Global alliances have shifted: So have German policies

Germany is set to lift its debt cap and defence spending in response to the new world disorder

- RAHUL JACOB

Whether John Maynard Keynes said, "When the facts change, I change my mind" is often disputed, but the witticism has never seemed more apt. German chancellor-to-be Friedrich Merz, long a fiscal hawk as the leader of Germany's centre-right Christian Democratic Union (CDU), recently made an about-turn on the virtues of higher deficit spending after being briefed on the country's dwindling growth prospects and witnessing geopolitical gyrations in the US, which seems keen to patch up with Russia, potentially leaving its European allies in the lurch.

The irony is that Merz campaigned as a fiscal conservative ahead of last month's German elections, which delivered a victory for the CDU and its allies. Merz is also a former executive of BlackRock, the world's largest asset manager. This month, it spent $23 billion buying ports from CK Hutchison, including two in Panama. Although Hutchison is Hong Kong-based, Trump had warned against "Chinese" ownership and said he wanted US ownership of the Panama Canal. Merz had long been committed to stronger ties between the US and Europe, but with security alliances like Nato and Aukus now looking akin to a Scrabble board overturned by an unruly child, all is change.