern German state of Schleswig-Holstein. Photo: picture alliance/dpa | Christian Charisius

Beyond this amount, which already represents a huge chunk of the national budget, the court decision also invalidated the Economic Stabilisation Fund (WSF). This fund was also originally set up during the Covid crisis and later repurposed as Olaf Scholz’s ‘Doppelwumms’: a €200 billion pot that paid for the energy price breaks and other relief measures in the wake of the Ukraine war. 

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Finance Minister Christian Lindner (FDP) announced that the debt brake would be set aside for one more year to allow the government to meet its financial commitments for 2023. However, the budget for next year – and how the significant gaps in funding will be filled – still remain unclear.

The crisis has sparked a major debate among politicians about whether the debt brake is still fit for purpose. 

What do critics of the debt brake say? 

As you might expect, the tight controls on spending aren’t popular with everyone – especially those on the left on the political spectrum. 

Proponents of the debt brake say we should lower the deficit to avoid lumbering future generations with unmanageable debts, but critics of the mechanism make the opposite argument. They say that straightjacketing spending will actually put a strain on future generations as the government will be unable to invest in modern infrastructure and could therefore be hindering growth.

If borrowing is slashed too much and tax revenues don’t increase, projects like the green transformation, upgrading public transport and pushing ahead with digitalisation will inevitably be put on the backburner. The government will be forced to prioritise its urgent day to day spending in the present rather than trying to invest in the future – and it could also be forced to cut vital public services.

Deutsche Bahn train

Deutsche Bahn staff give the sign for an ICE high speed train to leave the main railway station in Stuttgart, southern Germany, on August 11, 2021. Photo by THOMAS KIENZLE / AFP

Other critics argue that the debt brake was appropriate at the time when it was introduced but that times have changed and governments require more flexibility. 

In the early to mid-2000s, Germany was riding high on a booming manufacturing and exports sector fuelled by cheap Russian gas, and had made little attempt to invest in renewable energy. Now, however, with Germany transitioning away from cheap Russian gas while trying to slash the country’s carbon emissions, Germany is faced with numerous expensive challenges at a time when the economy is especially weak – meaning borrowing more or raising more taxes feel like an inevitability. 

READ ALSO: ‘2024 a turning point’: When will Germany’s rail network run on time?

Could the debt brake be reformed in the future?

That’s certainly an idea that’s come from multiple camps – not least Economics Minister Robert Habeck of the Green Party. Speaking at the recent Green Party Conference, Habeck slammed the current rules on borrowing, stating: “With the debt brake as it is, we have voluntarily tied our hands behind our backs and are going into a boxing match.”

According to Habeck, the debt brake should be reformed according to the “green golden rule” to allow borrowing for investments rather than everyday spending. This is an idea that has also been put forward by economists.

Saskia Esken, the co-leader of the SPD, has also spoken out in favour of a reform of the debt brake to avoid putting a drag on growth in the future. 

However, the likelihood of this happening seems low at the moment, even if Greens and SPD politicians – and some members of the CDU – are in favour of it. 

That’s because it takes a two-thirds majority in the Bundestag to change any aspect of the Grundgesetz, or constitution – a much higher bar than the simple majority needed to change a law.

The FDP, who are in the coalition alongside the Greens and SPD, are also fiercely opposed to any reform of the debt brake and want to rein in government spending instead. 

Christian Lindner

German Finance Minister Christian Lindner (FDP) speaks in the Bundestag. Photo: picture alliance/dpa | Michael Kappeler

Messing with this fiscal rule could also prove unpopular: a recent poll found that 61 percent on Germans were opposed to any reform of the debt brake, as opposed to 35 percent who were in favour of it, and 4 percent who didn’t know. 

It means that in the medium term at least, the government may have to take a scalpel to its previous spending plans, cutting spending on investment projects, public services like healthcare and transport and social welfare such as child and unemployment benefits. Or it may find a way to raise some taxes without upsetting the FDP. 

READ ALSO: How Germany’s budget crisis could affect you

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