The Germany we knew is gone

Berlin: When I recently picked up a rental car in Las Vegas -- I was in America to cover the elections -- the agent at the counter insisted on "upgrading" me to a BMW. "So you feel at home," he said, looking at my German driver's license, smiling. I took the keys and made a mental note: Outside Germany, Germany is still intact.

I often find this when I travel. Outside Germany, Germany is still a car country, home to a flourishing economy. Outside Germany, Germany is still a prosperous country, where everybody drives a BMW or the like. Outside Germany, Germany is still a well-ordered country, a pleasant place both politically and socially. I smiled back at the agent. But inwardly, I winced. Because in Germany, Germany doesn't feel like Germany anymore.

On Monday, Chancellor Olaf Scholz lost a vote of confidence at the Bundestag, Germany's parliament, officially ending his government. It was a formality: The three-party coalition had fallen in early November, when Mr. Scholz dismissed the finance minister, Christian Lindner, prompting his Free Democrats to quit the administration. The move left Mr. Scholz, a Social Democrat, with a minority government alongside the Greens. Rather than stagger on, he decided to call snap elections that will be held on Feb. 23. The no-confidence vote was a final piece of housekeeping.

At first glance, the story of the government's breakdown looks like a rather dull "House of Cards" political thriller, centered on a budget fight. Underneath the noise, however, there's an existential crisis. The economically prosperous, socially cohesive and politically stable Germany has gone. And this government, ideologically torn and rocked by outside shocks, proved unable to cope. How did we get here?

In the fall of 2021, things felt very different. After Angela Merkel decided not to run again after 16 years in office, Mr. Scholz defeated her Christian Democratic successor and formed the first three-party government in recent German history. Younger politicians like Annalena Baerbock, the foreign minister, and Mr. Lindner came in. It was the first time the Greens, an economically left-leaning party rooted in the ecological movement of the '80s, had shared power nationally with the Free Democrats, a pro-civil liberties and pro-business party.

In interviews for a book I was writing, many of those younger politicians talked about overcoming their ideological barriers to modernize Germany after Ms. Merkel's long reign, which they saw as overly attached to the status quo. They talked enthusiastically about digitizing the country and promoting green industries. The energy felt genuine. Led by the steady, moderate Mr. Scholz, the government looked well set to tackle the country's challenges.

But problems soon stacked up. The first was Vladimir Putin's invasion of Ukraine, which threw the new government into crisis management mode: frantically buying gas on the international markets to replace Russian energy, trying to protect consumers and companies from soaring prices and organizing weapons deliveries to Ukraine. After Mr. Scholz announced a "Zeitenwende," a turning point in foreign policy, the government allocated 100 billion euros to rebuilding Germany's military.

All that came as the economy was faltering. While other Group of 7 countries are growing, Germany is about to register its second consecutive year of recession. Its signature businesses are struggling. Volkswagen, which employs about 300,000 people in Germany, plans to shut down manufacturing sites and lay off thousands of workers. Ford, Audi and Tesla have also announced layoffs, as has ThyssenKrupp, a major steel manufacturer. Once Europe's standout economy, Germany has gone from leader to laggard.

The reasons for the downturn are complex. The abrupt end of cheap Russian gas is a big factor, of course, but so is the government's agenda of green reforms, which -- by phasing out coal and relying more on renewables -- have exacerbated the cost of energy. That hasn't helped German car manufacturers, who are struggling to compete with their Chinese counterparts. Some companies have clearly made poor decisions, but the government has failed to support them, too. Generally, the government is guilty of underinvesting not only in key industries but also in schools, railways and roads. Overall, the picture is grim.

All the while, a toxic debate on migration has been brewing. Since 2015, millions of people have come to Germany, including, most recently, roughly a million Ukrainians. The country's attitude has been bipolar. On the one hand, the fact that Germany is a multiethnic, multireligious society is widely accepted. But on the other, there's simmering discontent -- periodically cresting into waves of anger -- about immigration. The government has offered a similarly mixed response, at once making it easier for skilled workers to migrate and imposing strict border controls, with tougher asylum measures and more deportations. The approach hasn't really pleased any one.

These travails have combined to devastating political effect. In the face of so many difficulties, it has become increasingly hard to govern. The public hasn't been sympathetic: Frustration with the government is widespread, its parties roundly disliked. In this febrile atmosphere, a newly formed pro-Russia party, the Sahra Wagenknecht Alliance, has prospered and the far-right Alternative for Germany has cemented itself as the second-most-popular party in the country. If the three-way coalition was an experiment in coping with the country's fragmented politics, it failed. The timing, with Donald Trump ascendant and Europe in disarray, could not be worse.

Not all is lost, though. Germany's crisis is real, but it is as much a crisis of confidence as anything else. Unemployment may grow but is still minimal. Our budgetary restrictions, far from a force of nature, can be overcome with political will. The party system is fracturing, but even the most divided states have been able to form governments: Next year we may well see the return of a stable coalition between the Christian Democrats and the Social Democrats. Having integrated generations and generations of immigrants, there's no reason we can't do it again.

And yet it is worth paying close attention. Germany could be the canary in the coal mine for Western societies. Most of our neighbors and friends face the same troubles: the costs of transforming carbon-based economies, the perils of responding to new geopolitical challenges, the difficulties of achieving social cohesion. If Germany, that most temperate zone of world politics, is not able to do it, who is?