End of an era: Merkel's leaving so prepare for a power vacuum

  • Chancellor Angela Merkel's announcement that she will not seek re-election as either party leader or chancellor is prompting soul-searching in Europe about who, and what, will come in her wake.
  • Merkel said on Monday that her current fourth term in office until 2021 will be her last, effectively beginning the winding down of her time as German leader. She will not run for re-election when the next federal election is due in 2021.
French President Emmanuel Macron (L), Britain's Prime Minister Theresa May (C) and German Chancellor Angela Merkel take a moment to discuss as they walk together during an EU-Western Balkans Summit in Sofia on May 17, 2018.
LUDOVIC MARIN/AFP/Getty Images
French President Emmanuel Macron (L), Britain's Prime Minister Theresa May (C) and German Chancellor Angela Merkel take a moment to discuss as they walk together during an EU-Western Balkans Summit in Sofia on May 17, 2018.

Chancellor Angela Merkel's announcement that she will not seek re-election as either party leader or chancellor is prompting soul-searching in Europe about who, and what, will come in her wake.

Merkel said on Monday that her current fourth term in office until 2021 will be her last, effectively beginning the winding down of her time as German leader. She will not run for re-election when the next federal election is due in 2021.

A departure of sorts will come even sooner, however, with Merkel not seeking re-election as the chairwoman of her party, the Christian Democratic Union (CDU). The move comes as her party continues to perform badly in regional elections, losing voters to both the left and right.

Three candidates high up in the CDU and government – Jens Spahn, Annegret Kramp-Karrenbauer and Friedrich Merz - have already thrown their hats in the ring for the party leadership which will be decided at a party conference in December. Merkel has not given her backing to any successor.

Interregnum

Merkel's announcement that she will depart, but not yet, has brought about a sense of interregnum in Germany with one analyst describing Merkel as something of a "lame duck" if she does manage to stay on as chancellor - assuming no one challenges her leadership before 2021.

While it's technically possible for a parliament to remove a chancellor through what's known as a constructive vote of no-confidence, it's unusual.

The last (and only time) such a vote was successful was in 1982 when then-Chancellor Helmut Schmidt was unseated by the CDU's leader at the time, Helmut Kohl. To happen again, a majority of the German parliament would have to vote for an alternative candidate and there is no immediately obvious successor to Merkel right now.

Marcel Fratzscher, president of the German Institute for Economic Research (DIW), told CNBC on Tuesday that the big question facing Merkel now was whether she would manage to unite her party behind her in order to see out her last term.

"Who will come after her as party chairman or chairwoman and will she be able to quieten things down and govern? That's a big question mark," he told CNBC's Annette Weisbach.

Power vacuum

But while the leadership vacuum has become apparent in Germany, questions are now being asked over the future of Europe once Merkel, a well-regarded pragmatic and principled leader, departs the post. With populist politics de riguer in Europe at the moment, there are concerns the departure of a strong leader like Merkel opens up the region to more extremes and divisions in the political sphere.

Niall Ferguson, an historian and senior fellow at the Hoover Institution at Stanford University, told CNBC on Monday that "we have a vacuum in German politics and therefore a vacuum at the heart of European politics and that will continue to be the case until Chancellor Merkel has ceased to be chancellor and has made way for a successor."

A weaker Merkel has immediate ramifications for Europe. It could stymie plans for reforms in Europe that are intended to bring the euro zone closer together, such as the creation of a common budget, that are being pushed by French President Emmanuel Macron. Likewise, it could change the course of Brexit negotiations and arguments between Italy and Brussels over spending.

"Angela Merkel and the German government used to be a beacon of stability for Europe," the DIW's Fratzscher said.

"The problem is we already see a weakness in the German government that does not bode well for Brexit – there will not be a strong German voice pushing for British interests. It won't bode well for Italy which needs European help at the moment. So that's my worry, this reliability of Germany and its government is no longer there to the extent that it was in the past."

Although the euro fell 0.2 percent as markets digested news of Merkel's departure, Lutfey Siddiqi, visiting professor at the London School of Economics, told CNBC's Capital Connection that Merkel's departure means "there is another source of structural uncertainty for markets at a time when we're not short of sources of uncertainty," he said, mentioning Italy's budget woes and the conclusion of the European Central Bank's asset purchase program expected in December.