The September federal elections proved Angela Merkel’s growing personal popularity and signaled support for her government’s course. That showing is remarkable at a time when hardly any other head of state in Europe manages to stay in office for a full term. Yet, with Sigmar Gabriel as leader of the coalition partner and five further Social Democrat ministers in key positions, Angela Merkel now has to govern with a cabinet that will play a major role and possibly make governing more difficult and less coherent in the upcoming four years than in the past.

When on the evening of September 22 it was clear that CDU (Christian Democratic Union) had won 41.5% of the votes, Merkel was cheerful-- It was an outstanding victory. But soon it was clear that winning the third election in a row and with ever-increasing margins was not going to make it easier for Merkel to form a government. Quite the contrary. The CDU’s coalition partner for the past four years, the Liberals, failed to garner enough votes for the parliamentary threshold of 5% and was thus no longer available as a governing partner. The alternatives-- the Social Democrats (25.7%), The Left (8.6%), and the Greens (8.4%), each carried problems. With the vast disagreements between CDU and The Left, an alliance here was never even a theoretical possibility. Early exploratory talks with the Greens quickly led to a mutual declaration that it was not yet time for a Black (CDU)-Green coalition; but many thought that it would be a preferable option for future governments in Germany. Two prominent Greens, Daniel Cohn-Bendit (Member of the European Parliament (EP) and chairman of the EP-Greens) and Tom Koenigs^[1], in an interview, explained that the Greens would have more common values with the CDU than with the Green’s former coalition partner, the Social Democrats. However, the Greens went home, declaring they would devote their attention to a recovery period of self-reflection and act outside government as a strong opposition force.

Ultimately, talks with the Social Democrats gained momentum and led to a coalition contract. But the poker game played by Social Democrat leader, Sigmar Gabriel politicized Germany during the coalition negotiations in a manner that is likely to have lasting and troubling effect.   When the Social Democrats and CDU previously formed a Grand coalition under Merkel, from 2004 to 2009, many of the enacted labor market reforms broke with long-lasting labor alliances. The worker’s unions were offended, protesters took the streets, and ultimately many traditional SPD-voters either voted for other parties or did not vote at all- amounting to a loss of 11% of SPD-votes. Taking these past experiences into careful consideration, this time around Gabriel decided that a SPD-internal vote among all 475,000 members on the coalition treaty would be needed for the SPD to participate in a government.

In doing so, Gabriel addressed skepticism about the idea of entering into a Grand Coalition by constructing a powerful bargaining instrument: The internal ballot vote on the coalition treaty. SPD party leadership decided that participation in the coalition would require a minimum of 20% of all party members voting with at least 50% voting “yes.” With limited alternatives, the CDU found itself in the position of having to give Gabriel what he needed to win his party member vote.   As a result, Gabriel managed to win inclusion of important SPD policies: the introduction of an hourly minimum wage of 8.50 EUR (equals 11.60 USD), dual citizenship (currently, people born in Germany with non-German parents must choose one nationality), legal equivalence of same-sex marriages for adoption purposes, and substantial education reforms. This way, Gabriel increased SPD influence in the current government far beyond the percentage of voters he had won in the federal elections. Almost two months after the elections, on the evening of December 14^th, the SPD vote result was released: 75.96 % of all SPD party members voted in favor of the coalition “treaty,” the term in Germany to describe mutual agreement (but not legally binding) on the policy agenda for the four year governing term.   At the same time when Sigmar Gabriel announced the result, there was no doubt that he had reached a new peak of his career and power.

His power – which few people had believed he would put to the test – is also reflected in the Cabinet that was sworn into office on December 17th. Of 15 Ministries in total, the Social Democrats take 6. Among these are key ministries like the new “super-ministry” for Economics and Energy (Sigmar Gabriel), Foreign Relations (Frank-Walter Steinmeier), Labour and Social Affairs (Andrea Nahles); Justice and Consumer Protection (Heiko Maas); as well as Family Affairs, Senior Citizens, Women and Youth (Manuela Schwesig); Environment, Nature Conservation, and Nuclear Safety (Barbara Hendricks).

By combining Economics and Energy^[2], Sigmar Gabriel has given himself a chance to successfully finish the Energiewende (“energy turnaround or transition”^[3]), a project that has for decades now been one of the priorities of both the Greens and the Social Democrats. As early as 1980, the Ökoinstitut (an environmental think tank) had published a report suggesting an immediate renunciation of nuclear energy and (crude) oil and coined the term Energiewende (energy transition). The Öko-(Eco)-movement gained more momentum and many Greens and left-leaning Social Democrats joined, advancing the issue. It only gained traction in the CDU-Liberals government after the recent nuclear accident in Fukushima had demonstrated the danger of nuclear energy. Bringing this policy field “back home” and into his own ministry, Gabriel is preparing for a tough term, with pressure to fulfill his promises to the SPD on one hand and countervailing pressures from CDU opposition on the other.

After getting the backing of his party fellows, Gabriel is bound by his promises but at the same time, he will need to address the unfinished business of the European financial crisis.   While Germany’s economy is praised both in Europe and abroad, the German people have not benefited from the trade surplus. As recent calculations have shown[4], wages have decreased while living costs are increasing, making for a real loss of 0.3% compared to 2012. SPD voters have demanded that Gabriel and his team address such imbalances--which may prove very hard to do and thus become a major source of frustration among SPD voters. If Gabriel fails to thread this tricky needle, the Social Democrats may find themselves in the same situation as 2009.

In addition, Wolfgang Schäuble (CDU), long-term Minister of Finance and close confidant to Merkel will most likely challenge Gabriel on economic issues.

The energy policies have good prospects to succeed and might help Gabriel to a positive overall balance after four years in office and thus to a chance to run for chancellor in 2017.

And there is more: Gabriel was made Vice-chancellor, a position that traditionally is assigned to the leading politician of the smaller coalition partner, who usually takes the role of Foreign Minister. When Gabriel chose the Ministry of Economics over Foreign Relations he marked a shift that is significant for the future. Foreign Relations has been the second most important governmental portfolio, and it carried the cachet of being the guide to Germany’s positions within Europe and the world. The Auswärtige Amt (foreign ministry) was not only prestigious but also provided a platform for those who strove for more.

But it seems the general notion “One does not win German elections outside of Germany” is becoming all too dominant: European and foreign affairs played a minor role during the elections – which is not unusual—But, for these issues to continue to lose importance is unusual.   Maybe it is the prospects of becoming chancellor like Helmut Schmidt in 1974, after being Minister of Economics and Finance the previous years. Maybe it was Frank-Walter Steinmeier who was eager to get the post he had already had during the Grand Coalition from 2004-2009 before he was defeated by Merkel when running for chancellor. In any case, it seems unlikely that the pressing issues on the European and the international levels will gain the prominence and attention they deserve.

In Europe, the disconnect between economic and political integration is clear. While the economic union and single currency are in place, the political mechanisms to manage them are not. This crisis has demonstrated that a stable single currency must be accompanied by joint financial policies, stronger European coordination of national budgets as well as growth policies. Germany, with the strongest economy in the European Union finally needs to take an active role in bridging this evident gap. Problem-solving is not about lip-service, but about concrete measures and actions. Germany can no longer celebrate its export records and ignore their costs. The Schulden (debt- and-guilt)-focused rhetoric of large parts of the CDU/CSU is a dead-end and will certainly not help make Germany a reliable cooperation partner for other EU member states.

And Merkel?

She is watching Gabriel’s poker games. She has professionalized a government style based partly on her own poker face, back-door politics, and “not bothering” the people with the distressing details of European and international politics. Probably the biggest surprise was the announcement that Ronald Pofalla, head of the Federal Chancellery and supposedly one of Merkel’s closest and trusted partners, would leave his post. Merkel is well known for keeping those considered loyal very close and everyone else at least at arm’s length. The split with Pofalla is one of the rare occasions where inner splits become visible while the reasons remained entirely unknown—unknown that is until after the first of the year it was disclosed that Pofalla has taken a lucrative job as lobbyist for the Deutsche Bahn, the partly state owned national railway.

Merkel now has Sigmar Gabriel. His need for attention is her guarantee of privacy. She can arrange her playing field behind the scenes while he is publicly celebrating his great victory.

In the end, however, with all the domestic power politics at play, the likely loser will be the urgently needed solutions for the European Union. Germany, as the biggest member state with a thriving economy (especially when compared to other EU countries such as Greece, Spain, Italy) finally needs to take a role of active responsibility, fully commit itself to the European idea, and help shape the future. Schäuble’s and Merkel’s decisions at the recent EU summit in Brussels point in the opposite direction: rejecting the banking union and yet demanding further reforms from others. “If you do not change, then I at least do not have to give away anything, either,” is how Merkel tried to convince others. All those upset by such logic are doubtful that this is the way to advance the European project.