• English Site
• > Germany

How Merkel Lost Her Mojo

Financial Crisis Exposes German Leader's Weaknesses

By Roland Nelles and Ralf Neukirch

The financial crisis and the threat of recession are revealing German Chancellor Angela Merkel's weaknesses and could contribute to a dramatic change in her party's prospects in next year's election. The Social Democrats, sensing an opportunity, are already planning their attack.

German Chancellor Angela Merkel had not seemed quite this alone for some time as she stood posing for a photograph surrounded by the 16 male governors of Germany's states. The men, smiling their politicians' smiles, look more grim than friendly, while Merkel's smile seems more tortured than anything else.

It was supposed to be an important moment for Merkel, the high point of an education campaign she herself had launched. But even while posing during the photo ops ahead of the talks, Merkel knew that the men surrounding her would leave her in the lurch, that her important announcement had been far too unqualified and that her summit would end in disaster.

Merkel needed concrete decisions to be able to portray herself as a pioneer in the struggle to rectify the problems in Germany's education system. The German states, which are responsible for education, needed more money. But because of poor preparations, the two sides -- Merkel and the governors -- were unable to reconcile their objectives. Instead of a political success, the meeting turned into Merkel's hour of humiliation.

The failure of the education summit was the culmination of a process that has seen the devastation of the chancellor's political strategy. Education policy, which she had attempted to make a top priority, is only a small part of the problem. Far more serious are the consequences of the financial crisis, which have dashed Merkel's plans for the run up to the autumn 2009 election.

Campaign planners at the Chancellery had, in fact, already drawn up their script for the election year. Merkel's goal was to depict the results achieved by her grand coalition government in a positive light, focusing above all on the balanced budget. After years of cut backs her party, the conservative Christian Democratic Union (CDU), finally wanted to give something back to voters. The plan was to make it a generous election campaign.

Merkel had hoped to portray herself as the leader of a country with declining unemployment and a growing economy, a country where there was plenty of wealth to go around. It was supposed to be a campaign of promises, not of demands and sacrifices.

Instead of devoting too much attention to content and concepts, one of the goals of the campaign was to make sure that the Social Democrats and their candidate for chancellor, Foreign Minister Frank-Walter Steinmeier, were not provided with too many areas they could attack. This was a mistake the CDU had made in 2005, when it entered that year's campaign with a clear program of reforms -- and then failed to win a majority. This time the CDU and its Bavarian sister party, the Christian Social Union (CSU), planned to revive an old campaign strategy from 1969 that focused on the strengths of their chancellor.

This approach still applies, but not in the way Merkel had envisaged. No one in the coalition government is mentioning a balanced budget these days. Instead of the continued economic upturn economists had predicted for next year, the country is now more likely to fall into a recession. Merkel can no longer campaign as Germany's feel-good chancellor.

Coping with the difficult situation also demands far more than the hectic crisis management of recent weeks. From now on, Merkel will be under significantly more pressure than ever before in her chancellorship.

Now she has to prove that she can also handle difficult crises, both in the short and long terms, in a substantive way and with clear direction. But her behavior in recent weeks has raised doubts that she is even capable of this.

Politicians in the SPD sense an opportunity to finally bring Merkel crashing down to earth from the lofty heights of acting as a moderator who is above the fray. Indeed, preparations are already underway for an unprecedented anti-Merkel campaign.

Merkel's Clumsiness Stands Out

And upon close inspection Merkel has, in fact, been less than convincing in recent weeks. She has hesitated and faltered when the pressure was on. And she has been behaving exactly the way that her critics have always accused her of behaving.

The chancellor seemed unsure of herself when it came to preventing the impending collapse of the banking system. Granted, no politician, neither in the SPD nor abroad, had all the answers at the ready when the crisis began, and yet Merkel's clumsiness was especially noticeable.

First she touted an international solution before eventually bowing to pressure from German banks and agreeing to a coordinated European approach. The assurance, offered together with Finance Minister Peer Steinbrück, that German savers' deposits were safe was poorly prepared and failed to achieve the intended goal of calming nerves.

Merkel also flip flopped when it came to the political consequences of the economic downturn. At first, her office announced that she and Steinbrück had agreed to bring forward a plan to make health insurance premiums tax-deductible. But then she dropped the plan when it came in for sharp criticism.

She encountered similar problems when she appointed Hans Tietmeyer, the former president of the German Central Bank, to head an expert panel on reforming the financial system. Unfortunately, Merkel had overlooked the fact that Tietmeyer was a member of the supervisory board of German bank Hypo Real Estate, which recently had to be saved from collapse.

In addition to inaccuracies and a lack of decisiveness, the financial crisis exposed another deficit that is just as serious a problem for Merkel: She cannot explain her policies convincingly. She is unable to come up with a clever way to combine a series of individual decisions into an overarching concept. Her address to the German parliament, the Bundestag, in which she explained the government's emergency bailout package, sounded like she was reading from a legal textbook.

This of course is going to be one of the greatest challenges in the upcoming election campaign: To be elected, politicians will have to convince voters that there is a concept, a cohesive plan, behind their policies. The popularity Merkel currently enjoys among voters, according to the current opinion polls, will not help her. Instead, she will have to find a new tone in a changed situation.

Another problem for Merkel is that she faces the crisis more or less alone. Her fellow conservative colleagues in cabinet are more of a burden than a boon. For instance, officials at the Chancellery consider the appearances of Economics Minister Michael Glos a success if they are only mildly embarrassing. Recently conservative politicians were even forced to agree with Fritz Kuhn, the parliamentary leader of the Green Party, when he joked that Glos was strolling through the financial crisis "like a sleeping pill on two legs."

No Buffer Between Merkel and the Crisis

It would make sense for Merkel to seek a replacement for Glos, to bring a real economics minister and confident crisis manager into her cabinet. But Merkel has no say in this, because the Economics Ministry is the preserve of Glos' party the CSU. Although it is certainly in the interest of Horst Seehofer, the CSU's new leader, to fill the position with a strong politician, he has no qualified candidates from which to choose. A major reshuffling of the cabinet, which would place the Economics Ministry under CDU control by awarding another ministry to the CSU, is highly unlikely.

Which ministry would the CSU get in return for giving up the Economics Ministry? Seehofer has little interest in gaining control over the Defense Ministry at a time when Germany is losing soldiers in Afghanistan. The Interior Ministry would be a more attractive prize, but Merkel can ill afford to get rid of Interior Minister Wolfgang Schäuble.

In theory, one of the many CDU governors could take over from Glos as economics minister. The only problem is that Merkel has consistently made sure that the governors were not given any public role in her policies.

In response, Christian Wulff, the governor of the northern state of Lower Saxony, warned Merkel a few weeks ago that he would no longer campaign as her deputy at the CDU convention in Stuttgart in early December. Merkel had sharply criticized Wulff earlier in the party executive committee.

"This is unacceptable," Wulff said after meeting with Merkel, adding that he was no longer interested in being made to look like a fool. The governor said that as deputy party chairman, he had the right to express his opinion, and that he would resign if prevented from doing so.

Merkel managed to placate Wulff. High profile departures from the party leadership are the last thing she needs now. Nevertheless, even Wulff's appeasement could not resolve Merkel's basic dilemma. For a time, she believed that her isolation was her strength, but now, in a time of financial and economic crisis, it has become a problem. There is no buffer between Merkel and the crisis.