In a stunning turn of events that has sent shockwaves across the European continent, Germany’s coalition government, led by Chancellor Olaf Scholz, collapsed this week amid deepening economic woes and rising populist sentiment. The breakdown of the so-called “traffic light” alliance — comprising Scholz’s Social Democrats, the market-oriented Free Democrats, and the environmentalist Greens — has left a gaping power vacuum at the heart of the European Union just as the United States veers back towards Trumpian nationalism.
The timing could hardly be worse. With Donald Trump’s dramatic return to the White House now all but certain following the November 2024 elections, Europe desperately needs strong, stable leadership to navigate the choppy geopolitical waters ahead. Instead, its largest economy is now rudderless, facing months of political paralysis and introspection as parties jockey for position ahead of fresh elections.
A Nation in Crisis
Beset by a prolonged recession, deindustrialization, and an unraveling social fabric, Germany today is a far cry from the confident, prosperous nation that anchored the EU for much of the post-Cold War era. The end of cheap Russian gas imports in the wake of the Ukraine war has exposed the fragility of its export-driven economic model, while falling demand from China — increasingly a competitor rather than a customer — has decimated its manufacturing base.
“The German dream of centrist, stable government has been dashed by geopolitical forces and the cult of balanced budgets,” lamented one senior EU diplomat, who spoke on condition of anonymity. “Wednesday was a seismic day in the politics of the West.”
With unemployment soaring and living standards plummeting, Germany’s long-marginalized working class — especially young white men — is increasingly turning to the extremes for solutions. Far-right firebrands like the anti-immigrant Alternative für Deutschland (AfD) and radical leftists in the Bewegung Sahra Wagenknecht (BSW) are surging in the polls, commanding nearly a quarter of the electorate between them.
Merkel’s Shadow
It’s a far cry from the stable, consensus-driven politics that long characterized the era of Angela Merkel, Germany’s iconic former chancellor. Under her pragmatic stewardship, the Christian Democrats (CDU/CSU) governed in a “grand coalition” with the center-left Social Democrats for 12 of her 16 years in power, marginalizingfringe movements on both flanks.
“Merkel’s Germany was the ballast that kept the European ship steady,” reflected a retired Italian ambassador. “Without it, I fear the EU will founder and fracture in the years ahead.”
Budget Hawkery Blasted
Ironically, many analysts blame Merkel’s legacy of fiscal hawkishness for exacerbating the current crisis. By dogmatically insisting on balanced budgets and enshrining debt limits in the constitution, critics say, successive German governments failed to invest adequately in the country’s crumbling infrastructure, education system, and green energy transition.
“German fiscal fetishism doomed Scholz’s government to failure,” argued Paul Taylor, a fellow at the European Policy Centre in Brussels. “The centre-left went along for far too long with the conservatives’ cult of the ‘schwarze Null'” — the “black zero” of a balanced budget.
Europhiles Alarmed
The turmoil in Berlin has sounded alarm bells in Brussels, where fears are mounting that a weakened, distracted Germany will be unable or unwilling to drive the ambitious agenda of EU reform and integration that many see as essential to the bloc’s long-term survival and relevance.
“This is all bad news for anyone expecting decisive European leadership as Trump takes office next year,” warned Taylor. “It’s a windfall for opponents of closer integration, like [Hungary’s nationalist prime minister] Viktor Orbán.”
Franco-German Frictions
Those concerns are compounded by the political paralysis gripping France, Germany’s traditional partner in European leadership. With President Emmanuel Macron increasingly a lame duck following a botched parliamentary dissolution, the “Franco-German motor” that has long driven EU integration looks to be sputtering out.
Behind the scenes, French and German officials have traded recriminations, with Paris accusing Berlin of selfishly prioritizing its own narrow economic interests over European solidarity, and the Germans countering that Macron’s reform agenda is unrealistic and ill-conceived.
Coalition Calculus
As Germans prepare to go to the polls, likely in early 2025, the only plausible governing majority appears to be yet another “grand coalition” between the CDU/CSU and the Social Democrats — a prospect that leaves many voters cold. With the Free Democrats flirting with political oblivion and no mainstream party willing to partner with the far right, the future looks like more of the same.
“The implosion of the traffic light coalition marks the disillusionment of those who believed a progressive alliance was possible between pro-market forces, supporters of a green transition, and advocates of social justice,” said Hans Kundnani of the German Marshall Fund. “External shocks and internal contradictions made it unviable.”
As Europe confronts a new era of geopolitical turbulence and uncertainty, its most pivotal power remains adrift, torn between past and future. The months ahead will determine whether Germany — and by extension the EU — can find a new formula for stability and dynamism in the 21st century. The alternative, many fear, is a slow, inexorable decline into division and irrelevance on the global stage.
