A New German Government Navigates the End of the West
On the face of it, the likely next German government will look familiar to observers. For the fourth time over the past 20 years, the Christian Democrats (CDU/CSU) and Social Democrats (SPD), the two dominant forces of post-1949 German democratic history, will form a coalition that will be led by Friedrich Merz (CDU), the winner of the election on February 23, 2025.
But there is nothing familiar about the context in which the leaders of the two parties are negotiating an agreement on a new government. The US government, led by Donald Trump, is taking the wrecking ball to European and global order that it helped build after 1945. Generations of German foreign policy makers have self-identified as “Atlanticists” (Transatlantiker), arguing for a close partnership with the US. The incoming chancellor Merz has been a staunch Atlanticist for his whole career, even at one point heading “Atlantik-Brücke,” an elite network with the purpose of “anchoring Germany” in the partnership with the US. Therefore Merz’ statements on election night responding to the Trump administration’s trashing of the transatlantic alliance and its turn against liberal democracy in Europe carry a lot of weight: “My absolute priority will be to strengthen Europe as quickly as possible so that, step by step, we can really achieve independence from the USA.” Merz said that the Trump administration seemed “largely indifferent to the fate of Europe.” He said it was unclear whether by the time of the NATO summit in June “we will still be talking about NATO in its current form or whether we will have to establish an independent European defense capability much more quickly.”
Of course, Germans have only themselves to blame for the lack of investment in their own defense capabilities in the face of an imperialist Russia waging war against Ukraine enabled by Beijing. US President Barack Obama’s Secretary of Defense Robert Gates had warned Europeans already in 2011 about the “blunt reality” of a “dwindling appetite” on the part of US “body politic” to “expend increasingly precious funds on behalf of nations that are apparently unwilling to devote the necessary resources or make the necessary changes to be serious and capable partners in their own defense.” Even the shock of Trump’s first term was not enough to decisively change Germany’s posture. The then German Chancellor Angela Merkel declared at the beginning of Trump’s first term in 2017 that “we Europeans truly have to take our fate into our own hands.” But no serious action to this end followed. The return of the transatlantic grandfather Joe Biden to the White House lulled Germans into a false sense of a return to the status quo ante. It is only now, with Trump’s destruction of the West during the first month of his second term that Germans are waking up to the monumental consequences that follow from “taking our fate into our own hands” seriously.
It is unclear whether the new German government will agree to mobilize the massive financial resources to lead Germany’s and Europe’s path to greater independence on all security matters. The fact that Merz pushes for Germany to engage with France and the UK to engage in nuclear sharing as a plan B for the US nuclear umbrella is a sign he has understood the seriousness of the situation. It’s a moment of great peril for Germany as not only the foundations of its security but also its economy are shaken with a looming China Shock 2.0 and trade war with the US threatening German core industries.
The EU Commission seems reasonably well prepared for a bruising trade confrontation with the Trump administration that will hurt both sides. However, it is far less clear that German elites have understood the challenge posed by competition from China for their core industries (such as machine tools, chemical, automobiles).
Both Chancellor Scholz and his likely successor Merz positioned themselves against EU countervailing duties on Chinese-made electric vehicles (EVs) last year. The purpose of the tariffs is to correct the unfair advantages Chinese EV producers enjoy in the authoritarian state capitalist system. Scholz and Merz seem to think that German companies will hold their own in global competition also with China like they have often done in the past decades. But faced with a US and China protecting and promoting their own champions at the expense of European competitors, an old-fashioned understanding of “competitiveness” is no longer enough as a guide to economic policymaking.
A push to decrease the regulatory burden on German and European companies as favored by Merz is certainly necessary. But it will be far from sufficient to allow core industries to survive and thrive in Germany and Europe. Merz needs to be open to an unorthodox set of measures (from regulation to tariffs) that protect the European market from unfair competition. Scholz and Merz are right to push for diversifying Germany’s trade relationships. But they have failed to realise that relying on a massive export surplus (or being: “export world champion” as Germans pride themselves) in and of itself is a high-risk strategy in today’s world of increasing barriers to trade. Rather, Merz needs to focus on spurring demand in the German and European home market, pushing to break down the still too high barriers in the European Single Market.
The MAGA assault on German liberal democracy
This is also a moment of great peril for German liberal democracy. The far-right Alternative for Germany (AfD) has risen to become the second largest party gaining more than 20% of the national vote. It is now by far the strongest party in Germany’s former Communist East (with 32% of the vote, with the second placed CDU at less than 20%). The AfD has profited from a cost of living crisis in Germany following the largest real wage loss over the past 80 years in the wake of energy price inflation over the past years. It has also tapped into a widespread sentiment that immigration has gotten out of hand with Germany no longer controlling its borders.
At the same time, the AfD rails against Germany’s supposed “cult of guilt” about its Nazi past, belittling the years from 1933 – 1945 as a minor episode. The far-right party is firmly aligned with both Beijing and Moscow. Recently, key figures in the Trump “Make America Great Again” (MAGA) right have thrown their support behind the AfD. US billionaire and Trump official Elon Musk has called the AfD Germany’s last hope and echoed the “cult of guilt” refrain during a joint campaign appearance with AfD leader Alice Weidel. US Vice President J.D. Vance used his speech at the Munich Security Conference to rail against Germany’s understanding of liberal democracy, calling for an end to the cordon sanitaire that has prevented other democratic parties from forming a coalition with the far-right AfD. On election night, this led chancellor-in-waiting Merz to conclude: “The interventions from Washington were no less dramatic and drastic and ultimately outrageous than the interventions we have seen from Moscow.” To hear some scholars claim that “Vance’s speech told us something reassuring about America’s continued attachment to values” sounds almost Orwellian to the ears of anyone committed to liberal democracy in Germany.
It also seems clear that the push by Musk and Vance to help bring the AfD to power in the EU’s most important economy is also motivated by a desire to neutralise the European Union as a regulatory actor that can stand up to the interests of US tech companies. Of course, a bit of schadenfreude on the part of those often at the receiving end of German and European lectures about values is more than understandable. But that should not lead you to bow to the MAGA agenda.
Deepening German and European cooperation with India
The end of certainties about the transatlantic alliance and the liberal democratic West increases the prospects for cooperation of Germany and Europe with India. As C. Raja Mohan has argued, both sides would do well to diversify their “strategic partnerships” in a world marked by uncertainty and turbulence: “The synergies between India and Europe are real and the bilateral partnership remains underdeveloped.” At the same time, as Happymon Jacob points out “one of the reasons why India and Europe will grow closer in the days ahead is because much of the world they disagreed about no longer exists.” That EU Commission president Ursula von der Leyen’s first major foreign trip in her second term took her to Delhi recently alongside her full cabinet of Commissioners is very much a step in the right direction.
The outgoing German government under the leadership of Chancellor Olaf Scholz invested significantly in improving the ties with India. One clear sign of a new pragmatism in the relationship is the more permissive environment for arms exports to India. The government, parliament, industry and also foundations and think tanks have started to invest in a closer relationship. The 7th Intergovernmental Consultation between Germany and India took place in Delhi last October, led by Prime Minister Narendra Modi and Scholz. It followed the visit of a German Bundestag delegation (alongside Australian colleagues) to Delhi as part of the Robert Bosch Stiftung Global Dialogue program as well as a major Indo-Pacific conference by the Association of German Industries (BDI) held in Delhi. A lot needs to be done to fully exploit the potential of German-India ties (and Germany’s broader focus on the Indo-Pacific). Incoming chancellor Friedrich Merz has stressed the need to deepen trade agreements with India, reinforcing the ambitious timeline for an EU-India trade agreement outlined by von der Leyen. Merz would do well to make cooperation with India a priority of his new government.
This piece was first published in India’s World on March 4, 2025.
