The Hour of Truth for Germany
Mertz will have a bunch of tasks to perform in managing in a changed world. Cracks have emerged in the unity of the West, and the economic principles that have been the basis of world trade for a long time and have driven the success of Germany are rejected. The German government must quickly activate itself to protect not only its strategic, economic and commercial interests, but also those of Europe and other democracies.
The future coalition faces four huge challenges:
- collapse in the security environment, aggravated by America’s retreat from global leadership;
- Economy in decline;
- increasingly fragile global order;
- Growing public and political polarization.
Merz has completed the negotiations, will run Germany with the Socialists
| The coalition has tools to solve all these problems. But the CDU and the SDP must show their determination to promote fundamental reforms, regardless of the short -term political price they have to pay. |
Mertz was able to overcome the biggest obstacle to serious actions – German’s « debt brake » – before its government was formed. In the bold move, the CDU and the GDP, supported by the Greens, changed the German constitution to alleviate the strict fiscal rules on the size of the federal budget deficit, and adopted an investment program worth € 1 trillion. ($ 1.1 trillion).
It was a change in the paradigm for a country that has long since turned fiscal orthodoxy into a cornerstone of public policy, and gives the new government the budget space to increase the costs of defense, infrastructure, research, digitization and climate conservation.
- However, higher costs in themselves will not solve the problems arising from two consecutive years of economic contraction.
- The country’s export model is under pressure, its competitiveness has decreased, and the key infrastructure is outdated.
- Overcoming this trend will require the government to spend reasonably and appropriately.
| The coalition agreement is disappointed in this regard as it does not include reforms to reduce bureaucracy, promote private investment and prepare Germany for the upcoming demographic collapse. |
The government must also develop a consistent plan to deal with the shortage of export demand, exacerbated by the stronger competition of Chinese products, especially cars, both in the European Union and in third markets. This problem is seriously overwhelmed by Germany’s economic perspectives, especially given the protectionist turn of America.
The German economy will shrink despite the postponement of the « reciprocal » duties
The dependence of Germany on the open markets, the international chains for the creation of value and the global stability is reflected in the coalition agreement, which confirms the government’s commitment to the international order based on rules and the multifaceted institutions.
It is just as realistic in its call for Europe to find a political will to act independently. To this end, the new government seeks to strengthen the European strategic sovereignty and to support the development of Eurostack – a pan -European digital infrastructure that can compete with world players. This will require the new Digital Ministry of Digital Affairs to ensure that Germany’s digital transformation supports similar efforts at the EU level.
Similarly, the new coalition explicitly recognizes the country’s systemic rivalry with China and promises to implement a stronger « risk elimination » strategy. This will also require close coordination with the EU and other global partners.
| In this way, the Mertz coalition creates hopes for a stronger and more persistent EU. |
Demonstrating their willingness to lead closely with France and Poland, his government has promised greater flexibility in the expansion process than previously exemplifies and improving the possibilities of decision -making in the EU by expanding cases of qualified majority voting – for foreign policy and security policy.
« Germany returned » with a new coalition, tightening of migration and message to Trump
It is equally promising that the coalition agreement emphasizes Germany’s support to put the EU budget funds, depending on the observance of the rule of law by the recipient – a clear signal to Hungary that Germany will no longer close its eyes to its authoritarian tendencies.
But although the next government expressed the desire to improve EU government by avoiding the notorious « German vote », in which the country refrains from voting in the EU bodies due to internal disagreements, the proposed mechanism must be improved in order to fulfill this promise. As a result, the Mertz government may not have as much voice in Brussels as it would like.
For Europe
| The future coalition must deal with the confidence crisis that exhausts the forces of Germany. Trust in political institutions and leaders is decreasing, social unity is shaken, and confidence in the capacity of the state weakens. |
The new leadership must work to reduce the sense of alienation among the Germans who are considered economically backward and socially marginalized and, which is important, see in migration a threat – especially given that the far right and the final left are waiting for the touch line. The coalition agreement calls for national border checks until the management of the EU external border is improved, temporarily suspends the collection of the families of refugees to whom subsidiary protection has been provided and extends the list of secure countries of origin.
Given the concerns about the resilience of German democracy, the Merz team is under pressure to improve the effectiveness of government, which is essential to strengthen the legitimacy of institutions in the country. This is not just a technocratic task. It requires a complete rethinking of public policy and a reasonable debate on how the country can cope with the upcoming challenges coming from abroad and more and more.
Europe and the next world order
