New chancellor, old constraints: Germany’s Friedrich Merz will have a hard time freeing the country from its self-imposed shackles

Friedrich Merz received a rude shock on the morning of May 6, 2025, as he prepared to lose the “in-waiting” qualifier from his title as German chancellor.

After weeks of negotiations following February’s federal election, Merz’s Christian Democrats (CDU) had struck a coalitional bargain with the center-left Social Democrats (SPD), giving the bloc a thin majority of 13 seats in the 630-member Bundestag, the lower house of Germany’s parliament. Yet, Merz still struggled to ratify his chancellorship.

He fell short of the majority he needed on the first vote, with 18 members of his coalition voting against him.

Though he was elected on a second ballot, the initial “no” vote was unprecedented for an incoming chancellor in the postwar federal republic, with insiders claiming that some of those voting “no” were conservatives opposed to Merz’s push to loosen German fiscal rules. Aside from the immediate political embarrassment, the vote was symptomatic of something else: a more deep-seated weakness in both the new chancellor and his government. As a scholar of German politics and history and the author of a forthcoming book on German state traditions and economic governance, I see Merz’s problems, and those of his country, as having deep historical roots.

Taking the brakes off?

For Germany and Europe, the stakes in the run-up to the vote to ratify Merz as chancellor could not have been higher – a cascade of crises confronts both. As CDU’s parliamentary leader Jens Spahn noted in the run-up to the May 6 vote: “All of Europe, perhaps the whole world, is watching this ballot.”

The German chancellor is looking to strengthen both Europe and Germany through firm leadership and heavier spending. He has promised a massive increase in defense outlays in order to create the “strongest conventional army in Europe,” to counter the threat from a bellicose Russia and the United States’ wavering over traditional security commitments to the continent.

This broad vision, however, is confronted by a number of obstacles, most importantly the so-called “debt brake.” Adopted after the 2008 financial crisis, this “brake” limited annual deficits to a paltry 0.35% of gross domestic product and proscribed any debts at all for the German “Länder,” or regions.

In March, soon after the February election but before the seating of the new Bundestag, then-presumptive Chancellor Merz called for an exemption to the debt brake for defense spending above 1% of annual gross domestic product, with a promise to do “whatever it takes” to bolster Germany’s military and verbally committing to spend up to US$1.12 trillion (1 trillion euros) over 10 years. The outgoing parliament agreed and also created a $560 billion (500 billion euros) fund dedicated to rehabilitating Germany’s crumbling infrastructure.

But Merz’s plans to revitalize Germany’s military and infrastructure could be seriously undermined by domestic forces – both within and outside of his coalition. It runs up against long-standing German norms and ideologies that threaten to hamper the state’s capacity and the government’s ability to act decisively.

Ambivalence about state power

This wobbly start to the new government hearkens back to old and deeply rooted divisions about the character of the post-World War II German state.

In the late 1960s, West German Chancellor-to-be Willy Brandt quipped that the federal republic had become an “economic giant but a political dwarf.”

Though the phrase would become a cliché, it captured both the fraught legacies of World War II and older German ambivalence about state power, which had long been associated with authoritarian politics under both the Nazis and the Wilhelmine Reich following German unification under Bismarck in 1871.

Until the 1980s, such constraints posed relatively few problems. The country’s postwar “economic miracle” legitimized the fledgling democratic state, while empowering capital and labor within the export sectors that fueled the boom. This effectively devolved political power to economically strategic actors.

These institutional features also reflected a distinctive postwar model of German politics that weakened centralized power. Achieved in the late 1940s by Chancellor Konrad Adenauer, West German sovereignty was fragmented: domestically by federalism and decentralized political institutions, and internationally through integration into NATO and the European Economic Community.

This “semi-sovereign state,” in political scientist Peter Katzenstein’s famous formulation, helped reclaim German moral credibility from the ashes of fascism and genocide. A decentralized state with robust checks and balances was viewed as both a bulwark against authoritarianism and a recipe for export-led growth and political stability.

Even after the restoration of full sovereignty with German reunification in 1990, German officials still trod lightly. Their concern was that a more assertive Germany would reawaken old fears about German militarism. Moreover, they were content to privilege economic rather than military power as the coin of their peculiar realm.

A nation of Swabian housewives?

The historical ambivalence about the German state’s role and related dilemmas about German power will not be easy for Merz to resolve.

With respect to Germany’s capacity for decisive leadership, the past three years suggest that much work remains to be done. Confronted with a series of unprecedented shocks - from Russian military aggression in Ukraine, to the attendant energy crisis that exposed German dependence on imported Russian gas, to the rise of the far-right Alternative für Deutschland (AfD) - Merz’s predecessor, Social Democrat Olaf Scholz, called in 2022 for a “Zeitenwende,” or “epochal change,” in defense and energy policy.

But instead, Scholz’s “traffic light coalition” of (yellow) Liberals, Greens, and (red) Social Democrats dithered and bickered, eventually succumbing to a rare – in German politics – public interparty squabble that ultimately brought down the government in late 2024.

Reluctant to send its most advanced weapons – notably long-range Taurus cruise missiles – to Ukraine, and unable to overcome the Liberals’ hostility to badly needed fiscal expansion, Scholz was criticized for leading from behind, wary of backlash from pacifist currents in the German electorate and captive to long-held German concerns over expanding the national debt.

Merz is looking not to repeat the same mistakes. But to accomplish his vision of a revitalized and more secure Germany, he has to overcome both the debt brake and, even more important, the deep ideological currents that gave rise to it.

These factors intensified long-standing constraints on defense spending, which had failed to keep up with inflation for much of the 2000s and remained far below the NATO norm of 2% of annual gross domestic product.

The “brake” was subsequently embraced by governments of both left and right, from SPD Chancellor Gerhard Schröder’s “Red-Green” coalition of 1998 to 2005 to the governments of Christian Democrat Angela Merkel from 2005 to 2021. As is abundantly clear in the pages of Merkel’s recent memoir, the proverbial character of the frugal “Swabian housewife” was one that she relished rather than resisted.

But to many observers, this fetishization of austerity has contributed to decades of underinvestment in domestic infrastructure - from roads, to schools, to public buildings, to broader public services - failures which the AfD has been eager to exploit. And as promising as it seems, Merz’s commitment of $560 billion (500 billion euros) is approximately equivalent to the country’s existing needs, without accounting for future depreciation.

Even Germany’s traditionally punctual train service has become a laughingstock, with jokes about late or canceled trains now standard fare for German comics.

Going beyond rhetoric

It remains unclear whether Merz’s rhetorical shift and a constitutional change that permits but does not in itself create more robust defense spending augur a new direction in German politics, or whether Europe’s largest economy will continue to be hobbled by self-imposed constraints and parliamentary squabbling. If the latter happens, Germany risks both continued economic decline and bolstering the AfD, whose support comes disproportionately from economically stagnant former Eastern regions, and which last month surpassed Merz’s CDU in public opinion polls.

And despite Merz’s commitments, not a single euro of the promised military and infrastructure funds has yet been budgeted. And even if it were, that would not address the country’s yawning needs in other areas, such as state-funded research and development and education.

Europe, too, needs Merz’s words to turn into action - and soon. The threat of Russia to the east and the turning tide of relations with Trump’s America to the west has put the EU in a bind and in need of strong leadership.

Mark I. Vail does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.