It’s Not the Economy, Stupid: Tough Times for Angela Merkel

After safely steering her country through the global economic crisis and capturing the hearts of East Germans, the refugee crisis may be her undoing

German Chancellor Angela Merkel speakings with the media at the conclusion of an informal EU summit on migration at EU headquarters in Brussels, Sunday, June 24.
Geert Vanden Wijngaert/AP

During this, the most difficult period in her 13 years as leader of Germany, Chancellor Angela Merkel has been on a visit to Lebanon. On Friday, the German chancellor, the longest-serving and most powerful leader in Europe, met with Lebanese Prime Minister Rafik Hariri. The two discussed the refugee crisis and economic stability in the region. The region, of course, is the Middle East, but the chancellor would have discussed the topic with equal urgency further to the northwest in her own country and in surrounding countries of the European Union.

In the course of Merkel’s two-day swing through the Middle East, the German magazine Der Spiegel published a cover in which it suggested that Merkel was on her way out. It featured an illustration of hands poised as the chancellor typically does and that have become her trademark, holding onto a nearly spent hourglass. The caption on the cover states simply “Endzeit” – your time is up.

The Christian Social Union, the partner of Merkel’s Christian Democratic Union, is fed up with the chancellor’s immigration policy. For a number of weeks now, the parties have been in discussions against the backdrop of a threat of a breakup of their decades-long partnership. The German press has been reporting about the rage that CSU party officials express regarding Merkel and the ferment within the CSU’s conservative electoral base over Merkel’s liberal policy.

Merkel has been chancellor during an exceedingly positive transition period for Germany. During her years in power, Germany has gone from having an economy that dubbed it the sick man of Europe to a thriving industrial powerhouse, while the disparities between east and west threatened to split it apart. All this came at a time of global economic crisis and a European debt crisis.

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The world’s kindergarten teacher

Merkel certainly wouldn’t have imagined that her party would be dealing with figures like Italian Deputy Prime Minister Matteo Salvini, the head of the right-wing nationalist Northern League, and Donald Trump, the most unexpected president in the history of the United States. Until recently, leaders like Trump and Salvini were considered outcasts among the political, economic and intellectual elites in the circles in which Merkel found herself but whose control over the Western world is waning.

Trump has scrambled the deck not only when it comes to U.S.-German relations but also with regard to America’s other traditional allies – from his scathing attacks on NATO to his withdrawal from the Paris climate accord to the trade war against Europe that he declared over the weekend when he announced new tariffs on European cars.

He took Germany to task in particular over its export successes but also over its refugee policy, which he claimed had increased crime in Germany. He has also behaved rudely in his meetings with the chancellor, where he has been seen as a recalcitrant boy in the presence of a stern kindergarten teacher. Very early on, Merkel expressed major pessimism over the future of German-American relations, telling last year’s G7 summit that she had come to the conclusion that the days in which others could be relied on are over. “We Europeans truly have to take our fate into our own hands.”

Trump, however, is not threatening Merkel’s political career in the same way that Salvini and others like him are. The fight in recent weeks over whether Italy, Spain and France would take in refugee ships reflects the change that Europe – and the United States – have undergone with regard to open borders and open arms that leaders of the EU had been committed to since the founding of the European Union. The rise of populist anti-immigration parties across Europe, including Alternative for Germany, the AfD, has put Merkel on a collision course with populist and nationalist leaders such as Salvini.

The global economic leader

To a great extent, Merkel’s success was built on two developments that she herself did not set in motion. Germany under Merkel’s predecessor, Gerhard Schroeder, underwent complicated economic reforms that streamlined its labor force and made the country a lot more competitive. The second and essential development that helped the German economy was the establishment of the eurozone at the end of 1999.

European monetary union handed Germany a gift by permitting the country to benefit from a more competitive currency exchange rate than it had under the Deutschemark. When an exporting country’s currency weakens, it makes its exports more attractive. And unlike Germany with its strong economy, eurozone countries such as Greece, Spain and Ireland have suffered from a strong euro compared to their original currencies.

Even prior to the outbreak of the global economic crisis, Merkel enacted a more austere economic policy and cut the government debt, resulting in a government surplus. When Germany entered the economic crisis, her government enacted a brilliant policy, joining forces with the private sector, both employers and employees. The German economy emerged strong and with full employment. Merkel also led an uncompromising neoliberal approach beyond Germany’s borders and garnered a large measure of support within her country as a result.

She defended the European banks and imposed austerity on the Greeks, who experienced major economic collapse. Her voters stood behind her. Germans fumed over “lazy Greeks” who had gotten “free money,” but it came at a time when German economic success was built on countries like Greece joining the eurozone.

If the economy was the only thing that Merkel was to be judged on, she would have been able to remain chancellor for the rest of her life, it would seem. Germans still enjoy the best economic security in Europe, even if their social security net has weakened due to budget cuts and meager government investment in sectors such as infrastructure.

The end of the Merkel era?

But there is one thing that pushed Merkel from her role and Germany’s Mutti, its mother figure, to the solemn Der Spiegel cover – and that was the refugee crisis. In the fall of 2015, Merkel opened Germany’s borders to more than a million refugees. For Europeans, particularly residents of Britain, which was preparing for a referendum on withdrawal from the EU, she conjured up a frightening vision of masses of foreigners coming into their countries, settling there, receiving government benefits and taking their jobs. Even if that’s not what she intended, that’s what most British voters heard when they voted in favor of Brexit.

In the three years since the borders were flung open, Merkel has waffled a number of times in the face of the backlash that her policy engendered. But now her coalition partners want her to reverse course and refuse entry to migrants and refugees at the border. If her Christian Social Union partners quit the coalition, Merkel’s party would have difficulty forming a minority government with the Greens or with the SPD, the Social Democratic Party, which Der Spiegel reports is already preparing for elections this fall.

In the face of the crisis that threatens to end her government and split Europe, Merkel presented a plan last week to provide financial stability for the eurozone and to strengthen the euro itself. Side by side with French President Emmanuel Macron, who with Merkel is carrying the EU torch, Merkel proposed a joint budget for eurozone countries. The effort appears to be too little and too late, however, considering the forces that are splitting Europe apart.

It’s important to remember that Merkel might still come to a compromise with her coalition partners, although as Der Spiegel noted, such agreements are usually temporary and superficial, a Band-aid of sorts that may cover up the problem but not treat it. For many people, this is reminiscent of solutions that Merkel proposed for the European debt crisis, which were far from addressing the root problems.

It may be too early to eulogize the German chancellor. She is a tough leader, beloved in her country and held in high esteem abroad, and she has impressive abilities and political survival skills. But in her latest term in office, she has not managed to grasp the changes occurring in Europe, and she has failed in her attempt to solve the issues that are bothering the citizens of the European Union and the eurozone. Like her political mentor Helmut Kohl, she is liable to find herself becoming prey to parliamentary politics, even at a time when it’s hard to imagine a fitting replacement for her in German politics.