Germany’s New Leadership: A Bold Return to EU Dominance?

Germany's new Chancellor, Friedrich Merz, is poised to restore the country’s leadership role within the European Union (EU) after years of a more cautious approach under former Chancellor Olaf Scholz. With pressing geopolitical challenges, particularly the ongoing war in Ukraine and shifting transatlantic relations, Germany’s policies in the coming months could significantly shape the EU’s future.

A More Assertive Germany?

Merz, leader of the conservative Christian Democratic Union (CDU), has signaled a more proactive stance on European defense and economic policies. His government is expected to push for increased military aid to Ukraine, potentially supplying long-range cruise missiles and even considering limited troop deployments. This marks a significant shift from Scholz’s more hesitant approach, which often frustrated allies seeking bolder German leadership.

Germany’s role in EU defense policy is becoming more critical, especially as concerns grow over the U.S.’s commitment to European security. With the possibility of the U.S. reducing its involvement in NATO, Merz has stressed the need for Europe to take greater responsibility for its own defense. Some proposals include increasing Germany’s defense spending beyond the NATO target of 2% of GDP, potentially reaching 3%.

Economic Reforms and EU Collaboration

Beyond defense, Germany’s economic policies under Merz will also influence EU-wide financial strategies. One key debate revolves around the EU’s fiscal rules, particularly Germany’s strict stance on debt and borrowing limits. The new government faces pressure to ease these constraints, possibly supporting joint EU borrowing for defense and economic resilience.

France, Poland, and other EU partners are closely watching how Germany navigates these economic decisions. A more flexible fiscal policy could unlock greater investments in EU-wide defense projects, infrastructure, and energy security. However, Merz's conservative fiscal background suggests he may resist significant deviations from Germany’s traditional budget discipline.

Challenges Ahead

Despite ambitions for a stronger EU role, Merz faces domestic challenges that could hinder his leadership on the European stage. Germany’s economy, the largest in Europe, is struggling with slow growth, high energy costs, and inflation. Balancing domestic economic concerns with increased defense spending and EU commitments will be a key test for his government.

Additionally, Germany's relationships within the EU remain complex. While France has historically been a close ally, President Emmanuel Macron has his own vision for European strategic autonomy, which may not always align with Berlin’s priorities. Meanwhile, Poland, a crucial player in EU security policy, has had strained ties with Germany in recent years. Rebuilding trust with these key partners will be essential for Germany to effectively lead the EU.