The End of Merkel’s Era: Is Germany Better off Than it Was 16 Years Ago?

By Ricarda Bluemcke

Germany’s elections on the 26th of September may not have ended with a clear winner, but one thing is certain: Angela Merkel will no longer be the chancellor of Germany, a role she has fulfilled for the last 16 years. On the 22nd of November 2005, Angela Merkel was sworn in as the new chancellor of Germany, as well as its first female one. Since then, she has not lost a single election, making her one of the longest-serving chancellors in Germany’s modern history. So, what legacy will she leave behind now that she is in the process of exiting the political stage?                 

It is of course not possible to analyze all of her actions and their connected consequences, rather, this article tries to present a preliminary account of her legacy. This will most likely also have to be re-evaluated in the future when these same actions can be looked at through the lens of their continued effect as well as the actions of her successors. So what is her legacy in Germany and how has the country changed compared to how it was in 2005?

Most people first look at economic growth when judging a country’s progress. In the case of Germany, the economy did grow quite substantially in the era of Merkel. The German GDP grew from 2.846 trillion USD too 3.806 trillion USD by 2020. She, however, had a less prominent role in this. Much of the growth was connected to the actions of her predecessor, especially the Hartz-IV reforms, as well as good global conditions such as globalization, the course of the Euro, and the rise of China, which resulted in a growing demand for German products and services. The German economy at times grew nearly twice as fast as the Eurozone, and created more than 5 million additional jobs. At the beginning of her time in office, Germany had a very high unemployment rate of nearly 12 percent. Now, in 2021, it is at 5.9 percent, so it was reduced by more than half. Now, seventy percent of Germans say that they are happy with their current economic circumstances. While many Germans are happy with their economic circumstances, this time still saw a sharp increase in the income inequality within Germany especially through the low wage sector in the economy.

However, while the economy continued to grow, many budgets were impacted by the introduction of the Black Zero in 2010, something that Merkel helped push through. The Black Zero is a constraint on the fiscal policy in Germany, by placing a ban on accumulating debt in the German constitution. While the black zero had some emergency provisions, there were no exceptions made for the investment in infrastructure for example. This caused Germany to be in dire need of modernization in quite a few sectors. Basic infrastructure, such as roads, bridges as well as communication networks were not able to keep up with the growth, something that is blamed on the black zero. Investment into the broadband internet also fell victim to the black zero. That this particular topic was not up to par became crystal clear during the Covid pandemic. In general, Germany is placed relatively low on international comparisons when it comes to digitalization. This is of course not only Merkel’s fault; bureaucracy, the federal system, as well as decisions made by her predecessors all influenced the now prominent problem. The black zero also played a role in the education sector. While Germany continued to raise the education budget, when compared to the percentage of overall GDP, the expenditures in the education sector were lower than many other OECD countries. The healthcare system even became increasingly more privatized, and it became in general, much more focused on staying economical. Germany is also not prepared for its aging population that will soon cause problems for the social system within Germany. Merkel’s government has stated that there is no need yet to talk about pension reforms, even though the pension system is only financed well until 2030. After this not only will there be additional strain put on the system through the longer life expectancies, but also the baby boomer generation will be needing their pensions. To sum up, the economy has done well over the last decade and a half, however the same can not be said for many other aspects of life in Germany, many of which are in dire need of modernization. However, this is something that her successor will have to deal with.

Her years in office have also been marked by a large number of crises, most of which were global in their scope – from the financial and euro crisis to the refugee crisis, climate change, and lastly the still ongoing global pandemic that we are facing today. Therefore, a review of her legacy would hardly be complete without looking at those.                                               In Germany, the most prevalent view about Merkel, especially when it comes to these crises, is one of a “Kriesenmanager” (crisis manager). The most frequent criticism leveled at her is that she was always pragmatic, but did not carry a vision for Germany. She was always only reactionary instead of showing initiative. But it would not be fair to her legacy to try to sum up her time in office into this one line. Instead, it might be better to look at these big challenges in her political career and judge them individually.

The Financial Crises

In a nutshell, when the financial crisis reached Germany, the government was able to stabilize the economy by introducing different schemes to encourage individual consumption such as the “cash for clunkers” scheme, which was a subsidy to encourage people to buy new cars. It also created a subsidy for workers whose work hours were lowered to keep their income relatively stable. This at the same time also allowed companies to keep their employees. So while the GDP of Germany went down by 5.7% in 2009, Germany did not see a big spike in unemployment numbers. This firmly established Merkel as a capable crisis manager. However, she did fail to properly address the causes of the financial crisis, and how these weaknesses could be strengthened for the future. Many people did not understand why the banks had to be bailed out using taxpayers’ money, for something these bankers had created themselves. The missing consequences for these bankers made many people distrustful of politics.

The Euro Crisis

During the Euro Crisis Angela Merkel, once again, became a crisis manager and in a way she was successful. The Eurozone managed to stay together, also due to the actions of the European Central Bank, but the austerity measures that she forced on countries such as Greece caused the recession there to be longer than otherwise necessary. For her politically, it might have been the right decision to keep the approval of Germans for the Euro project. In 2011, 80 percent of Germans were opposed to further financial assistance going to Greece. So while she made deals that even went against the advice of her finance minister to prevent the exit of Greece during the sovereign debt crisis, it also caused a deep north-south divide.

The Refugee Crisis

One can hardly talk about Angela Merkel’s legacy without talking about the migration crisis in 2015. On the 4th of September 2015, Merkel decided to let the refugees that were stranded in Budapest through to Germany. The usually so pragmatic German chancellor made a decision that wasn’t just a rational one but one that also showed an emotional side. Initially, the broad public supported her in her decision and many went to welcome the incoming refugees at the train stations to hand out food and other necessities. This “Willkommenskulture” however did not last long. Resentment and racism towards the refugees increased, especially after events such as the rape during New Year’s Eve in Cologne. Many Germans even turned to the Alternative für Germany (AFD). During this time the party grew from the fringe, towards being the first populist right-wing party to be voted into the Bundestag since the start of the second world war. It is worth pointing out, however, that Merkel’s decision to open up the German borders wasn’t just an emotional decision, it was also a rational one. If Germany hadn’t opened its borders, the refugees would have tried to enter the EU through the Balkans, which would have placed stress on the young democracies there. Greece would have also had to deal with the increasing numbers of refugees coming from Syria and Iraq due to the Dublin Accords. However, with this turn in the opinion of the German people, Angela Merkel also changed course. Together with the Turkish president, she negotiated a deal that should prevent further refugees from crossing the Aegean Sea to get into the EU. Merkel effectively limited the number of refugees capable of reaching the shores of the European Union without publicly closing the German borders and reversing course on her refugee policy.

However, when discussing this topic, especially concerning how it should be judged, it’s always important to remember that thousands of people were given a chance to start over in a country that wasn’t being destroyed by civil war. Nevertheless, the situation didn’t happen in one night, there were warning signs. Merkel, as well as many other heads of states were aware of the situation brewing in the Middle East. In her New Year’s Speech in 2015, meant to talk about the upcoming challenges, Merkel only mentioned migration as a side topic, barely worth a mention. She could have prepared better for a situation that was far from unexpected. This of course is not something that only Merkel can be blamed for, as all of Europe treated the civil war in Syria as something far removed, as of no concern or interest.

One of the critics of Merkel’s refugee policy is also that the integration of these refugees into Germany failed. However, integration efforts are better than most people think. While it is true that initially many of the government agencies were overwhelmed with the number of applications heading their way, they eventually adjusted to the situation at hand. After some time, asylum applications were handled on time and the coordination of accommodation, language classes, and other integration efforts became much easier. According to surveys, the majority of refugees in Germany feel as if they are safely settled in Germany. Therefore, in a way Merkel’s promise of “Wir schaffen das!”(We can do it!) has proven to be true. The Chancellor however did not manage to turn this crisis into an opportunity for a stronger European migration policy. The European Union today still does not have a reliant and resilient asylum system in place that would allow the handling of future challenges of a similar nature.

The Climate Crisis

Merkel used to be the environmental minister under former German chancellor Helmut Kohl (1994 – 1998), and her background as a physicist made her very aware of the consequences that climate change will bring with it. So, many in Germany were hopeful of what this new chancellor would achieve towards making Germany more sustainable. At the beginning of her term as the German chancellor, climate change was high on her agenda: from pushing the EU towards binding emission targets and convincing the then US President Bush to leave climate policy to the UN, many hoped that Merkel would spearhead this change towards a more environmentally conscious Germany. Some even took to calling her the Green chancellor. But, already in 2009, her mind seemed to have changed. She no longer wanted to be as closely associated with the problem, mostly because the financial crisis had threatened Germany’s economic growth and with this Merkel did not want to push more financial burdens onto the German population. Additionally, none of the parties that she formed a coalition with placed climate change high on their agenda, not within her own party of the CDU nor the labor party SPD or the business-friendly FDP. So instead of pushing for more hard-line emission targets, she turned to support the German automobile industry and even weakened the planned CO2 emission limits in Brussels. Besides the nuclear energy exit that she made happen very quickly after the Fukushima catastrophe, Angela Merkel did not spend much time on the topic of climate change, at least not until the Paris Agreement in 2015. In 2019 the finalization of the details to the coal exit was finally decided. It will be a very drawn-out exit, however. An exit that is supposed to end in 2038, so only seven years before Germany’s goal of being carbon neutral by 2045. In 2019, with the Fridays for Future protests that were started by Greta Thunberg, climate change once again entered the spotlight. The result of this was a quite confusing number of new climate targets for Germany. It should however be said that Merkle did more than many of her European colleagues did but that was still not even close to being enough for the problem at hand. This was also something that the German high courts decided when they ruled in early 2021 that the proposal of the government was not sufficiently strict enough to ensure the continued survival of future generations and needed to be revised.

There also seems to be a bit of a paradox within her strategy: renewable energy sources were being promoted and in some cases even subsidized, which did lead to quite a significant increase in the number of solar panels and wind turbines, but at the same time, there was no change in the traditional economy. For a long time, there were no changes in the fossil fuel industry and the construction of further highways and other infrastructure was just as much part of the economic strategy as it was before, while the public transport sector was ignored. On the topic of Climate change, Merkel was not known for great changes, except the nuclear energy exit, and seemed to have always waited for the political consensus on the topic that never came. 

The Covid Pandemic

The Covid pandemic put Merkel back into the spotlight. Before, much of the discussion in Germany was focused on the future, one in which she, at least on the political stage, would no longer be part of. At the beginning of the Covid crisis, it took Merkle, just as so many others, some time to find her footing. Initially, she tried to leave much of the control to the German people, reminding them of the risk of transmitting the disease and pleading with them to be cautious. After the extent of the crisis became apparent she, like many heads of state, placed the protection of human lives above the interests of the economy and certain freedoms. Merkel also proved to be far more communicative and approachable than she had been for many years. However, as the corona pandemic dragged on the more Merkel seemed to struggle with the different state governors to get them to implement stricter restrictions. While Germany, by international comparison, had done better than many other countries, it also laid bare Germany’s lack of infrastructure, especially when it came to digitalization and the lack of resources and infrastructure improvements in schools. 

But unlike in the Euro crisis, Merkle acknowledged that richer countries, such as her own, should help ease the burden of poorer EU countries to not lead them to be disproportionately affected by the pandemic and the connected economic consequences. So, Germany together with France, proposed the EU’s Covid Recovery Fund.As mentioned above, Merkel is most known for keeping the country on course, and that she has done. According to a survey of the German people on whether they would rate Angela Merkle’s time as the chancellor as overall good or bad, 84 percent answered with good. Merkel might not have carried with her a grand vision for Germany but she has always managed to keep Germany afloat. For Germans, she became a symbol of stability. 

Edited by Mia Black, Illustration by Maria Beckers