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Europe’s flirtation with populism is far from over

What happens in Germany matters to Europe and to the world at large. Germany is Europe’s largest economy and the world’s fourth largest. Chancellor Angela Merkel is the most powerful woman in Europe, arguably in the world, and a steady hand on the increasingly fraught stage of international politics.
As the exit polls came out after Sunday’s parliamentary election, there was a pause for breath among the German government’s coalition partners, Merkel’s center-right Christian Democrats (CDU) and her rival Martin Schulz’s center-left Social Democrats (SPD). They both lost votes, and did so big time. The CDU took about 33 percent of the vote, down 8.7 percent, and the SPD 22 percent, down 5.3 percent. The winners were the smaller parties, particularly the alt-right nationalistic Alternative fuer Deutschland (AfD) with 13 percent. In the states of the former East Germany the AfD came second, and in Saxony, in the southeast, they actually won. The Liberal Democrats (LDP), the Greens and the ultra left die Linke all increased their share of votes.
Here is how that happened. During the election campaign, the governing coalition came under increasing pressure from both right and left. Merkel’s decision to let in 1 million refugees quickly backfired after the initial euphoria. The chancellor was booed at rallies from Dresden to Munich — especially by people in the new states who were rich pickings for the AfD. They were angry, because they felt that the new refugees were given more assistance than East Germans were when they had to integrate into the federation after the fall of the Berlin Wall.
Jobs are hard to come by in the new states, which led to mass emigration of young people. Indeed, if the former Eastern Germany were a country it would have the world’s oldest population. The xenophobic voices of the AfD and the social equality agenda of die Linke resonated strongly with these voters.
The CDU remains the strongest party in an increasingly fractured parliament. Merkel now has the mandate to form a new government. The TV talk shows after the election made for amusing viewing. The SPD made it clear that they did not want to rejoin Merkel in government. They can’t really be blamed as their public image was badly burnt as the coalition partner. The Green and LDP protagonists sounded as though they were auditioning for ministerial posts under the watchful eye of the chancellor.

The powerful electoral performance of Alternative fuer Deutschland is significant because what happens in Germany matters far beyond its borders.

Cornelia Meyer

It will not be that easy, though, to form a coalition among those three parties as they have very different agendas. Furthermore, the LDP have a chip on their shoulder, because they were badly burnt during their last participation in a Merkel-led government. Four years ago they failed to make the all-important 5 percent vote threshold and were denied access to parliament.
Merkel will need to convince any potential coalition partners that working with her will not be electorally toxic. Experts expect the coalition wrangling to last until the end of the year.
Germany’s election matters both from a global and from a European perspective. The world is ablaze with conflicts from North Korea to the Middle East, Ukraine and Venezuela. US leadership has become less predictable, which puts great importance on the trusted names of the international scene. World leaders have come to rely on Merkel’s cool and calm demeanor.
In Europe, too, there are big decisions. The EU is grappling with many issues — Brexit being just one of them. It will not be easy for the institution to have its biggest and economically most powerful country in limbo for several months.
Lastly and maybe most importantly, Europe breathed a sigh of relief when the Netherlands and France elected Mark Rutte and Emmanuel Macron. It was a respite from the populist right-wing agendas of the Brexiteers, Geert Wilders and Marine Le Pen. The powerful electoral performance of the AfD has made it clear that Europe is not yet done with populism. It has also emboldened the usual suspects in Austria, Poland, Hungary and beyond.
• Cornelia Meyer is a business consultant, macro-economist and energy expert. Twitter: @MeyerResources