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Merkel Spins Out

Klaus Iohannis and Angela Merkel
photo courtesy the European People's Party

Angela Merkel’s historic term as Germany’s chancellor is probably entering its final phase, as the centrifugal forces of European politics tear apart the legacy of a leader who was all about unity.

Ironically, Merkel has in fact succeed in unifying her country – most recently against her leadership and her center-right party, the Christian Democratic Union (CDU). Merkel announced this week that she is stepping down as CDU leader at the party’s December meeting. She hopes to continue her chancellorship under a fragile coalition government until the next scheduled election in 2021, but that looks like a pipe dream. Merkel herself has advocated the position that the chancellorship and party leadership should be held by the same person. The Wall Street Journal reported that senior CDU politicians said the party was discussing the possibility of forcing Merkel to step down as soon as December. If she somehow manages to hold on until 2021, Merkel has said she will not seek re-election.

When Merkel took power in 2005, the German population still divided readily into “Ossies,” who lived in the formerly communist territory of East Germany, and the much more prosperous “Wessies” of former West Germany. Merkel herself is an Ossie, although the term has largely dropped from widespread usage. Under her pacifist and mercantilist administration, the work of economically integrating the two regions and, more broadly, integrating the country with the rest continental Europe has largely been completed. She did not start the process, but she did see it through and deserves credit for it. She also deserves credit for backing the measures that helped Europe muddle through the banking crisis that followed the Greek economic meltdown at the start of this decade.

But her pan-European vision took a disastrous turn three years ago when she unilaterally declared Germany a haven for refugees from the Middle East and North Africa. They overwhelmed countries to the south as they poured northward, leading one after another – Greece, Serbia, Hungary and Austria – to reinforce their borders. Estimates of those who reached Germany range from just under 1 million to well over that mark. Merkel’s own coalition was torn apart, as was the heretofore unrestricted movement of people across the borders of Europe’s Schengen Area. Since 2015, all of Germany’s mainstream parties have lost ground to the political alternatives of the Greens on the left and, especially, the Alternative for Germany (AfD, as it is usually written) on the right.

Merkel’s CDU struggled to form a coalition government in 2017, and has suffered a series of setbacks since. Most recently, both of the parties in the governing coalition suffered heavy losses in a regional election in Hesse, where the Greens and AfD both made significant gains. Merkel said that the results in Hesse, along with similar results in Bavaria, were not the cause of her decision to step down, which she had made privately earlier this year. But the election in Hesse was one more sign of the CDU’s ongoing struggle to retain its influence.

Developments across Europe have mirrored the new internal divisions in Germany. One country after another has installed nationalist governments or seen nationalist parties rise in power. The European Union itself is threatened, as the United Kingdom prepares to leave and as Brussels contemplates punitive moves against the rightist governments in Poland and Hungary. Italy’s recently installed populist government is on the verge of presiding over a banking crisis that has unpleasant echoes of the post-2008 crash.

Meanwhile, Merkel’s closest European ally – France’s President Emmanuel Macron – has seen his own popularity numbers plunge to levels far below those of other Western leaders, including President Donald Trump. While Merkel is under attack from the right, Macron’s problems are coming from his political left. The opposing political forces might have already created space between these two key EU powers, if not for their joint goal of making post-Brexit life as miserable as possible for the Brits as a warning to other countries that might want to break free of the strictures Brussels imposes on their internal captive market.

To update an old and archaically sexist saying, the political graveyards are full of indispensable leaders. Like so many before her, Merkel has stayed in power past her optimal exit date. She will likely make her exit soon, voluntarily or otherwise, leaving others to pick up the pieces of what she built and then broke.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

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