Merz asserts himself. But does he have a game plan?

My newest Letter from Berlin paints a picture of a Germany full of contradictions. Under Chancellor Friedrich Merz, the country appears more assertive and influential on the international stage than it has in years. At home, however, it continues to struggle with economic stagnation, reform paralysis, and growing political discontent. While Merz is emerging as a leading European statesman in the Ukraine crisis and beyond, weak growth, declining public support, and the rise of the AfD threaten to undermine his domestic agenda.

Yet the real story of my newest Letter from Berlin lies elsewhere. Beneath the headlines about economic weakness and political turmoil is a largely overlooked fact: Germany has once again become the world’s largest creditor nation. This gives the country a financial and strategic position that could prove increasingly important as the global economic and geopolitical order is reshaped. I argue that Germany’s vast stock of foreign assets is not merely a sign of accumulated wealth but a source of potential leverage at a time when Donald Trump’s trade and dollar policies are challenging long-established patterns of global capital flows.

My newest Letter from Berlin therefore advances two central arguments. First, Merz faces the formidable challenge of tackling Germany’s deep-seated structural problems and restoring economic dynamism. Second, despite all the talk of decline, Germany retains significant financial strength and geopolitical influence. Those who focus exclusively on the country’s economic shortcomings risk missing the bigger picture: Germany may be far better positioned for the emerging world order than current sentiment suggests.

My newest Letter from Berlin is thus much more than an assessment of the Merz government. It offers a fresh perspective on Germany’s evolving role in Europe and the world and raises a provocative question: Could Germany’s greatest strength be emerging precisely at a moment when many Germans see their country primarily through the lens of crisis? The underlying message is clear: while much of the debate centers on weakness and decline, Germany may possess the financial resources and strategic advantages to become one of the key beneficiaries of the next phase of global realignment.

The published article can be accessed here: The International Economy.