Since moving to Europe in 2007, Angela Merkel has been the only political fixture in my life – all European life in fact.
When I opened shop in Rome, she had already been chancellor of Germany for two years. She will step down shortly after Sunday’s election, but since German government coalition talks can last for months, she may not disappear from the Bundestag until Christmas or later.
In the same period, I have seen at least 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 they fly. Endless political turmoil means that long-term planning in Italy is equal to the life span of a fig. In Germany, that is at least four years – the stipulated interval between elections – and Ms Merkel’s enduring popularity has ensured continuity and a sense of strategic cohesion over 16 years.
Still, if Ms Merkel had a grand plan for Germany, Europe’s largest economy, or the European Union (besides keeping it afloat during various crises), I am unaware of it. She – a chemist by training – was more practical than a visionary.
There is no doubt that the average German did reasonably well and business flourished under his reign, even as the division of wealth became brutal. National and domestic assets 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. Economic numbers were generally strong. When Ms Merkel became chancellor, the unemployment rate was an alarming 11 percent, and Germany was known as the “sick man of Europe” (a title that has since circulated in half a dozen countries). Today the unemployment rate is half that.
For better or worse, it has driven small fiscal surpluses (at least until the pandemic hits) at the expense of public investment, which as a share of GDP has been in steady decline for decades. There is no doubt that the German GDP would have been stronger if the federal and state governments had not fully engaged with the philosophy of austerity that reduced the country’s debt. “Deficit” is still a bad word in Germany – and that needs 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 alert to a mistake on the industrial front. Here, his lack of ambition – and a clear desire to keep up with some of Germany’s biggest employers – has set the country up for a rough ride into 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. The diesel engines proved far dirtier than advertised – the 2015 Dieselgate scandals, which began 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 result is that Dieselgate gave German automakers a huge black eye. Worse yet, his devotion to old technology left him behind in the race to electrify. An upstart American company, Tesla, set the pace with its battery-powered wonders, and the Japanese and Chinese weren’t far behind either.
Today, in the Western world, Tesla and Nissan are the best-selling electric cars, and the Germans are playing catch-up (the Volkswagen ID.3 is the first all-electric German car to show global promise). Will they ever lead is an open question. Electric cars have been compared to iPhones on Wheels, and Americans are better at pumping out flashy software than Germans.
But no German industry faces major difficulties from the energy sector – another disappointing legacy from Ms. Merkel.
He executed a fleet of German nuclear plants in the aftermath of Japan’s Fukushima nuclear disaster in 2011. Also, coal-fired plants were to be phased out as they were inconsistent with the net-zero targets. This means that renewable energy – wind and solar – will have to be stronger to fill the gap.
The plan failed. Germany and the rest of Europe now find themselves in a real energy crisis, as natural gas and electricity prices record records almost every day. Gas is in short supply, and the North Sea, where most of Europe’s offshore wind power is generated, has been unusually windless this year. On a typical day, Germany gets 30 percent of its electricity from the wind; Recently it has been around 10 percent.
Germany is ramping up its coal plants to make up for the shortfall, and the country’s fossil-fuel emissions are on the rise. In the first half of the year alone, emissions from electricity generation increased by 28 percent, and the second half could see an even greater increase. It’s a bad look to go to the COP26 climate summit in Glasgow in November.
Germany is the industrial superpower of Europe. Rising electricity costs may only make its products less competitive — and China more competitive. Also, rising emissions will make it even more difficult to reach Germany’s net-zero commitments. Shutting down nuclear plants was a mistake.
Ms. Merkel is leaving at a good time. Fixing auto and energy files is a huge challenge that will be left to their successor. She will be pleased to be remembered as the stable, liberal-minded, democratic chancellor who refused to allow the EU to fall apart on her watch.
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