German Chancellor's weaker position at home will make it harder for her to broker compromise abroad.
Ian Bremmer is the president of Eurasia Group and author of the forthcoming book Us vs. Them: The Failure of Globalism.
After five months without a government, members of the centre-left SPD have now voted to join another coalition led by Chancellor Angela Merkel.
There has been no great sense of urgency in Germany.
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Its economy continues to grow, and its politics remain stable. Yet, the weakness of this latest "grand coalition" is bad news for Europe and for the world.
Europe needs leadership, and France's Emmanuel Macron needs a strong Eurozone reform partner. At the global level, liberal values like respect for rule of law, human rights, open markets, and open borders need a champion.
Germany, like the United States, is far from a perfect messenger on these questions, but with Donald Trump touting "America First," Xi Jinping erasing term limits in China, and strongmen emerging in country after country, Merkel is still the best defender of these values. Her task has only become more difficult.
Much has changed in Germany over the past five years.
The new coalition earned a collective 53 per cent of the vote in last October's election, down from 67 per cent at the previous vote in 2013. A February survey dropped the SPD below the far-right Alternative fuer Deutschland, which will now serve as Germany's main opposition party.
SPD members voted by a two-to-one margin to join the new government, but the party's youth league campaigned against the idea, and even those who voted yes appear to have done so without much enthusiasm.
A politically weaker Germany is bad news for Europe because a diminished Merkel will leave the EU without forceful leadership at a time when reform is very much on the agenda. Macron has proposed sweeping changes designed to bolster the Eurozone and counter resentful nationalism with common EU-wide policies on defence, taxes, and asylum rules. He has called for a Eurozone parliament, Eurozone ministers, a Eurozone budget, better coordination on tax policy, and a common approach to border controls. But Macron needs Merkel's strong backing to ensure that leaders of the European Council, Commission, Parliament, and Central Bank can agree to these plans before all of them are replaced in 2019.
It's not only Europe that needs strong political leadership from Germany. When Trump won the US presidential election, Merkel made no attempt to compensate for his lack of experience, erratic temperament, protectionist, anti-immigration campaign rhetoric. Instead, she offered congratulations with a clear rendering of the terms on which the two leaders and two governments could work together successfully: "Germany and America are bound by common values — democracy, freedom, as well as respect for the rule of law and the dignity of each and every person, regardless of their origin, skin colour, creed, gender, sexual orientation, or political views," she wrote.
"It is based on these values that I wish to offer close cooperation, both with me personally and between our countries' governments."
As Trump's words and actions have shifted US policy away from the promotion and defence of these values, though Washington itself has always delivered on them imperfectly and inconsistently, Merkel's voice has only become more important.
Her refusal to compromise on the ideals that have defined the EU — the free movement of goods, services, money, and people — her welcome for refugees, her backing for the EU itself, the most ambitious and idealistic political project in human history, and her rejection of the populist/nationalist trends that increasingly define the politics of a growing number of influential countries have only become more important.
But now she'll lead a government that must answer questions and challenges posed not by the centre-left but the far-right. Her weaker position at home will make it harder to offer concessions and broker compromise in Europe and elsewhere. The EU will be much more vulnerable to future crises, and Western liberal values will be harder to defend.
Merkel isn't finished. As she begins her fourth and final term as Germany's chancellor, her party remains Germany's strongest, and she is more popular than the party. Germany's economy will continue to expand. Unfortunately, Europe and the world need more leadership than a frustrated and erratic Trump and a beleaguered Merkel can provide.