How Merkel’s Legacy Will Test Whoever Succeeds Her

(Bloomberg) -- When German Chancellor Angela Merkel steps down following September’s election after nearly 16 years in power, it won’t just be her legacy that’s at stake. Germany’s leadership of Europe will be tested. Over four terms leading coalition governments, Merkel put her stamp on Europe and the wider world, defending moderation and a global vision that came under attack from nationalists around the globe.

1. Who will her party choose to succeed her?

Armin Laschet, who runs the state of North Rhine-Westphalia, is in pole position after winning the leadership of Merkel’s center-right Christian Democratic Union on Jan. 16. As the candidate who most resembled her in policy and style, he beat off two rivals. While he would normally be the conservative bloc’s candidate for the Sept. 26 election, Markus Soeder, leader of the CDU’s Christian Social Union sister party in Bavaria, is more popular and can make a claim. Laschet and Soeder will choose who will run soon after state elections in Baden-Wuerttemberg and Rhineland-Palatinate on March 14. While their decision will need the approval of the two parties’ leadership committees, that’s little more than a formality. If the CDU performs well, it would enhance Laschet’s prospects, while a poor result would favor Soeder. Complicating the picture is a potential wild-card bid from CDU Health Minister Jens Spahn.

2. What about the opposition?

The Greens have gone mainstream under co-leaders Robert Habeck and Annalena Baerbock. They were level with the CDU/CSU bloc before the pandemic and were still the second strongest party in January, although they had yet to decide which of them would be the chancellor candidate. They have never led a national government, but were coalition partners with the Social Democratic Party between 1998 and 2005, and have run the state of Baden-Wuerttemberg for almost a decade. They are likely to be kingmakers, either forming a majority with the CDU/CSU or leading a three-way tie-up with the SPD and the Left party. The SPD, for years the CDU’s main rival, has been hurt by coalitions with Merkel and could support the Greens if the parties do well. Finance Minister Olaf Scholz, the SPD candidate, would need to overtake the Greens and potentially secure backing from the Left to become chancellor.

3. What are the main challenges for the next government?

4. What does this mean for Europe?

During Germany’s six-month presidency of the EU in the second half of 2020, Merkel helped broker a deal on the bloc’s pandemic relief fund, which broke new ground on jointly backed debt. Under Merkel, Germany’s fiscal discipline created friction with other EU countries, notably Greece during the financial crisis, but was meant to set an example for them. By sticking rigidly to EU spending constraints, Germany was showing more profligate nations the benefits of self-control. While those constraints have been temporarily removed during the Covid-19 pandemic, Merkel still sees Germany as a role model for the bloc. How much debt spending Germany needs to help offset the impact of the virus will be a major theme of the election campaign.

5. How could it affect relations with the U.S. and NATO?

Merkel had cordial relations with George W. Bush, a warm rapport with Barack Obama and a frosty relationship with Donald Trump. Her successor will take over with Joe Biden’s administration already having spent eight months in office, and the priority will be to rebuild some of the framework of international diplomacy that came under attack during the Trump years. Merkel’s Germany, along with other European nations, was chastised by Trump for what he said was an inadequate financial contribution to NATO, and he announced the withdrawal of some U.S. troops from Germany, a move Biden could reverse. Merkel took steps to respond, announcing plans for a phased increase in military funding over several years. In 2006, NATO members set a “guideline” to spend at least 2% of gross domestic product on defense and in 2014, they agreed to “aim to move towards” the target by 2024.

6. What about Russia?

Merkel, who grew up in East Germany and speaks Russian, adopted a pragmatic approach to relations with President Vladimir Putin that frustrated some allies. She maintained her backing for the Nord Stream 2 pipeline under construction through the Baltic, in the face of scathing criticism from Trump of Germany’s reliance on Russian gas, and kept diplomatic channels open to Moscow even as the EU was applying sanctions. Putin’s seizure of the Crimean peninsula from Ukraine in 2014 cast a pall over the relationship during her final years in power. When Putin’s most prominent critic, Alexey Navalny, was recovering in a Berlin clinic in 2020 after being poisoned, Merkel showed her support by visiting him shortly after he awoke from a medically induced coma. She joined calls for Navalny’s release after he was detained on his return to Russia.

7. How might it affect China?

Merkel’s policy toward China stressed the importance of trade, and reflected the interests of large German corporations doing business in the country. While the U.S. pursued an aggressive policy of seeking to rein in China’s trade surpluses and restrict its access to technology, and Australia was drawn into its own tariff dispute with its neighbor to the north, Merkel helped secure a deal between the EU and China that opens the Chinese market further to EU investors. She also resisted pressure from the Trump administration to exclude Huawei Technologies Co. from Germany’s fifth-generation wireless network, refusing to compromise on her core position that Germany mustn’t single out the Chinese supplier with a targeted ban.

8. How big an issue is immigration?

Much of Merkel’s trouble in recent years stemmed from her decision not to shutter the German border to hundreds of thousands of refugees attempting to enter the country in 2015 and 2016. In the 2017 federal election, the party bloc led by Merkel took its lowest share of the vote since 1949 despite a booming economy. The anti-immigration Alternative for Germany party, or AfD, surged into parliament with 12.6% of the vote, making it the third-largest force and the first far-right party since 1953 to win seats in the lower house, the Bundestag. Since then, the pandemic has pushed immigration down the agenda and the AfD has seen its support ebb. The party remains a stronger force in the former communist eastern states, where many voters feel neglected by the government in Berlin. Immigration is likely to remain a challenge for Europe, and Merkel’s successor will need to try to establish a common response to it.

9. What about nuclear energy and climate change?

Merkel made a career of defying expectations and making surprise shifts, including Germany’s exit from nuclear power after the 2011 Fukushima reactor disaster in Japan. Policies designed to curb climate change are likely to remain a priority for her successor. There is strong support in Germany for environmental action, partly explaining the rise of the Greens. With the EU seeking to build momentum behind its own Green Deal, the elements are there for a shift in German energy infrastructure and the industrial model that it powers. Climate policy, touching on issues such as the country’s planned exit from coal, its drive for more renewables and its reform of agriculture, is probably one of the biggest challenges for any chancellor, and one that could lead to tension between the CDU/CSU bloc and the Greens.

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