Friedrich Merz

Friedrich Merz enters September with Germany's security, trade, and political fronts all active at once. On August 30 he warned that an AfD victory in the September 6 Saxony-Anhalt election would cause considerable damage to the state economy and deter international investment, as his coalition coordinates with federal and state leaders to restrict AfD access to classified intelligence and power. A Nomura analysis on August 24 found the AfD has overtaken the CDU/CSU nationally at 42 percent, a surge the bank frames as a direct threat to his political survival.

Merz formally attributed the August 4 explosives-laden drone attack at Leipzig/Halle Airport to Russia and is coordinating a sanctions response with EU and NATO partners, pledging that those responsible for hybrid attacks will pay a price. His cabinet had already approved legislation turning the BND and BfV into proactive secret services with hack-back cyber capabilities and covert sabotage powers, and cleared tools to disrupt a Russian-linked Matryoshka influence campaign using AI-generated content to deepen East-West divisions before the elections. He warned that fringe parties risk sending Germany into the abyss while insisting the political center is delivering.

On trade, Merz ordered his cabinet to develop proposals countering the EU-China trade deficit of 89.3 billion euros and called for a new Plaza Accord to force revaluation of the yuan, signaling the EU should prepare a defensive package if October talks with Beijing fail. Finance Minister Lars Klingbeil is publicly aligning with this hardening line. Merz hosted five northern European leaders in Berlin to form a frugal coalition opposing the proposed 1.76-to-2-trillion-euro EU budget, demanding cuts of several hundred billion euros and redirecting funds from agriculture to defense. At a Neuhardenberg retreat on August 22 he pressed his cabinet to fast-track a 34-point reform package on taxes, pensions, deregulation, and digitalization, calling growth and employment the most important issue. Germany's Q2 GDP was revised up to 0.3 percent, the third consecutive quarterly increase, supported by his defense and infrastructure spending, though the full-year forecast was cut to 0.5 percent.

Merz is co-leading with France and Britain a Ukraine peace-talk framework at Zelenskyy's request to prevent a U.S.-Russia settlement that excludes Europe, pledged collaboration with Macron's offer to extend France's nuclear umbrella to European neighbors, and shifted Germany toward a pragmatic hydrogen strategy favoring blue hydrogen over the green priority of previous governments. He labeled the nuclear phase-out a strategic mistake and argued climate targets must better align with jobs and market realities.