Since my move to Europe in 2007, Angela Merkel has been the one political constant in my life – all European lives, in fact.
When I set up shop in Rome, she had already been Germany’s Chancellor for two years. She will step down some time after Sunday’s election, but since German government coalition talks can last for months, she may not vanish from the Bundestag until Christmas or later.
Over the same period, I have seen no fewer than eight Italian prime ministers. I have forgotten the names of some of them (though never Silvio Berlusconi’s). On average, they last less than two years before blowing up. The endless political upheaval means long-term planning in Italy is comparable to the life span of a fig. In Germany, it’s at least four years – the set interval between elections – and Ms. Merkel’s enduring popularity ensured continuity and some sense of strategic coherence over 16 years.
Still, if Ms. Merkel had a grand plan for Germany, Europe’s largest economy, or for the European Union (other than to keep it intact during various crises), I am unaware of it. She – a chemist by training – was more of a pragmatist than a visionary.
There is no doubt the average German fared reasonably well and businesses thrived under her reign, even if the wealth divide became cruel. National and household wealth grew impressively, and “Made in Germany” became a formidable brand that guaranteed export success.
Today, one in three cars sold in China, the world’s largest auto market, is German. The economic numbers were generally strong. When Ms. Merkel became Chancellor, the unemployment rate was an alarming 11 per cent, and Germany was known as the “sick man of Europe” (a title that has rotated among half a dozen countries since then). Today the jobless rate is half that.
For better or for worse, she ran small fiscal surpluses (at least until the pandemic hit) at the expense of public investment, which as a share of GDP has been in steady decline for decades. There is no doubt German GDP would have been stronger if the federal and state governments had not been utterly wedded to the thrift philosophy that underpinned the country’s debt brake. “Deficit” is still a bad word in Germany – and that will have to change if the country is to make good on its pledge to reach net-zero emissions by 2045.
If Ms. Merkel was cautious on the debt front, she was cautious to a fault on the industrial front. Here, her lack of ambition – and apparent desire to coddle some of Germany’s biggest employers – has set the country up for a tough ride in the next decade.
The symbol of Germany’s global industrial prowess is the automobile. The Mercedes-Benz, BMW and Volkswagen brands were coveted around the world, and the companies bet heavily on diesel technology. Diesel engines proved far dirtier than advertised – the 2015 Dieselgate scandals, which started with Volkswagen, confirmed as much – and they were sold to the virtual exclusion of climate-friendly models. Ms. Merkel defended diesel cars to their smoky end – and it backfired.
The upshot is that Dieselgate handed the German automakers a massive black eye. Worse, their devotion to the old technology put them well behind in the electrification race. An upstart U.S. company, Tesla, set the pace with its battery-powered wonders, and the Japanese and Chinese were not far behind.
Today, in the Western world, Teslas and Nissans are the best-selling electric cars, and the Germans are playing catch-up (the Volkswagen ID.3 is the first all-electric German car that shows global promise). Whether they will ever take the lead is an open question. Electric cars have been compared to iPhones on wheels, and the Americans are better at pumping out dazzling software than the Germans.
But no German industry faces greater difficulties than the energy sector – another dismal legacy of Ms. Merkel.
She handed Germany’s fleet of nuclear plants a death sentence after Japan’s Fukushima nuclear disaster in 2011. At the same time, coal-fired plants were to be phased out because they were incompatible with the net-zero goals. That meant renewable energy – wind and solar – would have to come on strong to fill the gap.
The plan failed. Germany and the rest of Europe now find themselves in a genuine energy crisis, as prices for natural gas and electricity set records virtually every day. Gas supplies are short, and the North Sea, where much of Europe’s offshore wind power is generated, has been unusually windless this year. On a normal day, Germany gets 30 per cent of its electricity from wind; recently it has been about 10 per cent.
Germany is ramping up its coal plants to make up for the shortfall, and the country’s fossil-fuel emissions are soaring. In the first half of the year alone, emissions from electricity generation were up 28 per cent, and the second half may see an even steeper rise. That’s a bad look to take to the COP26 climate summit in Glasgow in November.
Germany is Europe’s industrial powerhouse. Soaring electricity costs can only make its products less competitive – and China’s more competitive. At the same time, surging emissions will make Germany’s net-zero commitments ever harder to reach. Closing the nuclear plants was a mistake.
Ms. Merkel is leaving at a good time. Fixing the auto and energy files is an enormous challenge that will be left to her successor. She would be happy to be remembered as the steady, liberal-minded, democratic chancellor who refused to allow the EU to be torn apart on her watch.
Our Morning Update and Evening Update newsletters are written by Globe editors, giving you a concise summary of the day’s most important headlines. Sign up today.