Germany has a new leader: Friedrich Merz, who was elected Chancellor on May 7, 2025. The election followed six months of uncertainty after the collapse of the previous government led by Olaf Scholz. Merz, a conservative lawyer and businessman, won by a narrow margin in a second vote after 18 members of his party did not support him initially, raising questions about the stability of his government.
His coalition holds the “slimmest governing margin” in Germany’s post-war history, with just a 12-seat majority in the Bundestag. This makes it challenging to pass new laws. Many are watching to see if his government will endure or face new elections soon.
One of Merz’s primary objectives is to strengthen Germany’s relationship with the United States, particularly as President Donald Trump returns to office and adopts a tough stance on European countries. Trump has threatened tariffs on European products and questioned NATO’s role in protecting Europe.
Describing himself as a “convinced transatlanticist,” Merz’s first major decision as Chancellor was to establish a €500 billion fund to improve infrastructure, develop clean energy, and bolster Germany’s military. This fund is exempt from Germany’s usual debt rules, underscoring its importance.
Merz also focuses on defense cooperation with France and the United Kingdom, announcing plans for a Franco-German Defense and Security Council. Additionally, he has begun discussions about extending nuclear protection to Germany, a significant shift for a nation that has avoided atomic weapons since World War II.
Taking a tougher stance on Russia than his predecessor, Merz has agreed to send Taurus cruise missiles to Ukraine if attacks on civilians continue. This decision has drawn ire from Moscow, which accused him of “direct participation” in the conflict.
In energy, Merz aims to reduce Germany’s reliance on Russian resources, allocating part of his fund to accelerate renewable energy projects. However, some economists caution that substantial borrowing could threaten Germany’s economic stability.
In the Middle East, Merz continues Germany’s support for Israel while voicing concern about civilian casualties in Gaza. He has dispatched Foreign Minister Johann Wadephul to Israel to discuss humanitarian aid and reaffirm Germany’s commitment to Israeli security, rejecting calls for Germany to mediate peace talks between Israel and Palestine.
Merz faces economic challenges at home, with the German economy experiencing three recessions in five years and slow growth of just 0.2% in early 2025. Trump’s tariffs could further strain German businesses, particularly in the automotive and green technology sectors.
Merz seeks to revive the trade deal between the European Union and South American countries (Mercosur) and expand energy exports to Southeast Asia to address these issues. He has also taken a tougher stance on China, blocking investments in critical infrastructure, which has drawn mixed reactions.
The €500 billion “future fund” aims for climate neutrality by 2045 through renewable energy subsidies and infrastructure improvements. However, some experts warn that exempting defense and green spending from debt rules could lead to inflation and financial instability.
Merz’s coalition consists of his Christian Democratic Union and Christian Social Union (CDU/CSU) and the Social Democratic Party (SPD), differing views on key issues. SPD members have criticized Merz’s plans to cut welfare programs, while conservatives oppose his climate initiatives.
As Germany navigates multiple crises, including the war in Ukraine and strained relations with the U.S., Merz’s leadership marks a departure from the cautious approach of former Chancellor Angela Merkel. His ability to achieve his goals will depend on maintaining his fragile coalition and addressing the many challenges ahead.
In this report on Germany’s new Chancellor, insights are provided by Clara Beaumont, a European affairs correspondent from The Congress Post (CP) Berlin Bureau, specializing in German politics and EU governance; Alexander Reed, a political affairs reporter from The Congress Post (CP) Washington Bureau, who brings expertise on transatlantic relations and U.S.-German diplomatic ties; and Noah Wilson, a business affairs analyst from The Congress Post (CP) New York Bureau, offering perspective on the economic implications of Germany’s policy shifts. Their combined reporting provides a comprehensive look at the political, diplomatic, and economic dimensions of this significant leadership transition in Europe’s largest economy.