BERLIN — Germany is facing crises from conscription to pensions, a troubled auto industry and faltering economic growth, and figuring out politically palatable solutions is splintering Chancellor Friedrich Merz’s coalition.

“There have been too many public discussions that have been interpreted as disputes,” Merz pleaded last week of his fractious coalition of conservative Christian Democrats and center-left Social Democrats (SPD).  

“The government must solve problems. And the government must not give the impression that it is divided,” Merz went on, “Then the confidence of the population in the political parties and also in the individuals involved will gradually grow again.”   

With top politicians of the center left and center right feuding over key government policies, it’s affecting Germany’s place at the heart of the EU as other countries are having a hard time figuring out Berlin’s position on a host of key issues. There are also growing doubts over the coalition’s long-term survival prospects.

Fewer than one-third of Germans think the coalition will be able to govern until the end of the legislative period in 2029, according to a survey by polling institute Insa for Bild, which also saw government approval fall to a record low of just 25 percent.

At the same time, the far-right Alternative for Germany (AfD) has recently overtaken Merz’s conservatives as Germany’s most popular party, according to POLITICO’s Poll of Polls, and its rising strength is adding to coalition tensions.

Since taking office in May, Merz’s Christian Democrats have tried to take the wind out of the sails of the anti-immigrant AfD by vowing to lead a crackdown on migration. But members of the SPD, Merz’s junior coalition partner, are increasingly trying to distance themselves from a discourse they say is taken straight out of the far-right playbook.

The deputy leader of the SPD in parliament, Wiebke Esdar, went as far as joining anti-Merz protests over the weekend.  

“The two major parties of the former center are now in a dilemma in that, on the one hand, they naturally have to distance themselves from each other to a certain extent, but at the same time they must always fear that, in a sense, if they do not work together properly, it will benefit the fringes,” said Florian Grotz, a political scientist at the Helmut Schmidt University in Hamburg. 

Key divisions

A prime example of the coalition’s messy infighting is its battle over military conscription, a dispute over both the army’s future and how present it should be in Germany’s national identity. 

The Bundeswehr needs to reach 260,000 troops by 2035 from about 180,000 today. The conservatives want to reintroduce a “lottery-based” draft if voluntary recruitment fails, invoking civic duty as the backbone of national resilience.  

The SPD, backed by Defense Minister Boris Pistorius, counters that coercion will only breed inefficiency at a crucial time for Germany’s rearmament. Pistorius has already torpedoed a compromise between the two parliamentary groups, rejecting the reintroduction of mandatory elements. 

Both sides agree that the army needs people — but not on how to rebuild a force gutted by decades of neglect. Critics warn that six-month stints for 18-year-old conscripts would barely scratch the surface of the Bundeswehr’s high-tech needs. 

The issues have grown into a referendum on postwar Germany’s self-image and whether the country’s ability to implement wide-ranging reforms is equitable for everyone — young and old.

While the SPD is trying to protect the young from a mandatory draft, a whole other generational issue has triggered a rebellion inside Merz’s own bloc: pension reform.

At the center of it is SPD Labor Minister Bärbel Bas, who wants to lock in the current pension level of 48 percent of average wages beyond 2031. She argues that safeguard is essential to prevent benefit cuts when Germany’s baby boom generation retires later this decade. 

For Germany, this is no small matter. Pensions are the country’s largest single item of public spending — more than defense, education or health — and the system rests on a delicate pact between workers and retirees. The coming years will see millions leaving the workforce while far fewer young people enter it, threatening to push the pay-as-you-go model to the brink. 

But for a bloc of younger Christian Democratic lawmakers that looks like an act of generational theft. Bas’ reform means about “€115 billion in additional costs” by 2040, according to a position paper by the 18 lawmakers who say they want to block it, seen by POLITICO.

The revolt has turned into a test of Merz’s authority. His government’s 12-seat parliamentary majority is among the smallest in postwar German history, meaning that a relatively small group of lawmakers can easily stymie any measure.

The end of an era 

The coalition’s gridlock is also being felt in Brussels.

The EU’s 2035 phaseout of combustion engines — a crucial issue for Germany’s car industry that anchors nearly a fifth of the country’s exports — is another dicey issue that exposes Germany’s fading grip on Europe’s industrial transition. 

Merz’s Christian Democratic Union and the SPD have tentatively backed a compromise to keep the EU’s 2035 ban in principle while creating exemptions for plug-in hybrids, “range-extender” vehicles that use small combustion engines to add range to batteries, and some synthetic fuels.  

But the Bavarian Christian Social Union, the sister party of Merz’s CDU, has flatly refused. Bavarian premier Markus Söder has framed the ban as an assault on Germany’s industrial soul, warning Brussels to turn back its “ideological regulations.”

Söder’s strong rejection is based on the influence of car giants such as BMW and Audi in Bavaria, but also on political fear, two people familiar with the CSU’s strategic thinking, granted anonymity to discuss internal matters, told POLITICO’s Berlin Playbook.

Söder worries about ceding working-class voters to the far-right AfD, they said, which has turned the defense of the combustion engine into a rallying cry ahead of next year’s communal elections.  

The European Commission will start reviewing its car-emission regulation by the end of the year and expects member countries to communicate their positions beforehand. While other big countries such as France and Spain are trying to uphold the ban, Germany is essentially voiceless as long as the government has no common position.

Defining a new approach toward pressing questions — including on the way forward for the German car industry —has become even more important as the old global system that saw Germany become Europe’s dominant economy looks increasingly tattered.

During the long 2005-2021 rule of former Chancellor Angela Merkel, Germany’s prosperity rested on three pillars: exports to China, cheap gas from Russia and U.S. protection through NATO. They have all crumbled, shattered by Chinese market barriers, Moscow’s full-scale invasion of Ukraine,and President Donald Trump’s questioning of U.S. security guarantees for Europe.

“Germany has created and enjoyed relatively favorable conditions during the Merkel era — economically, geopolitically, etc., and little provision has been made for the future,” said Grotz, the political science professor. “That is why difficulties exist now not only in one area, but in many.” 

The result is a country forced to reinvent itself — but the fear of fringe parties is keeping mainstream politicians frozen, said Sabine Kropp, a political science professor at the Freie Universität Berlin.

“A truly poor approach at the moment is the constant fear of the AfD,” she said. `”Everything is viewed through the lens of whether it benefits or harms the AfD, and that reduces the ability to solve problems.”

Laura Hülsemann and Rasmus Buchsteiner contributed to this report.