The German election saw significant gains for the far right and has resulted in a fragmented parliament. But the election result may just bring about a stable German government able to lead Europe at a time of unprecedented security and economic challenges.
The path towards forming such a government appears surprisingly clear at this stage. The centre-right CDU/CSU, led by Friedrich Merz who will likely be the next German chancellor, won the most votes. As Merz begins the process of seeking coalition partners, the only politically viable two-party coalition would be between the CDU/CSU and the centre-left SPD. Together, these two parties dominated post-war German politics and formed three of the four Merkel governments. In the new Bundestag, they hold 328 of 630 seats and thus a slim absolute majority.
But while time is of the essence, a quick coalition agreement is unlikely. Merz has set Easter as target date for the new government. This would be quick by German standards, where the last three governments took at least 73 days to form. Usually, German coalition talks include three phases: scoping; detailed negotiations on a long and detailed coalition agreement; and internal ratification of said agreement among the coalition parties. The SPD could delay the process. It conducted a members’ vote on the 2017 coalition treaty and hinted it could so again this time. It is also recovering from its worst result in over 100 years so will nominate a new political leadership.
Germany will remain under a caretaker government led by outgoing chancellor, Olaf Scholz, until the new government is formed. And while Scholz will coordinate with Merz, do not expect strong German initiatives before Easter – or even a bit later – despite the pace of world politics.
The election also showed that despite its history, Germany could not escape the wider European trend of a far-right surge. The Alternative für Deutschland (AfD) party doubled its vote share following a campaign focused on a much tougher migration policy and blaming the green transition for Germany’s economic difficulties. Notably, Trump adviser Elon Musk and US Vice-President JD Vance intervened in the elections on behalf of the AfD. At 20.8 per cent, it will now be the largest opposition party in the Bundestag.
This will put enormous pressure on the next government. For now, despite Merz’s much-criticized willingness to vote with the AfD on migration in the last frantic phase of the election campaign, he and his party are crystal clear that they will uphold the so-called firewall (Brandmauer) and refuse to even hold talks with the AfD. But this stance will be continuously tested by the AfD, which will likely seek to find cracks in the governing coalition by proposing deals to the CDU in areas where differences with the SPD are particularly striking, such as migration, taxation or economic policy.
How this is managed will affect the stability of the next German government and its potential to take on a leadership role in Europe. Although Merz will not have to juggle a three-party coalition like Olaf Scholz did, he will continuously have to fight for coalition and party unity.
If and once a government is formed, other challenges await. On foreign policy, the stakes could not be higher. Merz’s declared ambition is for Germany to regain a position of responsibility and leadership in Europe. He wants to strengthen Germany’s existing partnerships – notably with France, Poland and the UK – invest in German and European defence, and boost the competitiveness of the EU.
To achieve these aims, he also banks on the current strength of the European People’s Party (EPP), of which his party is a member. The EPP currently leads the most governments in the EU Council, is the biggest political group in the European Parliament, and the president of the EU Commission, Ursula von der Leyen, is also from the EPP.
The biggest foreign policy tests will be Germany’s relations with the US and the negotiations over Ukraine. For Germany, NATO and its partnership with the US are key pillars of its security. Merz himself has traditionally had a strong transatlantic orientation. However, the interventions by Musk and Vance – which Merz has called ‘outrageous’ and put on a level with interference by Moscow – and the US-Russia peace negotiations that bypassed Europe and Ukraine have provoked a swift change of course.
On election night, Merz stated he has ‘no illusions‘ regarding the US and questioned whether NATO in its current shape would continue to exist, meaning Europeans must take on more responsibility for their defence independent from the US. Differences with the US are also likely to emerge on China, where Merz is so far following the German balancing act of carefully ‘de-risking’ but retaining economic ties. This does not mean that a Merz-led government will not try to work with the US, but the ambition will be a big push for European defence.
A key test for whether Merz can achieve this ambition is German defence spending. Following Russia’s invasion of Ukraine, the Scholz government’s Zeitenwende politics and push to increase defence spending saw Germany just about hit the 2 per cent of GDP target through a special off-budget instrument. This special instrument will run out in 2027, so a Merz government will have to both find a substitute for this and finance an additional increase in defence spending.