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OPINION & ANALYSIS

What we learned from Angela Merkel’s first foray out of retirement

The former German Chancellor defended her legacy in her first major interview since leaving office. But it left many questions open - and hasn't impressed her critics, writes Aaron Burnett.

Former Chancellor Angela Merkel on stage in Berlin on Tuesday.
Former Chancellor Angela Merkel on stage in Berlin on Tuesday. Photo: picture alliance/dpa | Fabian Sommer

Six months to the day since she left office, a sold out Berliner Ensemble audience gathered to see Angela Merkel’s first post-retirement media interview. Coming out with her trademark humour and a blue suit jacket, the former Chancellor answered questions from journalist Alexander Osang for an hour and a half on Tuesday evening. 

But it was also an interview that left open more questions than it answered.

Sitting at ease and cracking jokes, Merkel calmly answered Osang’s softball questions, demonstrating that even after six months largely relaxing on the German shores of the Baltic Sea, she still knows how to eat many reporters for breakfast.

Whenever the camera panned to the crowd, it showed a beaming, transfixed audience. “Altkanzlerin” or “ex-Chancellor” or not – Merkel still knows how to hold a room. And when she’s in the room, she still knows how to run the show.

Merkel isn’t doing regrets over Russia and Ukraine

Merkel’s performance during the interview was all the more notable given how her controversial record on Ukraine and Russia dominated the discussion almost entirely.

Somewhat nervously, Osang’s first substantive question – after spending several minutes talking about Merkel’s quiet retirement – was about her decision to block NATO membership for Ukraine and Georgia in 2008. Ukraine at the time, was a divided country plagued by oligarchy and corruption, she said, and not prepared to be in NATO. She reasoned that because membership doesn’t happen overnight, Russia’s Vladimir Putin may well have invaded to prevent Ukraine from joining – at a time when it wasn’t ready to defend itself.

Merkel went on to say that she doesn’t regret how she handled Putin, and defended her record of keeping diplomatic dialogue open with him to try and prevent war.

“I don’t blame myself,” she told the crowd. “I would feel very bad if I had said there wasn’t any point in talking to him.”

READ ALSO: Merkel says she has ‘nothing to apologise for’ over Russia legacy

Merkel didn’t really believe in ‘change through trade’

Merkel insisted she was never under any illusions about who Putin was, and didn’t really believe in Wandel durch Handel (change through trade), or the idea that boosting economic links between Germany and Russia would change how Putin would behave. It was an uncharacteristically frank statement from a politician with a reputation for her public poker face, saying little while in office.

Yet many analysts, both inside and outside Germany, say those are claims that simply don’t stack up against evidence.

“Not believing in ‘change through trade,’ which supposedly guided German policy during much of her time, is a remarkable admission that Germany was basically just profiting from its relationship with Russia, at the expense of Ukraine and central European states like Estonia – without actually trying to use German leverage to make Russia more democratic and less threatening,” said Benjamin Tallis, a Fellow at the Hertie School’s Centre for International Security in Berlin.

“That’s just a policy of naked greed.”

Former Estonian President Toomas Hendrik Ilves commented on Merkel’s interview in similar terms.

Merkel’s answers on the state of the German army, or Bundeswehr, weren’t entirely convincing either.

“On a personal level, I thought she was good – funny, engaged, eloquent,” said Dr. Ulrike Franke, a German defence expert with the European Council on Foreign Relations.

Yet Franke says Merkel oversold her role when pushing for higher defence spending against resistance from the Social Democrats, her coalition partner. “She is right that the SPD was putting the brakes on this, and the CDU was pushing more. But her personally? Not so much.”

All the things Merkel didn’t say – from new progressive politics to energy

Merkel’s interview was perhaps just as notable for what she didn’t say – and what Osang didn’t ask her.

If Merkel really didn’t believe in change through trade, how did Germany become so  dependent on Russian energy? Osang didn’t ask. Nor did he ask about one of Merkel’s other major decisions – her surprise reversal on continuing nuclear power in Germany after the Fukushima disaster in 2011. That decision made Germany even more dependent on Russian gas, oil, and coal. 

“At the time, too little was done to diversify energy sources in Europe and Germany in order to become independent of Russia more quickly,” German Council on Foreign Relations Director Daniela Schwarzer told Tagesschau. Bild newspaper criticised her for being a Chancellor without a plan, particularly on energy. 

Nor did we hear about whether Germany should have been more ambitious in its climate targets, or whether the country’s dependence on Russian energy hampers a transition to clean energy.

Merkel’s crisis leadership during Covid-19, the euro crisis – even the 2015 refugee crisis – was scarcely mentioned at all, let alone subjected to serious questioning.

We did find out that she broadly supports the current government but doesn’t wish to comment on everything from the sidelines, akin to a grandmother trying not to tell her granddaughter how to bring up her children. From a woman who has been referred to as Germany’s “Mutti” or “Mummy,” it was an apt analogy.

But beyond its Ukraine policy, which specific bits of the new government’s agenda does the ex-Chancellor agree or disagree with? Merkel didn’t say and Osang didn’t ask.

And it would be interesting to know because a lot of change is happening. For instance, the country’s strict abortion laws are being eased. Cannabis is set to be legalised. Dual citizenship is to be allowed, even if the current government hasn’t yet said precisely when.

All of these decisions point to a very different Germany than the one under Merkel – but they weren’t discussed.

We did, however, hear quite a bit about how Merkel is spending her retirement. She is enjoying hiking in nature and reading the books she hasn’t had time to get to – including Shakespeare’s Macbeth.

Beyond that, we mostly heard about Merkel’s foreign policy, which may end up largely defining her legacy. For better or worse, that risks leaving so many of her other decisions broadly unexamined.

READ ALSO: An era ends: How will Germany and the world remember the Merkel years?

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MONEY

Who benefits most under Germany’s tax relief plans?

German Finance Minister Christian Lindner says he wants to give taxpayers relief worth €10 billion in the face of rising inflation. But there is already pushback, with some saying high earners will benefit the most.

Who benefits most under Germany's tax relief plans?

What’s happening?

As Germany battles rising inflation, Finance Minister Christian Lindner has revealed a plan to give residents tax relief worth more than €10 billion in total. 

“Employees and low-income earners, pensioners and self-employed, students with taxable part-time jobs and, above all, families will benefit,” the FDP politician wrote in a guest article for German daily FAZ on Wednesday.

As well as an adjustment of the benchmarks in the income tax scale, child benefit and child allowance are also to be increased.

READ ALSO: How the German Finance Minister wants to ease inflation with tax relief measures

According to sources in the Finance Ministry, the so-called ‘Inflation Compensation Act’ provides for child benefits to be increased in two stages and also to be standardised. Under the plans, the first, second and third child will each receive €227 per month next year. From the fourth child onwards, €250 will be added. In 2024, the rates for the first to third child are to be raised again – to €233.

At the same time, Lindner’s draft provides for an increase in the basic tax-free amount, i.e. the income up to which no tax has to be paid. The Finance Minister wants to raise this limit from the current €10,347 to €10,632 in the coming year and €10,932 in 2024.

Finance Minister Christian Lindner speaks at a press conference in Berlin.

Finance Minister Christian Lindner speaks at a press conference in Berlin. Photo: picture alliance/dpa | Kay Nietfeld

READ ALSO: Germany pledges inflation relief tax package worth €10 billion

Other key values of the tax scale will also be shifted to compensate for the effect of so-called ‘cold progression’. This is the term used to describe a kind of creeping tax rise when salary increases are eaten up by inflation but still lead to higher taxation. People are then hit with higher taxes, although purchasing power does not increase at all in real terms.

“A tax system that also imposes higher taxes on people who are already suffering from high prices is not fair,” Lindner wrote in FAZ. Eliminating this is “not a patronising act, but is called for in several respects”. Lindner says his plans would benefit 48 million taxpayers.

Who would benefit most?

In order to mitigate the effect, the top tax rate, which currently starts at an income of €58,597, will only apply at a level of €61,972 in 2023, and €63,521 one year later.

However, the tax threshold for very high incomes will remain in place. The income limit of €277,826, on which the so-called wealth tax rate of 45 percent is charged, will not be changed.

But there is already widespread criticism of the plans because in absolute terms, top earners would benefit more from Lindner’s tax cuts than low earners.

The FDP’s coalition partners – the Greens – said they considered the plans to be socially unbalanced.

“High and highest income groups would receive more than three times as much as people with low incomes, who actually need the relief most urgently,” said Greens parliamentary group vice-president Andreas Audretsch. Furthermore, people with very low incomes would not get any relief at all because they pay no income tax below the basic tax-free amount.

Katharina Beck, the Greens’ spokesperson for financial policy, expressed similar views. “The other way round would be right: strong shoulders should bear more than low-income shoulders and not be disproportionately relieved,” she told the Redaktionsnetzwerk Deutschland (RND) on Wednesday.

Lindner’s plans have a greater impact on low incomes in percentage terms, but in absolute terms people with high incomes benefit more.

For example, a taxpayer with a taxable income of €20,000 is to be relieved by around €115 per year under the current plans. With an income of €60,000, the relief amounts to €471, according to figures from the Ministry of Finance. 

What’s the reaction elsewhere?

Vice-chairman of the SPD parliamentary group, Achim Post, said the relief doesn’t go far enough.

“The proposed increases in the basic tax-free allowance and child benefit are a step in the right direction, but they are not enough,” he said. 

He suggested direct payments as an alternative, which could provide targeted relief to people with small and medium incomes. 

A woman holds cash in her hand.

A woman holds cash in her hand. Photo: picture alliance/dpa | Daniel Karmann

‘Falls short’

Meanwhile, the German Trade Union Confederation (DGB) rejected the proposals. Lindner’s tax plan “falls far too short”, said DGB Executive Board member Stefan Körzell.

For the relief for people with small and medium incomes, the basic tax-free amount would have to rise to €12,800, said Körzell, adding: “Instead, top earners and the rich benefit, although they have far fewer problems coping with the current price increases.”

Körzell said that “top earners and the wealthy must contribute more to tax revenue”.

He said the FDP politician’s plans would cause “serious revenue shortfalls” for the treasury.

FDP Secretary General Bijan Djir-Sarai rejected the criticism as baseless. The adjustment is aimed at smaller and medium incomes and reduces “the tax burden of the hard-working middle”, he said.

For top earners, the relief amount is capped, he said. “The relief is fair and necessary so that people benefit from a wage or salary increase despite the high inflation and do not have to pay on top through a higher tax burden,” Djir-Sarai said.

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