European Council on Foreign Relations, date: 23rd September 2013  |  Author: Felix Mengel, Olaf Boehnke, Sebastian Dullien

Though Merkel’s victory is very impressive and cements her now unassailable position within the CDU, paradoxically, it might be quite difficult for her to form a coalition. The political reality dictates that compromises will have to be found, which means Germany’s policies are likely to shift slightly to the left. Her previous coalition partner, the FDP, has suffered a historic setback and will not be represented in the new parliament for the first time since the founding of the Federal Republic. Having lost two-thirds of their voters, the Liberals will have to fundamentally re-invent themselves.

In terms of the euro crisis, much depends on who will actually partake in the final coalition. The Green party has been much more euro-friendly and critical of Merkel’s austerity-focused recovery strategy than the Social Democrats, calling for a debt-redemption pact and a symmetric adjustment of current account imbalances alongside stronger policy integration.  However, it is not clear whether a CDU-Green coalition would actually be more euro-friendly than a Grand Coalition. Under a CDU-Green coalition, there would be the danger that the SPD becomes slightly more sceptical towards rescue packages and forces the government to appear tough in the defence of German interests.

That being said, it is safe to assume that any possible coalition will become slightly more constructive towards the rest of Europe and will more coherently work for a prudent outcome in the two main problems to be addressed in the coming months: the Greek debt problem and the banking union. Nonetheless, change will remain limited as the euro crisis is not the most important issue for either the Greens or the Social Democrats. As we have repeatedly stated in the last few months, do not expect a fundamental shift in Germany’s economic policies.

Europeans expect a lot from Germany once its election is out of the way – in particular a vision for Europe beyond simply dealing with emergencies. But they are likely to be disappointed. With its own domestic concerns, such as income inequalities and demographic decline, Germany simply lacks the political ambition to provide clear leadership for Europe in turbulent times. Despite its central role in European politics, it sees itself as a role model rather than a leader, and has a legalistic approach to reform rather than an attachment to grand plans.

In a new ECFR paper – “The German election: what Europe expects – and what Germany will not do” – Ulrike Guérot warns that Germany’s pragmatic approach is likely to continue, despite many European leaders wanting Berlin to take the lead in three main areas:

• Banking union – Germany is dragging its feet on an issue that many see as an overriding priority both to disentangle state from bank finances and to stabilise the European project. But legal and political hurdles in Germany are unlikely to disappear after the election, unless the return of dangerous market instability forced it to act.

• A growth strategy – rather than respond to calls for them to alter their economic policy to stimulate the entire European economy, Germans believe their economic success is the model for others to copy, through hard work, austerity and reform.

• European foreign policy – many believe Europe cannot have a strategic focus without Germany, but Germany itself lacks such a focus, preferring commerce to diplomacy.

“Europe wants Berlin to put its money where its mouth is, and emerge from its election with a vision for the EU’s future. But Germany lives in a different world to other EU members, with its own preoccupations and concerns. There is a gap between European expectations of a more constructive German role and Germany’s capacity to meet these expectations.”