Merkel’s Successor Needs to Strike Right Tone With Biden and EU

(Bloomberg) -- The election of Armin Laschet as the new leader of German Chancellor Angela Merkel’s Christian Democratic Union is good news for the European Union and those who welcome engagement with China and Russia.

What kind of rapport he strikes with the new U.S. leader remains to be seen.

The 59-year-old state leader from the industrial heartlands endorses the moderate economic and foreign policy course set by Merkel, has a good relationship with French President Emmanuel Macron and shares her vision of a more integrated EU.

More controversially, he shares Merkel’s openness toward Chinese network provider Huawei Technologies Co. and her support for the Nord Stream 2 gas pipeline to Russia. Both of those issues posed problems for the previous U.S. administration and the stance in Washington is unlikely to shift with the transition from Donald Trump to Joe Biden following next week’s inauguration.

Analysts assume no change. Berenberg Chief Economist Holger Schmieding described Laschet as “no foreign policy expert so he will therefore continue Merkel’s foreign policy.” Is that the right assumption?

The challenge for Laschet will be to offer continuity while carving his own path as someone with an eye on running Europe’s dominant economy come September elections. He’ll want to avoid the fate of a predecessor who was never able to emerge from Merkel’s shadow and point to a track record of being a conservative able to win in a traditionally left-dominated state.

In terms of raising his international profile, Laschet was one of the first German politicians who congratulated Biden and praised his victory as proof that elections could still be won without a populist campaign. Tellingly, he also signaled openness to a transatlantic trade agreement once Biden will have taken office.

There’s no guarantee that Laschet will be nominated to be chancellor when the CDU and its Bavarian sister party choose their candidate for the federal election. But his position as party leader will nevertheless give him a central role in that decision and, most likely, in shaping the policies of the next German government.

His election also gives a clear indication of the mood within the CDU. Faced with the opportunity to abandon Merkel’s moderate line in favor of the hard-edged conservatism of Friedrich Merz, a long-time critic of the chancellor, the party’s 994 voting delegates opted for Laschet, albeit by a narrow margin of 53% to 47%.

“I look forward to our cooperation,” Merkel announced in a statement on the party’s Twitter account. Laschet might even prove to be a stronger advocate of EU integration than Merkel was. As former member of the EU parliament, he’s still strongly attached to the vision of a more united Europe. “The Germany I imagine is a European Germany,” Laschet told delegates ahead of the vote.

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On domestic policy too, Laschet represents business as usual. He’s backed Merkel’s decision to leverage the power of the federal balance sheet to help German businesses weather the pandemic as well as her goal of returning to a balanced budget in 2022.

“We will face major economic challenges after the pandemic,” Laschet told public broadcaster ARD in an interview Saturday evening. “We will have a huge budget problem, because we still have to hand out state aid to businesses during the pandemic.”

During the 2015 refugee crisis that left the chancellor seriously weakened, Laschet was one of her staunchest defenders -- his ties to the immigrant community earned him the nickname “Turkish Armin” and made him a target for conservatives.

On climate too, Laschet has matched Merkel’s cautious approach of trying to limit emissions without imposing too much of a burden on German industry. As state leader in North-Rhine Westphalia, he’s familiar with the interests of the still-powerful coal mining and steel industries.

Just how much scope he will have to pursue that vision will be determined by his party’s next major decision, when the CDU and the Christian Social Union from Bavaria pick their candidate for September’s general election.

Laschet has signaled he’d be prepared to step aside if CSU leader Markus Soeder looks a better bet, though some in the CDU say he’s too ambitious to do that.

“As party leader, he’s in the pole position,” Schmieding said. “But the narrow margin of his victory shows that not everybody in the party supports him.”

Either candidate would be in good position to forge a coalition deal with the Greens after the election -- which is the most likely combination indicated by the polls. Soeder was photographed with a tree in 2019 as he sought to demonstrate his environmental credentials, whereas Green party leaders had suggested cohabiting with Merz would be difficult.

Laschet has a brief window to prove himself by engineering gains in state elections in Baden-Wuerttemberg and Rhineland-Palatinate in March before the nomination is finalized.

“We will work well together: the chancellor, the new CDU party leader and me,” Soeder said in a televised statement after the vote. “I am sure that Armin Laschet and I will resolve all further questions.”

Many conservatives view Soeder, who isn’t shy about his political ambitions, as better suited for the chancellor candidacy. But with his election as CDU leader on Saturday, Laschet has once again proved that his opponents should never underestimate him.