The Merz era: What has he achieved? Where is he failing? | Berlin Briefing Podcast

Key Concepts

• Zeitenwende: A historic turning point in German politics, particularly regarding defense spending and foreign policy.
• Stagflation: Stagnant or negative economic growth coupled with high inflation.
• Schuldenbremse (Debt Brake): A constitutional limit on government borrowing in Germany.
• Mutterrente: A pension entitlement for mothers in Germany.
• Irregular Migration: Uncontrolled or unauthorized immigration.

1. Introduction: The Significance of Merz's First 100 Days

• Germany's new government, led by Friedrich Merz, has reached its 100-day mark, a period considered crucial for setting the tone and direction of the administration.
• Many view this coalition as a "last chance" for centrist parties to address Germany's pressing issues, with potential consequences of voters turning to far-right or far-left alternatives if it fails.
• The briefing will assess Merz's performance in four key areas: the economy, defense and foreign policy, coalition unity, and immigration.

2. The Economy: Promises, Realities, and Challenges

• Initial Optimism vs. Reality: Merz promised a significant economic drive to lift Germany out of its economic lethargy, contrasting with the previous government's perceived inaction.
• Growth Projections: The Ifo institute projects a modest 0.3% growth for the current year and a potential increase to 1-1.5% for the next year.
• Infrastructure Investment: Merz has a substantial €500 billion earmarked for infrastructure spending but faces challenges within his coalition regarding its allocation. The Social Democrats want to bolster the social structure.
• Pension Reform: A key structural reform is planned for the autumn, focusing on the chronically underfunded German pension system. However, recent cabinet decisions to stabilize pensions may create further financial strain.
• Controversial Borrowing: The €500 billion fund for infrastructure and climate change measures is financed through borrowing, which is controversial within Merz's own conservative party, given their historical emphasis on balanced budgets.
• Structural Industrial Crisis: Merz recognizes that Germany faces a structural industrial crisis, particularly in the car manufacturing industry, which cannot be solved by simply injecting money.
• Energy Costs: High energy costs are identified as a major structural challenge. The government has implemented energy tax cuts for energy-intensive industries, but these cuts do not extend to ordinary households, potentially missing a psychological opportunity to demonstrate tangible benefits.
• CEO-Style Politics: Merz's approach of "CEO-style politics," where he aims to implement plans decisively, has faced pushback and requires more sensitivity to public opinion and political realities.

3. Defense and Foreign Policy: A "Zeitenwende" and Symbolic Gestures

• Historic Shift: The "Zeitenwende" (turning point) in German defense policy began under the previous government with Olaf Scholz's announcement of increased defense spending following Russia's invasion of Ukraine.
• Increased Defense Budget: Germany is significantly increasing its defense budget, although the initial pledge of €100 billion is comparable to the annual expenditure on the pension system.
• Symbolic Policies: Merz has demonstrated a better ability to communicate with international leaders, such as Zelenskyy, and to make symbolic gestures that foster European unity.
• Taurus Cruise Missiles: Despite initial support for sending Taurus cruise missiles to Ukraine, Merz has become more cautious and aligned with a policy of "strategic ambiguity," similar to that of French President Emmanuel Macron.
• Transparency Shift: The government has shifted away from publicly disclosing details of military aid to Ukraine.
• Trump Relationship: Merz has successfully established a rapport with Donald Trump, emphasizing the need for continued American involvement in Europe to safeguard freedom and peace.
• Israel and Gaza: Merz has become increasingly critical of the Israeli government's actions in Gaza and has announced a halt to the supply of military equipment that could be used in the conflict. This decision has faced criticism from within his own party, where loyalty to Israel is a core political identity.

4. Coalition Unity and Political Competencies: Challenges and Divisions

• Party Backing: Questions remain about whether Merz has the full backing of his party, particularly after failing to secure enough votes in the initial vote to confirm him as chancellor.
• Compromise vs. Leadership: Merz's promise of a different leadership style, less focused on compromise than Angela Merkel's approach, has been tested by the realities of governing in a coalition.
• Supreme Court Judge Election: The failed election of a Supreme Court judge exposed divisions within the conservative ranks and raised questions about the loyalty and effectiveness of Merz's chief whip, Jens Spahn.
• Strategic Questions: The underlying question is whether the Christian Democrats are willing to compromise with the Social Democrats, the Greens, and the Left Party to achieve the necessary two-thirds majority for key decisions.
• Right-Wing Coalition: There is an undercurrent within the Christian Democratic Party that dreams of a conservative right-wing majority, potentially involving cooperation with the AfD.

5. Immigration: Tougher Stance and Symbolic Acts

• Tougher on Immigration: Merz has adopted a tougher stance on immigration, including turning back asylum seekers at the German border.
• Repatriation Flights: There have been repatriation flights to Afghanistan, and the ability for asylum seekers to bring their families to Germany has been halted.
• Safe Countries of Origin: There is a renewed debate on declaring certain countries as safe countries of origin.
• Skilled Immigration: Merz acknowledges the need for skilled immigration to address demographic challenges.
• Defeating the AfD: Merz sees cracking down on irregular migration as crucial to defeating the AfD, but this strategy has not yet proven effective.
• Symbolic Policy: The decision to turn back asylum seekers is largely symbolic, aimed at showing action rather than significantly impacting numbers.

6. Conclusion: A Fresh Start with Thorny Issues Ahead

• Merz has made a fresh start and is willing to think strategically about Germany's future, but he faces significant challenges in uniting his coalition and addressing thorny issues such as social and pension reform.
• He has achieved some success in foreign policy, particularly in establishing communication with Donald Trump.
• Domestically, he needs to secure the support of the Social Democrats and manage the competing interests within his own coalition.
• The economy and social issues will be key factors in determining the success or failure of his term.
• The infighting within the coalition raises skepticism about its long-term survival.
• The temptation for the Christian Democrats to pursue a right-wing coalition remains a significant factor in German politics.