Social Democrats' win in Germany could shake up Europe

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BERLIN Angela Merkel's political farewell was spoiled Sunday night when the Social Democrats (SPD) narrowly claimed victory in Germany's elections, just four years after suffering their worst loss since World War II.

Why it matters: The stunning political comeback could swing the balance of power in Germany leftward after 16 years of rule by Merkel's conservative bloc, and it could lay the groundwork for a more ambitious European Union.

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SPD chancellor candidate Olaf Scholz, who as Merkel’s finance minister championed the EU’s joint COVID recovery fund and has argued for deeper political integration, made strengthening the EU one of the main planks of his platform.

  • Merkel was a strong defender of the European project, but she was cautious about further integration.

  • Scholz could now join France’s Emmanuel Macron and Italy’s Mario Draghi at the center of a powerful pro-Europe axis.

  • That shift would come just as the bloc is debating the economic recovery from the pandemic and its place in an era of U.S.-China competition.

Zoom in: Germany alone "won't make a difference" in a world dominated by the U.S., China and other rising powers, Wolfgang Schmidt, Scholz's closest aide, told Axios.

  • That's why Scholz believes "the biggest, most important national issue of interest of Germany is the European Union," because "only with the bloc of 470 million that we are, do we represent and bring some weight to the table," Schmidt said.

  • "Obviously, 'vote for Europe' is not like this big thing for voters," Schmidt acknowledged. But "European sovereignty" is the answer to the uncertainties that do concern Germans, from pandemics to climate change.

What to watch: Scholz has said his first international visit would be to Paris, and he echoed Macron during the campaign's last TV debate in saying Germany's most important task was to ensure "a strong and sovereign Europe."

  • He'll also stress the value of the transatlantic relationship with the U.S., says Lars Klingbeil, the SPD's secretary-general. But asked about the U.S.-China competition under Trump and Biden, Klingbeil says, "we have a different approach."

  • "If you look at Merkel's China policy, I think that Olaf Scholz will be more similar to this than U.S. policy toward China," Klingbeil said.

Data: Preliminary results from German Federal Returning Officer; Chart: Sara Wise/Axi

Between the lines: Merkel prioritized economic ties with China, which is Germany's largest trading partner, at the expense of challenging Beijing's authoritarianism and human rights abuses.

  • While Scholz is prepared to follow in those footsteps, the leaders of the Greens and pro-business Free Democrats — with whom Scholz is seeking to form a coalition government — opposed a controversial investment deal Merkel helped seal with Beijing, and they may push Scholz to take a harder line.

The big picture: Germany could join the club of European countries led by social democratic parties, which includes Norway, Sweden, Finland, Denmark, Spain and Portugal.

  • Five of those parties won power within the last five years — a remarkable change of fate for Europe’s progressives, which some EU watchers had pronounced dead as far-right populists surged across the continent.

Go deeper: What to watch in the negotiations

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