Berlin tourist guides like to tell visitor groups, as they float along the Spree river each day, that locals took one look at the adjacent modernist chancellery building – a boxy concrete form with several round windows – and dubbed it “the washing machine”.
Nearly two months after collecting the keys to the chancellery, however, Berlin political insiders have given the new workplace of chancellor Friedrich Merz a new name: Germany’s last-chance saloon.
The 69-year-old’s first term as leader is also the last opportunity, so the dominant narrative here, for Germany’s political centre to hold.
And those close to the new German leader say he began correcting his positions after a series of shocks that began five days after his election victory.
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In his new book Democracy’s Last Chance, German political writer Robin Alexander argues that Merz – a lifelong Atlanticist – was deeply shaken by Donald Trump’s Oval Office dressing down of Ukraine’s president Volodymyr Zelenskiy.
Alexander writes that, for Merz, something significant happened in Washington on February 28th: “The Americans are not just threatening to hang out Ukraine to dry, but all its allies.”
This was the final trigger for Merz to perform a radical U-turn and push to loosen restrictive debt rules – contrary to his campaign promises – that includes what is effectively a blank cheque on defence.
Increasing Germany’s pure defence spending to 3.5 per cent of GDP is, analysts agree, as historic and far-reaching moment as ex-ECB president Mario Draghi’s “whatever it takes” speech in the euro crisis or the “Zeitenwende” (watershed) address of Olaf Scholz after Russia’s invasion of Ukraine.
But it is not just on defence, debt and the transatlantic relationship where Merz-led transformation is emerging: Israel’s ongoing blockade of Gaza has seen a toughening of rhetoric from Berlin, previously unthinkable in the Christian Democratic Union (CDU), if not – as yet – matched by action.
But elections are won or lost at home. After two months in a domestic political holding pattern, with an economy in its third year of recession, Merz is anxious to try some actual governing before the summer break.
On Wednesday he will chair a key meeting with his centre-left Social Democratic Party (SPD) partners where coalition reform aspirations meet Berlin’s new political reality.
Expectations have been building since the centre-right CDU, along with its Bavarian CSU allies, won last February’s snap election with 28.5 per cent support. The centre-left SPD finished third with a disastrous 16.4 per cent, just enough votes to return to power – this time as a junior partner.
Berlin’s political honeymoon, such as it was, ends on Wednesday when the coalition members meet to fill in the awkward detail of their vague shotgun coalition agreement.
From tackling climate change to an ban on the far-right Alternative for Germany (AfD), many of the coalition’s prickliest problems are unresolved issues where the CDU is more sceptical of government intervention.
As always, though, the biggest coalition rows are building over money.
SPD co-leader Lars Klingbeil, also the federal finance minister, has already presented spending estimates for the new government term with total borrowing of a record €850 billion. That is over and above off-balance-sheet spending of at least €1 trillion agreed in March for infrastructure and defence investment.
CDU and CSU politicians warn Berlin borrowing is “out of control”, and demand cuts to welfare budgets beloved of SPD leaders and delegates who gathered in Berlin for a weekend party conference.
It was a first chance for many to let off steam at February’s historic election disaster – and a party leadership many think is not listening to the grassroots.
Even so, many were shocked at the body blow delegates delivered to Klingbeil.
The 47-year-old, a pragmatic centrist, has moved quickly since February to establish himself as the SPD’s new kingpin and deputy chancellor.
Despite his success in securing considerable concessions from the CDU in the post-election scramble, his own party re-elected him as SPD co-leader with just 65 per cent support.
Political analysts see growing tension in power as SPD grassroot demands for real leftist policies – on welfare, housing and pensions – collide with a right-wing coalition partner and an increasingly professional, and distant, SPD leadership.
“Lars wants power and has a centralised understanding of power, and is pushing a professional party along American lines,” said Gero Neugebauer, a Berlin-based political analyst.
Despite SPD uncertainties, and unresolved trade and migration tensions, voter fury over the debt U-turn has evaporated and the CDU is back at its election level of support.
Even with the AfD trailing by just five points, and the clock ticking down to the next election, the Merz message for Europe is that Germany is back.
At a speech honouring European Commission president Ursula von der Leyen as recipient of this year’s Charlemagne prize, Merz insisted Germany was once more “placing itself at the service of a strong, united Europe”.
“We will not stand at the sidelines when it comes to defending freedom and democracy, rule of law and human dignity on the continent,” he said in Aachen. “History doesn’t just happen, politics is made by people and political decisions make history.”
