Almighty Merkel: Ready to enter the minefield?

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Angela Merkel has emerged as the undisputable winner of the German elections. With these results (almost 42% of the votes) in her third elections Merkel is on a path to join both Kohl and Adenauer as one of the greatest chancellors in German post-war history. The majority of Germans feel identified with Merkel’s cautious and pragmatic approach. For the first time they see a German leader fighting fiercely for German interests without coming across as arrogant. This hard-won trust should give Merkel ample room for manoeuvre.

However, what seems at first glance a propitious environment might turn to be a minefield. For starters, she will have to find a coalition partner, which will not be easy. After the last experience, the SPD demands will go from the introduction of a minimum wage to asking the heavy-weight Wolfgang Schäuble to give up his role as Minister of Finance.

Almighty Merkel: Ready to enter the minefield? Miguel Otero-Iglesias, Elcano Blog

Angela Merkel. Photo by: wiki commons.

In addition, Merkel will have for the first time a Bundestag without a liberal party. Indeed, all other parties will have a more left-leaning agenda. This leaves Merkel more exposed to possible blackmailing strategies by the SPD within the grand coalition. The SPD and the Greens have both clearly stated that they will not partner with Die Linke, but this does not mean that they cannot unite forces on particular policies. The chance at last to erode Merkel’s power will just be too tempting.

Apart from this, there are a series of other headwinds coming her way. She is now at the zenith of her popularity, but at some point the Germans will want to see a new face at the helm. There are also great doubts whether the Germany economy can continue ridding on the growth wave generated by emerging markets. Their growth levels, especially in China, might decline and this will hurt the German export industry.

And then, of course, there is the endless task of solving the Eurozone crisis. Considering that Greece, Ireland and Portugal are not out of the woods yet, during the next four years it is very likely that the German taxpayers will see the first bills coming their way. These are many possible bombs that can explode in Merkel’s face.Nevertheless, it would be a mistake to underestimate her. Even the fiercest critics recognise by now her political cunningness. She could be prepared to pay a high price to have the SPD as junior partner and then slowly, as she did before, make some of the SPD programme her own and debilitate her partner without pushing it completely away.

Now that the FDP is gone, and with it the active advocacy for liberal economic policies, she is likely to be willing to accept more social policies at home and softer fiscal consolidation in the Eurozone periphery so as to be better protected from a possible demand drop in the emerging markets. It would not be surprising, therefore, for Merkel to be under pressure by the SPD, with the support of the French socialists, to be more flexible in regards to growth enhancing policies, and then come out next to François Hollande in favour of these same policies selling them to the German public as a necessary compromise between France and Germany.

Merkel could even be bolder. Now that she has the trust of the German voters, she could use this overwhelming support to dedicate her efforts to build the banking, fiscal and political union that are needed to consolidate the single currency. Hence, if she were to dare it, she could follow the footsteps of her mentor Helmut Kohl and go down in history as one of the great leaders in European integration. However, is this likely to happen? Not really. Merkel will remain cautious and navigate the minefield without opting for the always more difficult and costly option of calling the mine-engineers-division to clean the field.

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