Merkel out; Scholz in

Angela Merkel’s sixteen-year hold of Europe’s largest economy ended earlier this month, as she handed over the helm of Germany’s affairs to Olaf Scholz, her four-year finance minister, vice-chancellor, and an ardent social democrat. Scholz, who narrowly edged out other candidates in the race to fill Merkel’s huge shoes in the September elections, has taken up arguably the most powerful position in the European Union (EU) and is set to lead the German economy’s charge into the new world.


The new Chancellor highly likened to Angela Merkel in terms of poise, civility, pragmatism, popularity among the people, is not expected to bring in radical changes to the country but build on Merkel’s achievements. His administration, composed of a three-way coalition between his Social Democratic Party, the environment-focused Green Party, and the pro-business Free Democratic Party has a tall order to meet given the giant strides achieved by Scholz’spredecessor since 2005.

On the foreign policy front, Scholz has largely signaled continuity in foreign policy, as the country looks to nurture its transatlantic alliance. Achieving stronger ties with the United States, managing Germany’s relations with Poland and Russia, and upholding Germany’s commitment to ensuring cohesion among the EU nations are at the fore of the new administration’s plans.


On the domestic front, the new coalition reached a three-way agreement on key policy issues, including increased investment in digital and climate infrastructure while maintaining budgetary prudence and refraining from raising taxes, as well as achieving social progress through more liberal policies in relation to legalizing cannabis and housing investment among others. The agreement, which was the product of five weeks of negotiation, gives a clear signal of the government’s cognizance of the global momentum towards social welfare and green politics. For the new chancellor, managing his coalition partners – the pro-spending, environmentalist Greens and the fiscally more conservative, libertarian Free Democratic Party (FDP) – will task his mediation skills.

Championed by the Greens – whose co-leader Annalena Baerbock and Robert Habeck, take on the roles of Foreign Minister and Economy and Climate Minister respectively – the administration’s focus on climate and transitioning to a carbon-free future poses a huge threat to Germany’s industrial growth. Although laudable, the environmental targets which include achieving an exit from coal-dominated electricity generation by 2030, are highly capital intensive. With the tax-cut advocate, Christian Lindner from the Free Democratic Party at the helm of the finance ministry, funding these capital-intensive investments may prove to be one of the major clashes in the new administration. However, the success of the traffic light coalition – in reference to the colours of the three parties – is supported by Germany’s long history of compromise-based politics – including Merkel’s administration, which gains from and yields a low level of polarization in the country’s political scene.

Angela Merkel’s strong crisis management, leading not just Germany but playing a significant role in shaping the coordinated response by EU countries would be another challenge for the new Chancellor. We did not have to wait too long to see how the new administration would fair, as the timing of his inauguration coinciding with the discovery of a new variant of the coronavirus meant he was thrown into the deep end. However, Olaf Scholz’s experience from navigating Germany’s economic response to the pandemic, overseeing the country’s compensation and relief programs to businesses and individuals affected by the lockdown measures as well as designing the EU’s recovery fund is expected to play a key role in his response to the new wave of infection in the coming weeks.


With a near-record time in office, Germany’s second-longest serving post-war chancellor has certainly given her successor a huge responsibility as well as respect for the office in the international space. Scholz’sgovernment takes office with high hopes of modernizing Germany and combating climate change but faces the immediate challenge of handling yet another phase of the pandemic. In Olaf Scholz’s bid to make the European powerhouse fairer, more liberal, and more digital, we anticipate how the new chancellor would navigate balancing compromise, change, and continuity in his tenure.