Back on 26th November 2014, following a Reuters despatch discussing a meeting Merkel had with Putin at the G20 summit in Brisbane, we wrote the following:

“Merkel has brought this on herself by taking on the Russians in Ukraine where, as we at RI have repeatedly said, the Russians hold all the cards. Accustomed to getting her way with other EU leaders, in dealing with the Russians she looks out of her depth. The first rule in politics is when in a hole; stop digging. If Merkel cannot stop digging, Germany may soon have a new Chancellor .”

We were the first to say at a time when no-one else even contemplated the possibility that because of her disastrous mishandling of the Ukrainian crisis Merkel’s job was on the line.

Since then Merkel has compounded her problems by her disastrous mishandling of the Greek crisis and the refugee crisis.

What we were the first to say last November is now shaping up as the consensus: Merkel is in deep trouble, and her days could be numbered.

Articles in the rigidly Atlanticist and pro-Merkel Financial Times say as much (see here and here).

We reproduce the second one of these articles below, partly because it is behind a paywall, but mainly because it shows the extent of the alarm - and bafflement - that talk of Merkel's imminent fall is causing in Atlanticist circles.

Suffice to say the title of this article is “If Angela Merkel is ousted, Europe will unravel”.

The trigger point, the event that caused opposition to Merkel in Germany to go public and crystallise, was not the crisis in Ukraine. It was the refugee crisis.

The refugee crisis should not however be seen as the cause of Merkel’s problems. Rather, it was the straw that broke the camel’s back.

Though Merkel’s stance during the refugee crisis was a bad - though characteristic - mistake, if Merkel’s political position in Germany really had been as strong as the Atlanticists believed it was, she would have been able to ride out the storm.

In reality, unease in German elite circles with Merkel has been growing for some time - ever since it became clear last autumn that the Russians were not going to back down over Ukraine, and that the sectoral sanctions she had imposed on Russia were not therefore going to be lifted any time soon.

This put Germany’s vital economic interests at risk by putting in jeopardy plans for Germany’s long term import of Russian gas, and plans by its businesses to expand in the Russian market.

Merkel’s mishandling of the Greek debt negotiations - in particular her decision to override Wolfgang Schauble’s demand for a Grexit - hardened concerns about her in Germany even further by showing that Merkel in a crisis always in the end plays to the Atlanticist gallery instead of defending German national interests.

The refugee crisis was the final straw, the moment when - since this is an issue which caused public opinion to become enraged - the doubts and criticism that have been growing in private, were able finally to go public.

What we are now seeing is a concerted attempt by the German political and economic establishment to try to find ways of mending Germany’s fences with Russia.

The first big sign of the shift was the unexpected agreement for the North Stream 2 pipeline.

Though some have tried to represent this as a victory for Berlin, as I have discussed previously it is the Germans who have made the big concessions - agreeing to an asset swap that will allow Gazprom to project itself downstream by gaining a stake in the European pipeline network - something the US is known to oppose and which the Europeans have always objected to up to now.

North Stream 2 of course also increases European dependence on Russian gas supplies - something the US and its Atlanticist allies want to reduce - and brings forward the moment when Ukraine will finally cease to be a transit state.

Interestingly, German Vice Chancellor Sigmar Gabriel has come out openly, not just supporting North Stream 2, but also saying that the EU Commission should not interfere with it, whilst appearing to call into question Ukraine’s position as a transit state.

Gabriel’s precise words, made to no less a person than Putin himself, were as follows:

“What’s most important as far as legal issues are concerned is that we strive to ensure that all this remains under the competence of the German authorities , if possible. So if we can do this, then opportunities for external meddling will be limited . And we are in a good negotiating position on this matter.

And in order to limit political meddling in these issues – you are, of course, aware, this is not just a formality – we need to settle the issue of Ukraine’s role as a transit nation after 2019. There are technical reasons for this: you know that Ukraine’s gas transportation system is not in very good state. And, of course, the financial and political role it will play for Ukraine, as will the backflow of gas.”

This a clear warning to the EU Commission not to invoke the Third Energy Package to block North Stream 2 - in the way that was done to South Stream.

It is almost unheard of for a senior German official to say openly in this way that German law should be given precedence over EU law. That he did so in Moscow, in a meeting with Putin, is even more striking and is clearly intended to underline the point.

Perhaps in order to highlight the extent to which the Russians and the Germans are once again talking to each other on economic questions, rumours have circulated that the 2009 Opel deal might in some form be revived, with the Russians presumably being offered some stake in the company. The Russians have made clear that - for the moment - they are not interested.

As steps are taken to repair economic relations, the first signs of a resumption of the political dialogue are taking place.

Significantly it is German Vice Chancellor and Economics Minister Sigmar Gabriel, who is also the leader of the SPD - the junior party in Merkel’s coalition and Germany's second biggest party - who appears to be acting as the point man, as shown by his recent visit to Moscow at the head of a strong German delegation, which included German Foreign Minister Steinmeier.

Gabriel will have gone to Moscow as a representative of the German government. The fact that he went to Moscow is the strongest sign that the political dialogue between Berlin and Moscow has resumed.

There is however far more to be said about Gabriel's visit.

With Merkel’s grip on power visibly weakening, it is impossible to avoid the feeling that Gabriel by going to Moscow was making a political pitch, positioning himself in case Merkel falls suddenly and he finds himself in a position where he can take over quickly.

Gabriel’s visit to Moscow looks frankly as if it is intended to introduce him to the Russians as Germany’s Chancellor in waiting, whilst signalling to the powerful German business community that he is the man who is prepared to stand up to Washington and repair relations with the Russians.

The transcript published by the Russian government of Gabriel’s meeting in the Kremlin with Putin contains these remarkable words:

“If we take a look into the past, back to the year 2000, when Germany and Russia had excellent relations, it is entirely unclear why the development of our two nations went in completely different directions .

I feel that the situation surrounding Ukraine is most likely a symptom rather than the cause of the problems that have occurred.

………….

And I feel that this is an enormous opportunity to overcome the conflict, especially since t here are parties involved in Europe and the US who benefit from the continuation of this conflict, rather than its resolution . So we must do everything and use all our opportunities to overcome this conflict.”

It is impossible to see these words as anything other than a veiled criticism of Merkel for allowing Germany’s relations with Russia to deteriorate from “the excellent relations” the two countries had with each other in 2000, i.e., before Merkel became Chancellor.

Gabriel’s words are also as clear a statement as a German official is able to make that the Ukrainian conflict was deliberately engineered by “parties in Europe and the US” in order to wreck Germany’s - and Europe’s - relations with Russia, and that it is these parties who are trying to prolong the conflict for that purpose.

The Russians will have carefully noticed these comments, as will officials in Washington and Berlin. It was almost certainly in order to make these comments - and to have them publicised - that Gabriel went to Moscow.

The criticism of US policy that appears in Gabriel’s words precisely echoes that of Jean-Claude Juncker, the EU Commission President, who is known to be very close to German thinking, and is known to be especially close to Gabriel’s SPD colleague, German Foreign Minister Steinmeier.

As we discussed previously, Juncker recently made a surprisingly strong pitch for a resumption of Europe’s dialogue with Moscow, and did so moreover in a way that contained a clear rebuke to Washington. His precise words were:

“We must make efforts towards a practical relationship with Russia. It is not sexy but that must be the case, we can’t go on like this….. Russia must be treated decently … We can’t let our relationship with Russia be dictated by Washington .”

It is difficult to believe that Juncker said what he did without first getting clearance from Berlin, and Gabriel’s words to Putin in Moscow put the question beyond doubt. In fact it looks like Gabriel and Juncker coordinated their positions in advance.

Signs of the resumption of the dialogue between Berlin and Moscow are being picked up elsewhere.

Stratfor, the “private” US intelligence agency, has recently published a lengthy report about it, which discusses Gabriel’s visit to Moscow in detail and makes clear Washington’s concern.

Stratfor talks of “Berlin testing the waters before making a decision on the future of Germany's relationship with Russia”, which is no doubt true, but which - in light of Gabriel’s words to Putin in Moscow and the North Stream 2 agreement - undoubtedly seriously underestimates the seriousness of what is going on.

Is there anything that could derail this process?

First of all it is important to say that though Merkel is down, she is not out. She would not have been Chancellor for almost ten years unless she possessed formidable political skills, and she will now use them to the utmost.

One thing that works to her advantage is that she has been careful to prevent any obvious rival emerging from within her own party - the CDU.

The person who is sometimes spoken of as a possible successor - Finance Minister Wolfgang Schauble - has shown little interest in becoming Chancellor, and is aged 73. It is difficult to imagine him as anything more than an interim choice.

The point however is that even if Merkel survives, she is now weakened, and the price of her of doing so will be to look for ways to resolve the crises that are besetting her and which are opening her up to criticism.

The election in Poland of the Law and Justice Party looks like making a solution of the refugee crisis even more difficult, with the new Polish government elected to oppose any German proposal to share refugees.

Given that the refugee crisis looks set to go on and get worse, and given that the latest indications from Greece are that the crisis there is going to come back with a vengeance next year, Merkel is simply not in a position to take a strong line with Russia over Ukraine given that the German political and business elite increasingly oppose her doing so.

With Gabriel now quite obviously manoeuvring to take over from her, and busy sending out smoke signals to the German business community and to the Russians of his readiness to do so, and with Merkel's critics in the CDU circling in expectation of a kill, Merkel’s political space has gone.

———————————————

From the Financial Times

It is more accurate to call it panic than plotting. This week I spent time in the company of members of Angela Merkel’s Christian Democrat party. Startlingly for an outsider, the conversations turned on whether the German chancellor would survive the refugee crisis.

Some thought she had just weeks to turn things around. Never mind that only yesterday she had towered above any other European leader. Overnight, the unthinkable has become the plausible — for some in her party, the probable.

Other voices say the fever will subside, but Ms Merkel’s vulnerability speaks to the convulsions across Europe caused by the tide of refugees from Syria, Iraq, Afghanistan and the Maghreb and Sahel countries of Africa. In the eastern, post-communist part of the continent, the influx has strengthened the hands of the ethnic nationalists who never quite signed up to the idea of liberal democracy. To the west it has bolstered the fortunes of nativists such as Marine Le Pen’s National Front in France. Rallies of the far-right Pegida party in Germany now feature speakers who lament the loss of concentration camps. If Britain’s David Cameron loses his referendum to keep Britain in the EU it will be because emotions over migration trump economic self-interest.

Ms Merkel has rarely been called a conviction politician. Her longevity in office has resided in her skill in finding the natural point of balance in the German national mood; and, it should be said, her ruthlessness in despatching potential rivals. The adjectives most often applied to her leadership style, sometimes with more than a note of frustration, have been cautious, deliberative and consensual.

“Mutti” (mum) Merkel, as she is often called, has succeeded by assuring her compatriots that she will shelter Germany from the fires raging beyond its borders. They need not worry about the detail of policy. Germans can be sure she will be firm but calm in standing up to Russia’s Vladimir Putin and, though committed to the future of the euro, will be a careful guardian of the nation’s finances. For a decade, Germans have taken her on trust.

She has displayed the same skills in Europe. Those who have watched her operate at summits of EU leaders have marvelled at her informal consensus-building. A conversation over the shoulder with this prime minister, a deal sealed over a snatched cup of coffee with that president, a friendly pat on the shoulder for officials seeking common ground. Ms Merkel has always pressed the German interest, but in a manner of compromise over confrontation.

The refugee crisis has seen a different Ms Merkel: a leader ready to speak to, and act on, her convictions, to step outside the padded cell of focus groups and opinion polls. Her decision to welcome the hundreds of thousands making their way through the Balkans made more sense than her opponents allow. Could Germany really have built fences and posted soldiers to guard them? Could it have chartered trains to send them back to a Middle East in flames? But there was heart as well as head in her response.

Fair enough, say my CDU friends. And, yes, her welcome for the refugees initially caught the national mood. But the sheer numbers — Germany expects 1m-plus arrivals this year — have changed the calculus. Towns and villages have been overwhelmed by the influx. And, this the potentially fatal wound for the chancellor, a sense has grown that she has lost that all-important control.

Politicians never stop looking at their poll ratings and the CDU’s have fallen sharply. There is no obvious candidate to replace her, but step up Wolfgang Schäuble, the finance minister, as a likely stopgap until a candidate is chosen to fight the 2017 election. Mr Schäuble has been curiously quiet of late.

Behind selfish calculation lies a deeper fear. Centre parties across Europe have surrendered ground to populists of left and right because their electorates have feared they no longer offer security. Germany, the nastiness of the small Pegida notwithstanding, had seen the centre hold. But now, on an issue widely seen as one of cultural identity, has Ms Merkel lost control?

The answer I think is no, but when politicians fall to panic anything is possible. I watched at close quarters the defenestration by her own party of Margaret Thatcher, another powerful leader who seemed invincible until the moment of her fall. She, too, had won three election victories. Though deeply unpopular by 1990, until it happened it seemed unthinkable that her colleagues could turn on her with such ferocity.

The stakes, though, are much higher with Ms Merkel. The financial crash, the euro crisis and the collapse of the Schengen open borders arrangement has seen Europe unravelling as centrist parties across the continent have struggled to meet the challenge of the populists. Ms Merkel has been the rock of certainty — the leader with the authority to keep the show on the road. Without her the fractures would multiply.

Mr Schäuble, too, is a pro-European, in some respects a more committed integrationist. But Ms Merkel has been the guardian of a post-1989 settlement that has rooted Germany in its Europeanness. Her removal would see it shift into the camp of those consumed by narrower, more immediate calculations of interest, giving up on the ideal of a European Germany. And that would be the beginning of the end.