Angela Merkel Strikes New Deal With Old Partners, at a High Cost

BERLIN — After more than four months of tortuous negotiations, with her fate and Germany’s hanging in the balance, Chancellor Angela Merkel on Wednesday announced a deal for a new government.

But it was telling that Ms. Merkel, in power for 12 years, looked more weary than jubilant.

The new deal with the same old coalition partners — her conservative alliance and the left-leaning Social Democrats — is precisely the government that Germans had voted against in inconclusive elections last September. It leaves the far-right as the country’s leading opposition party. And it comes at a high cost for Ms. Merkel, the incredible shrinking chancellor, who had to relinquish key ministries.

But what is troubling for many Germans is not necessarily bad news for Europe, which for years has depended on stability in Berlin and has been waiting in limbo as Ms. Merkel stumbled toward a deal.

The new arrangement must still be approved by the Social Democrats’ rank and file. But if endorsed, the coalition may provide France’s new president, Emmanuel Macron, with the partner he has been looking for to help buck up the European Union and move it away from the austerity policies that were identified with Ms. Merkel’s old team and often blamed for stifling growth.

“Good news also for Europe!” tweeted Pierre Moscovici, the French finance commissioner of the European Union.

In the new coalition, the powerful German Finance Ministry, once led by a hard-line Merkel ally, Wolfgang Schäuble, will be run by a Social Democrat. The party was critical of the government’s tightfisted policies and may prove more flexible.

“A slightly weakened Germany could be one of the things that helps create a sense of a more balanced Europe,” said Mark Leonard, director of the European Council on Foreign Relations in Berlin.

“Certainly, the fact that Wolfgang Schäuble is not finance minister will be greeted with enormous relief,” he said, referring to anger in parts of Europe over painful austerity measures after the eurozone crisis.

It is hard to overstate the scope of German influence over European affairs during the Merkel era, especially in economic policy. Following the 2007-08 financial crisis, Mr. Schäuble became the face of the German-led austerity policies imposed on debtor countries like Italy, Spain, Portugal and, especially, Greece. Even as the Obama administration and an array of economists called for looser policies, the Germans held firm.

Beyond economics, Ms. Merkel has been the rock of European foreign policy, demanding a tough line on maintaining economic sanctions against Russia after the conflict in Ukraine while other European countries were far less enthusiastic.

And it has been Ms. Merkel who has pointedly stood up to President Trump, to the cheers of many Europeans and others who have embraced her as a defender of the liberal order.

But now the political landscape has shifted, not only in Germany, but also elsewhere in Europe.

The rise of Mr. Macron in France, if celebrated by those who support a stronger European Union, is also being interpreted as a rebalancing of power away from Berlin.



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