Germany after Merkel

The recent elections in Germany have thrown up a close result, with the left-of-centre Social Democratic Party (SPD) bouncing back from low popularity ratings to emerge as the single largest party. The right-of-centre Christian Democrats, which led a coalition government for 16 years under the leadership of Angela Merkel, is now in second place. The Green Party, in third place, has emerged as king-maker along with the Free Democratic Party. As of now, the SPD, Greens and FDP formation stand the brightest chance of making it. This marks a break from the CDP/CDU and SPD centrist coalition that ran the show for years. By virtue of being a coalition, the new government is likely to remain moderate. Merkel’s likely successor, Olaf Scholz of SPD, was, after all, finance minister in her government. But a bigger focus on climate, labour and the environment is on the cards, given the near-certain participation of the Greens in the new government. While Germany has upped its climate ambition, it is likely to play a role in pushing India and the rest. Its sticking points have always been IPRs, and labour and environment standards.

Germany can play a major role in India with respect to technology transfer in renewables, including electric mobility. If Germany’s research stations have been working on improving the efficiency of solar panels, it can enhance projects with India in areas such as grid adaptation to renewables and the development of rooftop solar. It is disappointing that bilateral trade and investment have been stagnant despite the potential. Of the nearly $530 billion cumulative FDI into India since April 2000, Germany accounts for barely $14 billion. This is despite the fact that Germany is in the same league as the US, China and Japan as far as outbound FDI flows are concerned. Surely, the 2,000 German companies in India can expand their footprint. A ‘2+2’ dialogue, engaging the defence and trade leaders of both countries, could open up possibilities. Bilateral trade at about $20 billion annually too can be improved.

The world will remember Merkel for being a balanced, no-nonsense leader who held the EU together amidst Brexit and Euro debt crisis of 2011, while pulling Germany out of an economic slump at the turn of the century. Merkel displayed a humane side during the Syrian conflict by allowing a million refugees to enter the country — reminding the EU of its founding values of tolerance. She has been criticised for fiscal austerity at home and imposing the same recipe on southern Europe, post-2011. But the pooled EU bonds issued to deal with the pandemic’s impact are an improvement. Merkel would learn from mistakes and shun excesses. Her successor has high standards to live up to.

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