American Institute for Contemporary German Studies: A Reflection on German Chancellor Angela Merkel’s Impact on the Global Economy
Note: the following is a contribution to an anthology of views collected by the American Institute for Contemporary German Studies (AICGS) as German Chancellor Angela Merkel prepares to step down as Germany’s leader after more than 6 years in office.
Eighteen years ago in Berlin, I attended a business reception at the Staatliche Museums. As I chatted with a small group of German CEOs, I was introduced to the then opposition leader, Angela Merkel. She was then as she is now: subdued, hands clasped together with her intense gaze sizing up whomever she was talking to but also with that smile that radiates a genuine warmth and deep emotional intelligence. I was charmed as she asked me a few incisive questions about the political situation in Washington at the time before quickly moving on to greet another cluster of business leaders.
When she was out of earshot, one of the CEOs quietly explained to me – while all the other CEOs heads bobbed up and down in agreement -- “She is likely going to be the next Chancellor but I don’t know how long she will last. She really doesn’t understand global markets or the big economic issues.” Flash forward to today: Each of those CEOs is gone and she is still Chancellor, having guided Germany, the European Union and, in a real way, the rest of the world through the largest global economic challenges and crises of the last century.
Chancellor Merkel is nothing if not a superb crisis manager: From the global financial crisis of 2008 which led to the sovereign debt crisis that gripped the Eurozone, to the storm of Brexit, she handled them all. Having sat in a large global investment bank through all this tumult, I can attest it was Merkel’s constantly calm yet steely demeanor that assured the markets – the very markets those CEOs had told me she really did not understand – that she had a firm grasp on each of these situations and somehow, some way, she knew how to solve them.
So, without doubt, the legacy of Merkel’s global economic crisis leadership is assured. Looking to the future, first and foremost the question is how will Germany and the EU deal with China. Merkel has uniquely stood out in her efforts to develop stronger trade relations with China, but understands (and hopefully whoever her successor does as well) that it is not a one-way street with China. It desperately needs what Germany’s advanced industries have to offer. And that gives Germany leverage to push China to turn away from their vile human rights policies as well as more fully respect international trade rules. It will be critical for Merkel to set the tone on how to tackle the China challenge for her successors.
Closer to home, her crisis management achievements include her careful navigation through the always chaotic and occasionally minacious Trump Administration’s trade policy toward the EU in general and Germany in particular. Many in the business community today worry that we risk the election of a Republican to the White House in four years who quickly begins echoing the Trump EU trade policy. The simple fact is the Biden Administration can only do so much to try to assure businesses on both sides of the Atlantic that will not happen. What Chancellor Merkel says and does now will ultimately be that most critical assurance sought by business.
I have no doubt history will deem her leadership as extraordinary by any measure – particularly her global economic leadership. What I do fear, however, is we will all acutely best understand just how powerful and impactful she has been when she is gone from office and the next crisis is upon us. That is when those former CEOs I stood with eighteen years ago and their many successors will hail Chancellor Angela Merkel as having positively led the global economy like very few other world leaders we have seen in more than half a century.