Though it was initially overshadowed by former President Donald Trump’s victory in the U.S. presidential election, the results of which were announced the same day, the news that Germany’s governing coalition had collapsed on Nov. 6 did not surprise many observers. Led by Chancellor Olaf Scholz’s center-left Social Democratic Party, or SPD, alongside the left-liberal Greens and the market-friendly Free Democratic Party, or FDP, the coalition’s attempt to reform Germany’s institutions and economic model was overwhelmed by the aftermath of the COVID-19 pandemic, Russia’s all-out invasion of Ukraine and growing structural pressure on German manufacturers. As campaigning for elections expected to take place in early February gains momentum, Germany’s political elites face wider questions over whether they can restore the economic dynamism and military strength Berlin needs to remain at the center of decision-making in the European Union, at a time of growing uncertainty for the trans-Atlantic alliance and the global order.
The challenges inherited by Scholz’s Ampelkoalition—or traffic-light coalition, after the three parties’ colors—since it took office in December 2021 were the legacy of preceding governments under former Chancellor Angela Merkel, who frequently ducked tough decisions over key strategic dilemmas. While Merkel’s first term between 2005 and 2009 leading a so-called grand coalition between her Christian Democratic Union, or CDU, and the SPD led to social reforms such as universal nursery provision, the years of turmoil that followed the global financial crisis and the subsequent destabilization of the eurozone pulled her attention away from domestic politics after 2008. Merkel’s later coalitions with the FDP in 2009 and SPD after 2013 involved big changes, such as the decision to decommission the country’s nuclear power plants and the adoption of the minimum wage. But her era was primarily defined by international crisis management—of the eurozone crisis in the early 2010s, of Russia’s first acts of military aggression against Ukraine in 2014 and of the European migration crisis in 2015.
Berlin’s monomaniacal focus on debt reduction bolstered by the long shadow of the eurozone crisis led to severe underinvestment in infrastructure that has fueled public resentment over collapsing rail and road networks at home, while also weakening Germany’s ability to defend Europe from threats abroad. Having reaped the benefits of global growth through Germany’s access to export markets and industrial supply chains linking the EU, U.S. and China, Merkel’s governments failed to prepare for a shift toward protectionism and the mass adoption of electric vehicles that now threatens to disrupt Germany’s economic model.