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Is Germany, Europe’s Rock, Starting to Crumble?

German Chancellor Angela Merkel saved the eurozone this summer. But a number of homegrown issues are straining her leadership.

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When Greece teetered on the edge of bankruptcy last summer, Germany provided the stern leadership that kept Athens in the eurozone only after it gave into strong austerity demands. It’s a role Berlin, Europe’s economic engine, has played throughout the five-year sovereign debt crisis. But now, mere months after that victory, a number of crises are testing German Chancellor Angela Merkel and raising concerns that Berlin — Europe’s rock — is starting to crack.

Hundreds of thousands of asylum-seekers, many of them Syrian, have flooded Germany, and Merkel’s ruling conservative coalition is divided over how to handle them.

The Volkswagen emissions scandal, which spread from diesel cars to now gasoline-powered vehicles, has heaped accusations against one of Germany’s most successful brands and symbols of national industry.

German soccer officials are under investigation for bribes connected to the 2006 World Cup, part of the larger inquiry into FIFA officials around the world.

And there are new allegations that German foreign intelligence spied on allies far more than originally thought — a concept not likely to sit well with German citizens, who still bristle from World War II and Soviet-era privacy violations.

“There is a sense of embarrassment in Germany,” Joerg Wolf, editor of the Berlin-based online think tank Atlantic-community.org, told Foreign Policy. “The German economy, regulators, and judicial system have to work hard to reduce the long-term damages to Germany’s international reputation and soft power.”

The refugee crisis, in particular, has made Merkel vulnerable to the cracks that are forming in her coalition.

As recently as last month, Merkel was widely considered to be a candidate for this year’s Nobel Peace Prize, which ultimately went to the National Dialogue Quartet for fostering democracy in Tunisia. She is currently the longest-serving elected leader in the European Union and is ending her 10th year as chancellor. But Merkel’s critics now are challenging her authority to pluck out refugees from the larger pool of migrants who are flooding Germany.

In doing so, the Social Democrats, Merkel’s junior partner in government, seek to prove she was not prepared to accept the refugees who rushed to Germany’s open doors.

Vice Chancellor Sigmar Gabriel, a Social Democrat, rejects Merkel’s plans to set up so-called “transit zones” and screen out refugees who have little chance of getting asylum. Gabriel has declared he’ll challenge Merkel in Germany’s next federal election in 2017 and has criticized the chancellor for what he described as her changing positions on how to handle the migrants.

“Every time we reach an agreement, shortly thereafter there’s a new proposal that wasn’t on the table before,” Gabriel told German television. “That leads to a situation in which Germans get the impression that the left hand doesn’t know what the right hand is doing in the government.”

How refugees would be resettled within Germany led to a new round of strain last week within Merkel’s once unshakeable coalition government.

On Friday, Interior Minister Thomas de Maizière said refugees would only be given restricted asylum, in the form of a one-year renewable residence permit, and would not be allowed to bring relatives to Germany for two years. Merkel’s chief of staff, Peter Altmaier, made it clear that the plan had not been run by the chancellor before de Maizière announced it.

Members of Merkel’s sister party, Bavaria’s conservative Christian Social Union, said they backed de Maizière’s plan. Bavarian governor Horst Seehofer told Sueddeutsche Zeitung that Germany should review the “refugee status of every Syrian carefully” and check whether they personally faced persecution. Wolfgang Schaeuble, Germany’s finance minister, also said he backed the interior minister. Some 758,000 refugees and other migrants arrived in Germany between January and October.

“Our capacity to take in [people] is not unlimited; and because of that it is a necessary measure that we examine cases individually and for it to be clear in Syria that not everyone can now come to Germany,” Schaeuble told German television.

Markus Knauf, a spokesman for the German Embassy in Washington, told FP the government “is working very hard on the goals that Chancellor Merkel has mentioned publicly” — that is, assistance to refugees, ensuring orderly migration, and working to end the conditions that brought asylum-seekers to Germany in the first place.

Knauf said “comprehensive asylum policy measures” went into effect last Thursday.

The growing disagreements within the Bundestag, Germany’s parliament, comes as the inquiry into the Volkswagen emissions scandal continues, something that could damage a major trade deal that has been under negotiation for years.

The cheat, revealed in September, has cost the company billions of dollars and CEO Martin Winterkorn his job. Volkswagen recently reported a quarterly loss of $3.9 billion, its first quarterly loss in 15 years. Winterkorn was replaced by Porsche boss Matthias Mueller, who is now being dragged deeper into VW’s mess by new U.S. Environmental Protection Agency revelations that Porsche diesel engines also willfully violated emissions rules when he was in charge

Even more damaging than financial losses for the iconic German carmaker, said consultant Patrick Hillmann, is the fallout that could hurt Europe’s standing in the Transatlantic Trade and Investment Partnership.

Hillmann said malfeasance by VW could give the United States leverage in the trade talks between Europe and the United States that have been ongoing since 2013. A series of high-profile actions in Brussels against Google, which is the subject of EU anti-trust inquiries, has been a sticking point in talks. Hillmann said U.S. negotiators could use the emissions scandal to get the EU to turn down the heat on Google.

In April, the EU accused the U.S.-based Internet search engine of directing users to Google’s shopping service. At the same time, the EU opened a second anti-trust investigation into whether Google steered users to favor the company’s services and apps in its Android phone, the most popular smartphone operating system. In August, Google denied the charges, setting up a prolonged legal fight.

“This might end up being too enticing an opportunity to gain leverage of the EU’s handling of American firms,” said Hillmann, a vice president at the communication firm Levick, who has helped guide foreign heads of state and Fortune 500 companies through crises.

Both the Volkswagen scandal and the rift in Merkel’s government are playing out against the backdrop of another inquiry: whether officials with the German Football Association, the DFB, handed out bribes to win the 2006 World Cup.

The homes of three current and former high-ranking DFB officials have already been raided. Senior state prosecutor Nadja Niesen said the raids were part of an investigation into ”the awarding of the football World Cup 2006 and a transfer of 6.7 million euros [$7.4 million] made by the organizing committee to FIFA.” On Monday, Wolfgang Niersbach, president of the DFB, resigned.

And in a more recent controversy, a Der Spiegel report last weekend revealed that Germany spied on EU member states, including Poland, Austria, Denmark, and Croatia. The newspaper reported that German intelligence monitored diplomats’ email addresses, telephone numbers, and fax numbers, and also snooped on nongovernmental humanitarian aid organizations.

The surveillance appeared to be directed by Berlin, and not partnered by the U.S. National Security Agency, Der Spiegel reported. In the past, Merkel has been indignant about U.S. snooping — “Spying among friends? That’s just not done,” she said in 2013 after discovering the NSA tapped her own phone line — but has downplayed Germany’s spying on Turkey, a NATO ally. Merkel’s government has yet to respond to the Der Spiegel report.

Officials in Washington have long wanted Merkel to step up and take a firm grasp of the European leadership, a role the chancellor has been reluctant to fill. Wolf, the think tank editor, said the White House often overestimates the ability of the German government to solve problems, both across Europe and within German borders.

“The U.S. looks to Berlin for leadership as German politics and economy appear much stronger than the French and British,” he said, “but our government’s capacity for problem solving has been exaggerated for years.”

“Don’t count too much on Berlin,” Wolf said.

Photo credit: Sean Gallup/Photo Credit

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