BERLIN — Friedrich Merz, the projected winner of Germany’s recent election, reached a landmark deal on Wednesday, setting the stage for a new government. This administration is set to focus on revitalizing the economy, increasing defense budgets, and modernizing Germany, while adopting more stringent immigration policies.
This agreement marks a turning point for Germany, the European Union’s most populous nation with the continent’s leading economy. It comes on the heels of a period marked by political instability and intense negotiations, with the backdrop of uncertainty due to U.S. tariff policies and lingering security commitments.
Merz is poised to succeed Olaf Scholz as Germany’s leader this May. His political alignment, a two-party Union bloc, emerged victorious in the February 23 election. In a strategic move, Merz partnered with the center-left Social Democrats, Scholz’s party, to form a coalition holding a majority in parliament.
Germany is on the road to recovery as Merz, awaiting coalition deal ratification, seems ready to take the chancellor’s office. This requires endorsement by the Social Democrats’ members and a subsequent Christian Democratic Union convention slated for April 28. With these steps complete, the allies’ coalition, owning 328 of the 630 parliamentary seats, can officially elect Merz.
Merz emphasized that the agreement signals Germany’s renewed capability and commitment to action, resonating both domestically and across the European Union. Addressing the United States, Merz underscored Germany’s readiness to meet defense obligations and enhance EU competitiveness.
Noteworthy is the coalition’s initiative, already passed through parliament, to augment defense spending and create an infrastructure fund to invigorate the struggling economy. This step reflects a deviation from Merz’s earlier fiscal conservatism, accommodating debt for economic recovery.
The coalition’s policies mirror Merz’s campaign values, promoting corporate investments, reducing taxes on overtime and electricity, and tightening immigration rules. Plans include halting family reunions for certain migrants, designating safe origin countries, and bolstering deportations for denied asylum-seekers, with coordinated border policies.
Additionally, citizenship laws will be revised to revert to five-year residency requirements for well-integrated applicants seeking passports.
A proposed “digitization ministry” aims to update Germany’s bureaucratic systems, phasing out outdated practices. The Social Democrats’ co-leader, Lars Klingbeil, highlighted the need for economic growth and modernization.
Merz outlined intentions to downsize federal administration by 8% during the coalition’s term without drastic employee reductions, ensuring a balanced approach.
Germany finds itself pressured both internally and externally, with the early election occurring seven months before schedule following the collapse of Scholz’s coalition. The political landscape became unstable, partially due to market disturbances from U.S. tariffs, which pose a threat to Germany’s export-reliant economy already in recession.
In addition, as political negotiations prolonged, popularity for Merz’s Union waned, while the far-right Alternative for Germany gained support, precipitating a timely resolution.
According to Merz, the agreement illustrates the political center’s capacity to address looming challenges. Further announcements regarding ministerial positions are anticipated in due course.