Europe's Sputnik.

• Author: Engelen, Klaus C.

With the spying scandal, Europe--and particularly Germany--discover "mindboggling vulnerabilities." Will the spotlight now move to financial espionage?

As Germany's major parties, the conservatives under election winner Angela Merkel and the Social Democrats under party leader Sigmar Gabriel, negotiate a "grand coalition" agreement for the next four years, the spy scandal and the still-smoldering eurozone crisis highlight Europe's--and in particular Germany's--mindboggling vulnerabilities.

The spy scandal should be taken as a wake-up call to build up Germany's technological defenses in the cyber age. Germany as the world's biggest exporter has been massively criticized in a U.S. Treasury study and also by the International Monetary Fund. Germany has to protect its patents and technological competitiveness. As the euro area's largest economy, Germany also faces financial exploitation by powerful Club Med debtor interests. They dominate the EU institutions where Germany is increasingly marginalized. Currently, the Eurogroup of finance ministers are pushing for what the Wall Street Journal calls an "EU bank bailout union" where "'public backstops' are another way of saying 'Germany pays.'"

"ONE WOMAN TO RULE THEM ALL"

A few days before Merkel faced the voters on September 22, 2013, the British magazine The Economist came out with its cover story and an impressive headline: "One woman to rule them all."

Standing on a tall pillar above falling and sinking symbols of Europe's landscape, Merkel was praised as "the world's most politically gifted democrat and a far safer bet than her leftist opponents." And the accolades went on. "It is also partly because of what we believe she could still become--the great leader Germany and Europe so desperately needs."

As expected, the fifty-nine-year-old Merkel won an historic third term, and she won big. She is now the only European leader not to have become a casualty of Europe's financial crisis, beginning with the banking crisis in 2007 and continuing with the eurozone sovereign debt crisis that erupted in Greece in the spring of 2010.

With an electorate that felt "sticking with Mutti" might be their safest bet, her conservative bloc got 41.5 percent of the vote with 311 seats, just five seats short of an absolute majority. Her coalition partners, the pro-business Free Democrats, with only 4.8 percent, suffered a political disaster. They missed the 5 percent hurdle, and for the first time in sixty-four years had to exit the lower house, the 630-member Bundestag. For traditional FDP voters, it was a sad day for post-war German liberalism and democracy.

Merkel's Social Democratic challenger, Peer Steinbruck, had no real chance. Steinbruck finished with 25.7 percent. The SPD's Green allies with 8.4 percent and the Left Party with 8.6 percent saw a loss of votes.

After futile preliminary discussions with the Greens, the Merkel camp now is moving towards a second joint venture with the Social Democrats. Both great "people's parties"--on the one side the CDU and its Bavarian sister party CSU, and on the other side the Social Democratic Party--have entered negotiations for a grand coalition headed by Merkel as chancellor with Sigmar Gabriel as vice chancellor.

The negotiating team totals seventy-five--thirty from the SPD and forty-five from the CDU/CSU--and twelve working groups for different areas. The convoluted process involves about three hundred people. Haunted by the disastrous deal they made during the previous "grand coalition" in 2005-2009 under Merkel, the Social Democrats, who won only 193 member seats, want to make sure they push through important planks of their political agenda. They want to get this in writing in a hundred-page coalition agreement full of key demands such as a statutory minimum wage. And since Gabriel, the SPD party leader and chief negotiator, will have to put the coalition agreement to the vote of the whole SPD membership, the Merkel camp cannot play hardball with its future coalition partner. A major bone of contention in the emerging "grand coalition" is whether the SPD will get the finance ministry, or will Merkel succeed in leaving Wolfgang Schauble, the trusted seventy-one-old CDU veteran, in his job.

THE SPY SCANDAL MOVES CENTER STAGE

But new revelations by Edward Snowden, the...