Germany at a Crossroads: Elections Amid Uncertainty

"MANY PEOPLE... have the vague feeling that something is no longer right with our country and the situation in the world." So writes Friedrich Merz in his final "MerzMail" dispatch before Germany’s pivotal election on Sunday. Unlike many leaders-in-waiting who offer bland optimism, Merz presents himself as a plain-speaking realist. This year’s election, he argues, is "marked by great uncertainty and upheaval." The numbers back him up—only 18% of Germans believe the country is on the right path. Rarely has such anxiety overshadowed a campaign in Europe's largest economy.

The causes of this unease are clear. The pillars of Germany’s post-war prosperity are crumbling. Russia’s invasion of Ukraine exposed not only Germany’s dependence on Russian gas but also the fragility of its assumption that trade would secure peace. Meanwhile, Donald Trump is challenging Europe’s security framework, and nowhere has his rhetoric landed with more force than in Germany.

Domestic challenges are equally stark. Irregular migration, though declining and well below the peaks of 2015-16, has remained persistently high. A series of violent attacks by asylum-seekers—some evading deportation—has intensified public frustration. The latest, a knife attack by a Syrian refugee at Berlin’s Holocaust Memorial on February 21st, further underscored the government’s failures in handling deportations.

The economy offers little reassurance. While many nations have faced voter backlash over the rising cost of living, in Germany, economic woes run deeper. The country’s manufacturing-centric model is under strain. Industrial giants like Bosch and ThyssenKrupp are cutting jobs, and surveys indicate more layoffs ahead. Real GDP has stagnated for six years. The car industry—once the backbone of German economic dominance—faces an uncertain future. Many Germans now echo a common refrain: "Nothing works in this country anymore," a sentiment often voiced in frustration on delayed train platforms.

This discontent has propelled the hard-right Alternative for Germany (AfD) to unprecedented heights. The party may secure close to a quarter of Bundestag seats. If Merz’s Christian Democratic Union (CDU) is forced into an unwieldy three-way coalition with the other two major parties, the AfD will emerge as the primary opposition force. The political "firewall"—which has kept the AfD out of government at both federal and state levels—has preserved Germany as one of the few European nations where the hard right remains excluded. Yet this exclusion has also removed any pressure for the AfD to moderate, leaving it among the most radical populist-right forces in Europe, alongside Austria’s Freedom Party.

Merz has sounded the alarm, warning that failing to address Germany’s economic stagnation and migration challenges could see the AfD claim victory in 2029. While some dismiss this as hyperbole, his concern reflects a growing anxiety within the political establishment. Unlike his predecessors—Olaf Scholz, the Social Democrat incumbent, and Angela Merkel, his party-political opposite but temperamental twin—Merz does not promise stability through managerial competence. Instead, he positions himself as an agent of change. "The business model of this country is gone," he told The Economist—a statement neither Merkel nor Scholz would have uttered.

Yet despite his stark rhetoric, Merz’s campaign has largely been marked by caution—even occasional unseriousness. His proposed economic fixes—cutting red tape and reducing welfare dependence—are hardly transformative. The CDU’s manifesto, stuffed with unfunded tax cuts, does little to address Germany’s structural economic challenges, from an aging workforce to intensifying competition from China. While pockets of economic success remain, fundamental issues demand deeper reforms.

On foreign policy, Merz’s instincts appear more aligned with current geopolitical realities than Scholz’s. While Scholz has seemed slow to grasp the world’s shifting dynamics, Merz has signaled a willingness to engage in once-taboo discussions, including extending France’s nuclear umbrella. He acknowledges that Germany’s European partners expect a stronger German role in defense. However, while he recognizes the need for a significant boost in military spending, he has yet to present a clear plan to finance it. His first test may arrive even before he takes office, as Trump’s evolving Ukraine policy looms over Europe.

Once chancellor, Merz’s immediate priority will be proving to Germans that their government can still deliver results. But before he can govern, he must first build a coalition. If the numbers allow, he is likely to seek a partnership with the SPD. For the first time in modern history, Germany’s main center-left and center-right parties will likely secure less than half of the national vote. Yet this need not necessarily result in the stifling consensus-driven governance that has long defined German politics. A three-party coalition, however, would be a far more complex and fragile arrangement.

Germans have already experienced the dysfunction of Scholz’s “traffic-light” coalition, the least popular government in recent memory. But they are not particularly enthusiastic about Merz either. His rise is fueled more by frustration with his opponents than by enthusiasm for his leadership. Just a month ago, the CDU and its Bavarian sister party hoped to capture 35% of the vote; now, they will be fortunate to reach 30%—a result lower than any federal election except 2021.

If Merz takes office, he will inherit a country grappling with economic stagnation, political disillusionment, and an increasingly volatile global order. The challenges ahead are formidable. Whether he can rise to the occasion remains to be seen.