Germany’s much-anticipated federal election takes place September 24. Capital Group’s John Emerson, former U.S. ambassador to Germany, discusses the challenge Chancellor Merkel faces to stay in power and the stakes for Germany and the rest of Europe.

John Emerson

Vice Chairman, Capital International

16 years of investment experience

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Matt Miller: I know you’re following the German election closely, obviously, given your recent experience there. How do you assess where this is headed? Looks like Angela Merkel is in a strong position to win. Is that how you see it? How do you think of it?

John Emerson: I’d say that’s correct right now. What’s really interesting about this is, in 2015, when the refugee crisis really hit its height, and early 2016, her numbers dropped substantially and she looked like she might have some real vulnerability. And after the presidential election here in the United States, Barack Obama came to visit his good friend Angela Merkel one last time before he left office.

We had two days together with the chancellor and the president in Berlin. And after their final meeting, they had a little one-on-one before they left. I was sitting in the car — “the Beast” — he jumped in, and he looked at me and he goes, “She tells me it’s only 50/50 if she runs again.”

Matt Miller: Wow.

John Emerson: Which was a pretty big surprise to us. But I think that in light of the election of Donald Trump, actually — and the fact that there was concern about Le Pen in France and what was happening elsewhere in Europe — she ultimately felt that Germany needed the stability of her running for yet a fourth term in office. This would mean 16 years as chancellor if she wins.

And what’s interesting is that her numbers — as soon as she made that announcement — really started to come back up. And with the exception of the time when Martin Schultz became the leader of the Social Democratic party — he had been the president of the European Parliament, moved back to Berlin to become head of the Social Democrats — he had a big jump in the polls, but it melted away pretty quickly. And now it looks like the chancellor and her party are running close to the high 30s, maybe even close to 40% in the polls, which is less than what her party earned last time, in 2013. And the Social Democrats, the center-left party, are running in the low 20s.

So I would say at this point, it looks like she probably will — once again — be given the opportunity, as chancellor, to form a coalition government.

Matt Miller: And so, how did it work? I mean, she took a real hit, as you said, after the surge in immigration. How did she turn that around?

John Emerson: I think there are a couple of things. First of all, German angst is alive and well. And I think once we saw in 2015 and early 2016 literally tens of thousands of refugees flowing into Germany on a weekly basis, Germans got anxious; they got nervous. And then, particularly when there were terrorist attacks in other parts of Europe — this is well before the Christmas market attack in December of 2016 in Berlin — there was a high level of anxiety.

Number one, I think Germany’s actually done a pretty good job of processing all these people as they come in, distributing them out throughout the country and beginning the process of integration.

Matt Miller: Is it something like a million people?

John Emerson: Initially, they were saying over a million. It was about 900,000 who came in, in the 2015 period — probably about 1.2 million, 1.3 million refugees overall who’ve come in, say, during the course of the last three or four years. So it’s a big number — 85 million population.

Matt Miller: So in the U.S., that would be, like —

John Emerson: That’d be like 4 or 5 million people in a 15- to 18-month period of time, so it’s pretty significant. In any event, what’s happened is, as the situation is not as bad as people feared, anxiety has come down. That’s number one.

Number two, Angela Merkel got the message, and she worked very hard with President Erdogan of Turkey to try to get the Turks to really clamp down on the trafficking of people across the Aegean Sea into Greece or, obviously, coming up into Germany. And that had some success.

And then, I think the third thing that happened was, in contrast to a sense that she was really ignoring the concerns of people, by continuing to address them — to focus on appropriate integration of these new refugees — I think there ended up being a sense of greater confidence.

And then, here’s the other thing: Germans like stability. They like stability in their government. Konrad Adenauer, Chancellor Kohl, who recently died — all served for four terms, and now Angela Merkel looks like she’ll be able to serve for a fourth term. Germans like that sense of stability. And I think today, when you see the rise of populism in parts of Europe, when you see Brexit, when you see the rise of populism potentially in the United States, there’s an appreciation for the sense of stability that she brings as leader.

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