Daniela Strube is a Research Fellow in the Lowy Institute's G20 Studies Centre.
Germany, Europe’s biggest economy, will elect a new parliament on Sunday, an affair that would normally be expected to bring some excitement back into German politics, which has been notably lacking in eventful episodes, whether domestic or foreign. Despite the European economic woes on its doorstep, Germany has been remarkably calm, led by Mrs Merkel and her distinct preference for 'no-noise', risk-averse politics. Depending on Sunday’s results, this could change, at least a little bit.
So what are the options and what is likely to happen?
Mrs Merkel’s Christian Democrats (CDU) are miles ahead, consistently receiving about 40% of the vote in pre-election surveys. But in Germany, government is formed by coalitions. So Mrs Merkel needs a coalition partner and may even miss out on a third term as chancellor.
Her preferred option would be to reinstate the current ruling coalition with the Liberal Democrats (FDP). Both are centre-right parties and share many political objectives. With the FDP projected to get just enough votes to make it into parliament, the CDU would be the dominant party in government and would have more leeway to implement its policies than with any other potential coalition partner.
However, while the FDP's weakness plays into the CDU’s hands in the event of an CDU win on Sunday, it may also sink the ship for both parties. There is a real danger that the FDP will not make the 5% threshold required to enter parliament. Three days out from the election, the polls project 5-6% for the FDP, meaning failure is within the margin of error.
So this is what to watch out for on Sunday: will the FDP surpass the 5% threshold? Should the FDP fail to enter parliament, things get interesting. [fold]
Mrs Merkel’s strongest opponent is the leader of the Social Democrats, Peer Steinbrück. The SPD currently polls at just above 25%. Their preferred coalition with the Green (at approximately 10%) is clearly out of reach. But there is the possibility of the Left party (at about 8%) supporting an SPD-Greens minority government, an option that some in the SPD are contemplating. In that event, Mr Steinbrück could be the next chancellor.
But this scenario is politically very risky. The Left party, far out on the left of the political spectrum, is unofficially led by Sahra Wagenknecht, a young woman with strong and open sympathies for old-style communism. An SPD-Greens minority government would be critically dependent on the Left party, giving it extensive power.
Should an SPD-Greens minority government supported by the Left party indeed happen, this would have consequences for the stability of Germany and Europe. And this might not only be because of the role of the Left party.
Compared to Mrs Merkel's calm and steady leadership style, Mr Steinbrück is a totally different character. If you want to get idea about Peer Steinbrück the man, check out last week’s issue of the Süddeutsche Zeitung Magazin, a magazine-style supplement to one of Germany’s leading newspapers. The cover shows Steinbrück giving the finger, a truly extraordinary portrait choice for the man who aspires to become one of the most powerful leaders in the world. A few months ago, he famously labeled Silvio Berlusconi a clown, leading to the iconic Economist cover and the Italian president promptly cancelling a prearranged meeting.
Peer Steinbrück is clearly a man who does not fear judgment. While Mrs Merkel meticulously plans each and every one of her moves, Mr Steinbrück is not of the diplomatic kind and would, should he become chancellor, surely create a few political faux-pas, if not outright scandals. This could seriously affect Germany’s role as an influential negotiator on the world stage.
However, the odds of Mr Steinbrück becoming chancellor are slim, since he and other leading Social Democrats have wisely expressed concern with the minority government option.
More likely (if the FDP is left out of parliament) is a grand coalition between the Christian Democrats and the Social Democrats, just as in Mrs Merkel’s first term as chancellor. However, scepticism about this option is widespread. It would put the SPD in the shadows of the eminent Mrs Merkel and would damage its prospects for the next elections in four years. Moreover, many people are concerned that internal disagreement in the ruling coalition would prevent reform. However, experience has shown that grand coalitions can also have the opposite effect: they can spur reforms and progress because Germany’s two major parties' fates are tied together and they have to cooperate to be successful.
In any case, it looks likely that Mrs Merkel will get another term as chancellor. What will that mean for Germany and its role on the world stage? Probably not much.
Some wonder whether Mrs Merkel will become somewhat braver in her third term, pushing more strongly for serious reform at home and in the EU in order to polish her legacy. But she would then run the risk of losing the affections of the German public, who predominantly view her favourably. And if anything is obvious about Mrs Merkel, it is her risk aversion.
While she is certainly a force for global stability in the short-term, Mrs Merkel’s reform reluctance may have dramatic consequences for Germany’s global role in the long term. Germany's demographics, for example, are highly worrying. France is projected to exceed Germany's population by the middle of the century, meaning Germany is likely to lose its position as Europe’s biggest economy. The CDU has so far blocked every serious attempt to even contemplate a reform of Germany’s outdated immigration policy.
In other policy areas too, Merkel’s time as chancellor has been characterised by reform standstill. While Germany’s courageous labour market reforms in the early 2000s built the basis for its strong economic position today, Germany will lose momentum in the coming years unless serious structural reforms are brought forward. This will inevitably have significant consequences for the European and indeed global power balance.
Whether Germany’s future looks bright or gloomy is probably a matter of time-horizon, but Germans are likely to endorse Mrs Merkel’s lack of courage. She is a safe choice for Germany and the world for now, but one that Germany might regret unless whoever succeeds her wakes up to the challenges ahead.