Incoming German government’s focus on European sovereignty could impact its Indo-Pacific ambitions

The German national election concluded on 23 February with the conservative Christian Democrats (CDU) and their partners Christian Social Union (CSU), together known as the Union, garnering 28.6% of the vote share. Its leader, Friedrich Merz, is slated to become Germany’s next Chancellor.  

German national elections generally happen in September. This election took place earlier than expected due to the implosion of the ‘traffic light coalition’ of the centre-left Social Democrats (SPD), liberal Free Democrats (FDP), and environmental Greens last November. The Chancellor Olaf Scholz lost the no-confidence motion for the minority government of SPD and Greens, prompting the German President to announce an early election.  

At 82.5%, voter participation was the highest this year since the German reunification.  

While the Union won the election as expected in nationwide polls, the far-right Alternative for Germany (AfD) came in second with 20.8% votes, thereby doubling its vote share since the last election in 2021. It is worth noting that in three German States —Thuringia, Saxony-Anhalt, and Saxony — the AfD has been designated as right-wing extremist by the German intelligence agency.  

The ‘traffic light coalition’ parties faced dismal results. The SPD, with a 16.4% vote share, registered its worst performance in over a century. The Greens secured 11.6% of the vote share, and the liberal FDP couldn’t make the 5% cut needed to enter the German parliament. The leaders of all three parties — Mr. Scholz (SPD), Robert Habeck (Greens), and Christian Lindner (FDP) — have decided to step down from their top roles in their respective parties, with Mr. Lindner even retiring from active politics.  

The biggest surprise in the election was the far-left Die Linke, which secured 8.5% of the vote share despite having undesirable poll numbers till January this year and an existential crisis last year after one of its most popular leaders defected to form another party.  

The next step is coalition formation as none of the parties have garnered an absolute majority which amounts to 316 our of the 630 seats in the Bundestag or German parliament. The Union is most likely expected to partner with SPD to form the Grand Coalition, the talks for which began on Friday (February 28, 2025). The Federal Electoral Committee will announce the final results of the election to the Bundestag on March 14. 

“The world will not wait for us nor tolerate lengthy coalition negotiations. We need to be able to act quickly, to take the right steps domestically, and to be present in Europe again to show the world that Germany has a reliable government once more, “ said Chancellor-in-waiting Mr. Merz in his address to his supporters after winning.  

Tobias Scholz, South Asia researcher at the German Institute for International and Security Affairs (SWP) says the Union wants to appear strong. 

“The Union indicate that they don’t want to go into the details with tricky questions. SPD is interested in increasing its negotiation position in the talks. SPD knows they have a more vested interest in discussing the details on issues where SPD and the Union diverge,” her said.  

Regardless of their political differences that were apparent during the many times these two parties sparred in the last few years, the Union and SPD also overlap on a lot of ideas as compared to other parties. This could mean good news for the Indo-German partnership. 

Impact on India-Germany relations 

In October 2024, the then-German Chancellor, Olaf Scholz, visited India as part of the 7th Inter-Governmental Consultations (IGC). A total of 27 agreements were signed across trade, defence, renewable energy, labour, and research areas. 

According to Shairee Malhotra, deputy director, Strategic Studies Programme at ORF, Indo-German relations are on an upward trajectory.  

“As Germany’s relations with traditional partners, the United States and China, are under strain, a new coalition will likely build on the German partnership with India. If Mr. Merz manages to cobble together a workable coalition, the relative greater stability in Germany, as compared to Olaf Scholz’s divided previous traffic-light coalition, may help strengthen relations with India,” said Ms. Malhotra.  

Germany had released a ‘Focus on India’ policy paper in the lead-up to the 7th IGC. The Indo-German partnerships that were already strong in areas such as energy, climate, and development have now also expanded to security and defence. Last year saw Indian Air Force and German Luftwaffee doing joint activities. India’s Mazagon Docks Shipbuilders Limited (MDL) and German ThyssenKrupp Marine Systems (TKMS) will also be building six advanced submarines for the Indian Navy in 2025.  

Mr. Tobias Scholz noted that all major political parties in Germany are on the same page regarding a strategic partnership with India.  

“A lot of work has been put into this partnership already. The new government will continue on this path,” he said.  

Migration woes

 Based on trends in the last few years, Germany has been an attractive destination for Indian professionals. In 2022, Germany granted the most work visas to Indians, with 17,379 approved visas. Despite the economic slump in Germany, the demand for Indian IT professionals has never waned.  

However, in the last few months, migration became the major election issue dividing the country.  

The Union and AfD want to block illegal immigration into Germany. The Union even broke a long-held taboo by passing an anti-immigration non-binding motion in the Bundestag with the help of the far-right AfD party. While the rhetoric is against illegal immigration, for many skilled migrants, this has been a matter of concern as well. 

“The problem seems more about refugees or asylum seekers that could be a burden on the system or potential security threats rather than technically skilled migrants contributing to the economy. What remains to be seen is how this need for workers will be reconciled with the anti-immigration political rhetoric,” said Ms. Malhotra.  

The anti-immgration rhetoric was the loudest in the last few weeks before the election following a spate of fatal crimes allgedly committed by asylum seekers.  

Mr. Tobias Scholz notes that a conservative government led by the Union will have to walk a tightrope of appearing tough on migration and fulfilling the need to attract skilled migrants in Germany.  

“I can’t expect any policy from the government directed against skilled labour from India. But, xenophobia is a factor to consider,” he said. 

If one looks at the election map of Germany, the eastern part is covered by the blue of the AfD party, which also came in at the top in three State elections last year. Eastern German States are also where most of Germany’s innovation hubs for emerging technology are located. Skilled professionals for these industries are also expected to come from outside Germany.  

“It will be interesting to see which direction the AfD will go. Will AfD become 100% xenophobic – against immigration – or will their admiration of [U.S. tech billionaire] Elon Musk and [AfD leader] Alice Weidel among its followers bring them close to a course where they differentiate more between asylum seekers and high-skilled workers who come to the country,” said Mr. Tobias Scholz.  

China factor 

Regarding China, Mr. Merz has been relatively hawkish over the years. From describing China as part of the “axis of autocracies” along with Russia, North Korea, and Iran to calling it a threat to security, Mr. Merz even warned German companies to analyse the risks of investing in China.  

“Anyone who invests in China today has to estimate the increased risk. And companies must also know early enough that we would not be willing to save companies that have taken too high a risk in countries such as China,” Mr. Merz had said in April 2024.  

Globally, India has emerged as an alternative location, a sort of ‘China+1’ strategy for companies to de-risk their Chinese investments. Tech giant Apple is the best example of a company that is decoupling from China. Apple is expected to make its latest iPhone 16e in India. 

“A German government that espouses greater clarity on the risks emanating from doing business with China is in India’s interest, as India is an alternative when it comes to de-risking and diversifying away from China,” said Ms. Malhotra while noting that SPD which could be part of the coalition could impact the development of a more critical German-China policy.  

Mr. Tobias Scholz says that the economic ties between India and Germany are on an increasing trend that cannot be reversed.  

“Regarding the political stance towards China, one has to be cautious at the moment. When the Union were in the opposition in the last years, they could afford to be more hawkish on China. However, when they were in the government under Angela Merkel, the CDU was far more accommodating of China,” said Mr. Tobias Scholz.   

As of 2023, Germany-China bilateral trade, despite a 15% drop, amounted to over 250 billion euros, whereas Germany-India bilateral trade is still under 30 billion euros.  

Indo Pacific ambitions

 Last year, Germany participated in joint air force and naval exercises in India as part of its increased presence in the Indo-Pacific region. However, since Donald Trump became the U.S. President, his statements around NATO have been harsh. The Transatlantic partnership is facing headwinds and could impact Germany’s Indo-Pacific ambitions.  

Mr. Merz voiced his opinion on the night of February 23 about Germany’s top priority on national TV.   

“My absolute priority will be to strengthen Europe as quickly as possible so that, step by step, we can really achieve independence from the USA,” said Mr. Merz who has traditionally been an Atlanticist. He added that it was clear that the current U.S. administration “is largely indifferent to the fate of Europe.” 

“The key strategic objective for the next years in Germany and Europe will be to increase European security and protect itself from Russian aggression. This will consume a lot of time and energy for Germany regarding its military capability and focus and its partnership with Eastern Europe,” said Mr. Tobias Scholz.  

Mr. Merz has been vocal about getting Germany into a leadership position within Europe and with partners such as France and Poland. Another bombshell statement Mr. Merz made on February 23 was around the upcoming NATO Summit in the summer.  

“I am very curious to see how we are heading toward the NATO summit at the end of June. Whether we will still be talking about NATO in its current form or whether we will have to establish an independent European defense capability much more quickly,” said Mr. Merz.  

According to Ms. Malhotra, Germany has linked stability and security in the Indo-Pacific and Euro-Atlantic theatres. Recent geopolitical events involving North Korean and Chinese alliances with Russia in the Russia-Ukraine war have changed European dynamics. More recently, U.S. representatives even met with their Russian counterparts to forge a peace deal without involving Europe or Ukraine.  

“Europe will now have to take much greater responsibility for its security and defence in the wake of American retreat. Mr. Merz is keen to loosen Germany’s “debt brake” for increased defence spending. Going forward, Germany (and other European countries) may have to calibrate how much bandwidth and financial resources they would have left for the Indo-Pacific,” said Ms. Malhotra. 

Mr. Tobias Scholz noted that since many of Germany’s important trading partners are located in the Indo-Pacific region, Germany will continue to consider the region more from an economic standpoint than a hard security perspective.  

“The transatlantic partnership will also play a key role as European capacity to do something in the Indo-Pacific region on their own is limited,” he said.  

(Nimish Sawant is an independent journalist based in Berlin)