(CN) — Germans go to the polls on Sunday to pick a new Bundestag and in the process determine who will take over from Chancellor Angela Merkel, who's led Europe's largest economy for the past 16 years and gotten credit for her steady hand in guiding the European Union through a series of crises.
Despite its lack of drama and a narrow focus on domestic issues such as fiscal policy and how to best tackle climate change, the election has been closely watched around the world because it is as a watershed moment as Germany, and the rest of Europe, move on from the Merkel era.
The election is also highly consequential because Germany is a powerful force in European politics and tends to drive European Union policies. As a result, for these past 16 years the EU has tended to reflect Merkel's fiscally conservative, socially liberal, mercantilist and diplomacy-first approach.
In recent weeks, Merkel has made a round of visits to European and world leaders, including a visit to the White House in July, as she prepares to exit the chancellery. At 67, she has not said what she plans to do after she steps down.
Merkel leaves a mixed legacy, winning both praise and criticism for how she handled numerous crises, including a decision to force debt-saddled southern European economies to cut spending during the Great Recession and her opening of Germany's borders to a massive influx of asylum seekers and refugees during the Syrian civil war in 2015.
At home, she receives praise for overseeing an economic boom but also not doing enough to prepare Germany's economy for a digital future. Germany's digital infrastructure is viewed as very underdeveloped and there are concerns that its export-driven economic model is outdated.
Merkel will remain in charge until a new government forms — a process that could take several months as the biggest parties try to form coalitions.
The election outcome is highly unpredictable with polls showing many Germans remain undecided on who they want to take over from Merkel. A recent poll by the Allensbach research institute for Frankfurter Allgemeine Zeitung newspaper found that 40% of Germans remain undecided.
For the past two months, the big surprise has been the rise of the center-left Social Democrats and their chancellor candidate, Finance Minister Olaf Scholz. Equally surprising has been the fall of Merkel's conservatives, the Christian Democrats.
For the past month, the Social Democrats have led polls, and surveys from the eve of the election showed about 25% of Germans are backing them.
What makes this surprising is that the Social Democrats, Germany's oldest political party, had sunk miserably in recent elections. Like other center-left parties in Europe, its fate seemed gloomy and that it was at risk of becoming an irrelevant political force eclipsed by a resurgent Green Party.
But Scholz seems to have won the trust of Germans through his middle-of-the-road policy proposals, and he's positioned himself as the best person to continue Merkel's cautious and serious leadership. Scholz is on the conservative side of the Social Democrats, who are the junior partners in a coalition government with Merkel's Christian Democrats, Germany's big tent conservative party.
Scholz has outshone his chief rival, Armin Laschet, the Christian Democrats' chancellor candidate. The latest polls show the Christian Democratic Union and their sister party in Bavaria, the Christian Social Union, trailing with about 22% of the vote. Support for the conservatives has edged up a bit in recent days.
Polls show Germany's Green Party coming in third place. In April and May, the Greens led the polls as Germans responded favorably to their demands for more action on climate change and their chancellor candidate, Annalena Baerbock, was seen as a contender to become Germany's first Green chancellor.
But Baerbock has been bruised badly following revelations of plagiarism and allegations that she padded her resume and failed to report income while a member of the Bundestag. Support for the Greens has dropped to about 16%, according to polls tracked by Politico.
Two other parties are likely to figure in coalition talks: the pro-business Free Democratic Party and the Left Party, an offshoot of communist parties. Polls show the Free Democratic Party picking up about 11% of the vote and the Left getting about 6%.
Based on the polls, pundits consider it most likely that the Social Democrats could form a government with the Greens and Free Democratic Party.
This scenario though would lead to friction between the Socialists and Greens, parties that support higher government spending to tackle issues like climate change and inequality, and the pro-business Free Democrats who are opposed to raising taxes and say the private sector must drive economic development.
Another possible coalition includes the Social Democrats and Greens relying on the support of the Left, but this grouping is seen as more unlikely because the Left is viewed negatively by many in Germany due to its deep-rooted opposition to NATO and historical ties to East Germany's communist party.
Depending on the outcome of the election, the Christian Democrats could also find themselves in the driving seat, perhaps forming a coalition with the Greens and the Free Democrats.
One large party, though, will almost certainly not be part of the mix in coalition talks: the far-right Alternative for Germany party. Polls show it picking up about 11% of the votes, but the party has been largely cast out of German politics due to its links to neo-Nazi groups and harsh anti-immigrant rhetoric.
Courthouse News reporter Cain Burdeau is based in the European Union. Follow him on Twitter
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